Bharat Heavy Electricals Ltd., Baroda Vs. R.V. Krishna Rao - Court Judgment

Majmudar, J.

1. Bharat Heavy Electrical Limited has filed this petition under Art. 226 of the Constitution which in substance is one under Art. 227 thereof, seeking to challenge the award, passed by the Presiding Officer of Labour Court at Surat in Reference (LCS) 326 of 1981. By the said award, the industrial dispute raised by the respondent-workman against the petitioner concern has been adjudicated upon an the reference is partly allowed. The Labour Court has directed the petitioner-concern to reinstate the respondent-workman in service with continuity in service but directed the petitioner to pay 25% of back wages with effect from 5th October 1985. It is further clarified that the petitioner will be entitled to transfer the respondent-workman or to send him on deputation according to its needs. The said right of the petitioner-management has been upheld.

2. In order to appreciate the grievance of the petitioner, a few introductory facts are required to be noted at the outset. Respondent-workman was appointed as Welder-Grade I in the pay scale of Rs. 470-664 by the order of appointment dated 24th June 1975 by the petitioner concern. During March 1980, the respondent was working at Ukai Thermal Power Station in Surat district. On 5th March 1980, the petitioner, the petitioner decided to send on deputation the respondent along with others to Bhopal for a period of three months. It is the case of the petitioner that the respondent did not like to go to Bhopal and therefore, he unauthorisedly remained on leave, that earlier, on 12th March 1980 the respondent applied for leave for visiting Baroda which was granted. According to the petitioner, thereafter, the respondent remained absent without leave of his superior. Ultimately the petitioner informed the respondent vide letter dated 14th June 1980 that the respondent's name was struck off from the muster-roll from 10th May 1980. The respondent raised an industrial dispute for reinstatement in service with back wages. It is that dispute which was entertained and adjudicated upon by the Labour Court, Surat as mentioned earlier.

3. After recording evidence offered by the parties, the decision as noted earlier was arrived at by the Labour Court. The Labour Court took the view that striking off the name of the respondent-workman from the register of workmen amounted to retrenchment within the meaning of term 'retrenchment' as defined in the Industrial Disputes Act, 1947 vide Section 2(00)(a), (b) and (c) as they stood at the relevant time and as no retrenchment compensation was offered to the respondent by the petitioner while striking off the name of the respondent from the register of workmen, the said action of the petitioner was declared to be null and void and consequently, the order of reinstatement was passed. However, as the respondent had filed his statement of claim before the Labour Court only on 4th October 1985 and was not found to be active in prosecuting the dispute before the Labour Court, the Labour court directed payment of back wages only at the rate of 25% from 4th October 1985 till actual reinstatement pursuant to the Labour Court's order.

4. We have heard Mr. V. B. Patel for the petitioner as well as Mr. P. M. Thakkar who appeared for the respondent-workman. Mr. Patel for the petitioner raised the following contentions in support of the petition.

(1) That the amended definition of term 'retrenchment' as per Section 2(00)(bb) of the Industrial Disputes Act will be applicable to that facts of the present case and pursuant to that amended definition, the action to the petitioner in striking off the name of respondent would not amount to retrenchment and consequently, the Labour Court had patently erred in law in passing the impugned order on the supposition that the petitioner had retrenched the respondent and that such retrenchment was contrary to Section 25F of the said Act.

(2) It was alternatively contended that even assuming that amended definition of the term 'retrenchment' did not apply to the facts of the present case, it must be held that the action of the petitioner was based on misconduct of the respondent in remaining absent without leave and even on that basis, the action without not be covered by the term 'retrenchment' as originally defined. In this connection, it was further submitted that the petitioner had already led evidence before the Labour Court justifying the said action and consequently, the Labour Court had committed patent error in holding that the impugned action amounted to retrenchment within the meaning of Section 2(00) of the Industrial Disputes Act.

(3) It was lastly contended that in any view of the matter, because of the irresponsible behaviour of the respondent, the petitioner had lost confidence in him and therefore, the Labour Court ought not to have ordered reinstatement of the respondent and instead adequate compensation could have been awarded to the respondent.

5. We shall deal with the contentions seriatim

Contention No. 1 : Mr. Patel placing reliance on the decision in the case of Buckingham and Carnatic Co. Ltd. v. Venkatiah (1963-II-LLJ-638) contended that BHEL Leave and Holiday Rules had to be read long with the appointment order of the respondent-workman and as per Rule 9.13 of the said Rules, if an employee remained absent from duty without leave for more than 15 consecutive days, he shall be presumed to have left the services of the company of his own accord without notice and his name will accordingly be stuck off the roll of the company. Therefore it has to be held that the termination of service of the workman was as a result of stipulation in that behalf contained in the appointment order itself and that was squarely covered by the exclusion clause contained in Section 2(00)(bb) of the Industrial Disputes Act, 1947, and hence the said action would not amount to retrenchment on the part of the petitioner. It is not possible to agree with the contention of Mr. Patel for the simple reason that the respondent's services were terminated and his name was struck off the record of employees with effect from 10th June 1980. At that time clause (bb) of Section 2(00) was not on the statute book. It was inserted by Amending Act 49 of 1984 with effect from 18th August 1984. When confronted with this situation Mr. Patel submitted that the said amendment is retrospective in nature. It is also not possible to agree with this contention for obvious reasons. Section 2(00) as it stood prior to 18th August 1984 read as under :

'2(00)' retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include :

(a) voluntary retirement of the workman; or

(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulations in that behalf; or

(c) termination of the service of a workman on the ground of continued ill-health'

The Supreme Court in a catena of decisions had interpreted these provisions to mean that termination of services of an employee for any reason whatsoever which was covered by any of the exclusion clauses (a), (b) and (c) in the aforesaid definition would amount to retrenchment. The path-breaking decision on the point was rendered in the case of State Bank v. N. S. Money, (1976-I-LLJ-478). Interpreting Section 2(00) as it stood prior to 18th August 1984 in the light of its relevant exclusion clauses, Krishna Iyer, J. speaking for the Supreme Court in the aforesaid decision, made the following pertinent observations in para 9 of the report (p. 482) :

'The key to this vexed question is to be found in Section 2(00) which reads as under. XXXXXXX For any reason whatsoever-very wide and almost admitting of no exception ..... To retrench is to cut down. You cannot retrench without trenching or cutting ..... Section 2(00) is the master of the situation and the Court cannot truncate its amplitude.'

In Para 10, it has been observed :

'A break down of Section 2(00) unmistakably expands the semantics of retrenchment 'Termination ... for any reason whatsoever' are the key words. Whatever the reason, every termination spells retrenchment. So, the sole questions is, has the employee's service been terminated. Verbal apparel apart, the substance is decisive. A termination takes place where a term expires either by the active step of the master or the running out of the stipulated term. To protect the weak against the strong this policy of comprehensive definition has been effectuated. Termination embraces not merely the act of termination by the employer, but the fact of termination, howsoever produced.'

This decision was consistently followed by the Supreme Court in the later decisions. A few of them may be mentioned at this stage,.

(1) Hindustan Steel v. State of Orissa, (1977-I-LLJ-I)

(2) Santosh Gupta v. State Bank of Patiala, (1980-II-LLJ-72)

(3) Management of K. S. R. T. Corporation v. M. Boraiah, (1984-I-LLJ-110)

(4) Mohanlal v. Management Bharat Electronics Ltd., (1981-II-LLJ-70)

In view of this constant trend of decisions of the Supreme Court interpreting the then existing provisions of the term 'retrenchment' as found in Section 2(00) the legislature intervened by enacting further exclusion clause, in the shape of clause (bb), It, therefore, becomes obvious that the legislature wanted to remedy the difficulty which was found in the then existing exclusion clauses (a), (b) and (c) in Section 2(00) and that is precisely the reason why a substantive provision excluding from the operation of term 'retrenchment' those actions which were covered by clause (bb) was enacted. It is impossible to hold that such a substantive exclusion provision was retrospective in nature. It is impossible that the legislature while enacting the said provision has not expressly made it retrospective.

6. Then remains the questions of its retrospectivity, if at all, by a necessary implication. In the settings of judicial history centering round interpretation of the then existing clauses of Section 2(oo) aforesaid, it cannot be said that sub-clause (bb) was retrospective even by necessary implication. It is now well settled that if the provision is merely declaratory, it may be retrospective. But if it is a remedial provision, it is prospective unless it is expressly made retrospective by the legislature, or it is to be so is prospective unless, it is expressly made retrospective by the legislature, or it is to be so held by necessary implication. In this connection, it is profitable to look at the decision of the Supreme Court in the case of Central Bank of India v. Their Workmen. (AIR) 1960 SC 12 which was cited by Mr. Patel for the petitioner in support of his contention. At page 27, it was observed in para 29 of the report that 'for modern purpose a declaratory Act may be defined as an Act to remove doubts existing as to the common law or the meaning or effect of any statute. Such Acts are usually held to be retrospective'. It has been observed that 'A remedial Act on the contrary, is not necessarily retrospective; it may be either enlarging or restraining and it takes effect prospectively, unless it has retrospective effect by express terms or necessary intendment'. It is clearly found on the facts of the present case that by inserting the sub-clause (bb) in the exclusion clauses of Section 2(oo) legislature wanted to restrict the meaning of the term 'retrenchment ' as interpreted by the Supreme Court in the light of the prior existing provisions of Section 2(00) defining the term 'retrenchment'. Consequently, such a substantive provision imposing additional restriction on the meaning of the term 'retrenchment' cannot be construed to be retrospective by necessary intendment. It being purely remedial measure and seeking to displace series of decisions of the Supreme Court on the point, must be held to be prospective in nature and will apply to only those terminations which take place after this provision was brought on the statute book. Contention No. 1 of Mr. Patel to the contrary is, therefore, rejected. Before parting with this discussion, it is profitable to mention that the Patna High Court has also taken the same view in the case of Arun Kumar v. Union of India, 1986 Lab. IC 251. We respectfully concur with the said view.

7. Contention No. 2 : So far as this contention is concerned, it must be noted that the petitioner did not submit before the Labour Court that the action of the petitioner in dispensing with the services of the respondent workman was not retrenchment as per unamended definition of the term of 'retrenchment' because it was a penal action. It is now well settled that a point, especially the point raising mixed question of law and facts, which is not canvassed before the lower authority cannot be raised for the first time before the High Court in proceedings under Art. 227 of the Constitution. If any authority were needed, it is supplied by a decision of the Division Bench of this Court in the case of G. M. D. C. v. Presiding Officer, Labour Court & Ors. 1986 (1) XXVII (1) GLR 410 which is its turn is based on a number of Supreme Court decisions on the point. It has also to be kept in view that whether the action of the petitioner in striking off the name of the respondent-workman from the muster-roll was penal in nature or not is a mixed question of law and facts. Such a contention having not been canvassed before the Labour Court and its decision having not been invited on the matter, cannot, therefore, be permitted to be raised for the first time before us.

8. However, even assuming that such a contention was open to the petitioner for being canvassed before us, it will not be of any avail to the petitioner for the simple reason that before the Labour Court, no request was made by the petitioner to justify its action by leading evidence as admittedly, no departmental inquiry or proceedings were held against the respondent for the alleged misconduct. It is now well settled by series of the decisions of the Supreme Court that if the action is found to be penal action and not backed up by any departmental proceedings or inquiry against the workman, it would be open to the management to justify its action by leading evidence before the Labour Court in reference proceeding. But in order that the management can do so, it will have to take up such plea in its written statement or statement of claim itself and if such plea is not taken up as aforesaid, it is not open to the management to justify its action by leading evidence later on in the subsequent stages of the litigation before the trial Court. In this connection, it would be apposite to refer to the decision of the Supreme Court in the case of Shambhu Nath v. Bank of Baroda. (1983-II-LLJ-415). A. Varadarajan, J. speaking for himself and O. Chinnappa Reddy, J, there being no dissent from D. A. Desai, J., made the following observations in para 12 of the report.

'We think that the application of the management to seek the permission of the Labour Court or Industrial Tribunal for availing the right to adduce further evidence to substantiate the charge or charges framed against the workman referred to in the above passage is the application which may be filed by the management during the tendency of its application made before the Labour Court or Industrial Tribunal seeking its permission under Section 33 of the Industrial Disputes Act. 1947 to take a certain action or grant approval of the action taken by it. The management is made aware of the workman's contention regarding the defect in the domestic enquiry by the written statement of defence filed by him in the application filed by the management under Sect. 33 of the Act. Then, if the management chooses to exercise its right it must make up its mind at the earliest stage and file the application for that purpose without any unreasonable delay. But when the question arises in a reference under Section 10 of the Act after the workman had been punished pursuant to a finding of guilt recorded against him in the domestic enquiry there is no question of the management filing any application for permission to lead further evidence in support of the charge or charges framed against the workman, for the defect in the domestic inquiry is pointed out by the workman in his written claim statement filed in the Labour Court or Industrial Tribunal after the reference had been received and the management has the opportunity to look into that statement before it files, its written statement of defence in the enquiry before the Labour Court or Industrial Tribunal and could make the request for the opportunity in the written statement itself. If it does not choose to do so at that stage it cannot be allowed to do it at any later stage of the proceedings by filing any application for the purpose which may result in delay which may lead to wrecking the morale of the workman and compel him to surrender which he may not otherwise do.'

In view of this settled legal position, therefore, it must be held that the petitioner-management should have at the earliest pointed out in its written statement before the Labour Court that it wanted to lead evidence to justify the action against the respondent-workman on the ground that he had committed misconduct by remaining absent without leave. Mr. Patel for the petitioner fairly stated that in the written statement, no such request was made. It is also pertinent to note that even in the later part of proceedings, no separate request was made by the management to lead evidence to justify its action on the ground that it was a penal action. Whatever evidence was led was with a view to justifying termination in the light of the contest which was put forward by the respondent-workman on the ground that termination is violative of Section 25F of the I.D. Act and it is in this context that the entire controversy was examined and decided by the Labour Court. For all the reasons, therefore, it is now too late in the day for the petitioner to turn round and submit before us for the first time that the action of the petitioner in discharging services of the respondent was based on the misconduct of the respondent and was a penal action and, therefore, it was not retrenchment within the meaning of Section 2(oo) of the said Act as it stood at the relevant time. On facts it must be held that the only controversy between the parties before the Labour Court was whether the impugned motion was violative of Section 25F or not and as it is found, as a matter of fact, that it was so violative, it was rightly held to be illegal and void by the Labour Court. The second contention of Mr. Patel, therefore, cannot be accepted and stands rejected Before parting with a discussion on this contention, we may also refer to one additional important aspect of the matter which was pressed in service by the learned Advocate for this petitioner. Placing reliance on decisions of the Bombay High Court in the case of Managing Director v. Babasaheb Devgonda Patil. 1988 Lab. IC 288, it was submitted that when the workman remained absent without leave for number of years, he must be said to have abandoned the service voluntarily, and in the present case also similar is the situation and; therefore, we must hold that there was no question of retrenching the workman when his name was removed from the muster-roll. It is not possible to agree with this contention of Mr. Patel. Reasons are obvious. Firstly such a contention was never canvassed before the Lower Court. This contention which is essentially linked up with facts - as to whether the workman remained absent without leave continuously with an intention to abound on the service or not-raises disputed question of fact. Such a contention cannot be permitted to be raised for the first time before us in the present proceedings under Art. 227 of the Constitution. Secondly even otherwise, the decision in the case of Babasaheb Devgonda Patil (supra) also cannot be of any avail to Mr. Patel, for the simple reason that before the Bombay High Court the facts were that the workman concerned had remained absent without leave for 3 years continuously. The workman had not asked for leave nor did he care to explain his absence. It is in the background of these peculiar facts that Puranik, J. of the Bombay High Court came to the conclusion that the workman can be said to have abandoned the service voluntarily, and therefore, there was no question of retrenching him. The facts of the present case are quite different. The Tribunal has noted the relevant facts leading to these proceedings. We have also made a reference to them. On the facts of the present case, it cannot be said that removal of the name of the workman from the muster-roll was a formality as found in the Bombay case Consequently, the said decision cannot be pressed in service by Mr. Patel for the petitioner. The second contention of Mr. Patel, therefore, stands rejected.

9. Contention No. 3 : That takes us to the last contention canvassed by Mr. Patel. So far as this contention is concerned. Mr. Patel is on still weaker footing. It is now well settled that once the action of the management is held to be violative of Section 25F of the Act, the action must be treated to be void, with the result that the workman has to be held to have continued in service. This is not because of any order of reinstatement of dismissed employee under Section 11A of the Act. That provision will apply if it is held that dismissal order was too harsh a penalty on the facts as found on record and was to be substituted by any lesser penalty which the Labour Court may impose in exercise of its power under Section 11A. Once Section 25F is found to have been violated, the whole action becomes non-est, with the result that the declaration has to be given that the workman concerned has continued in service of the employer, void termination order as hit by Section 25F notwithstanding. In this connection, we may refer to a decision of the Supreme Court in the case of Mohan Lal v. Management of Bharat Electronics Ltd. (supra) D. A. Desai, J. speaking for the Supreme Court in that decision in terms repelled a similar contention as canvassed by Mr. Patel before us. In that case, it was found that the termination was violative of Section 25F of the Act. Having as found. It was held that as precondition for a valid retrenchment had not been satisfied. The termination of service was ab initio void, invalid and inoperative and, therefore, it must be held that he was in continuous service. Thereafter, the third contention of management regarding reinstatement of the workman was examined and in that connection, following pertinent observations were made in para 17 of the report (pp. 78-79) :

'17. The last submission was that looking the record of the appellant this Court should not grant, reinstatement but award compensation. If the termination of service is ab initio void and inoperative, there is no question of granting reinstatement because there is no cessation of service and a mere declaration follows that he continues to be in service with all consequential benefits. Undoubtedly in some decisions of this Court such as Ruby General Insurance Co. Ltd. v. P. P. Chopra. (1970-I-LLJ-63) and Hindustan Steel Ltd. Rourkela v. A. K. Roy. (1970-I-LLJ-228) it was held that the Court before granting reinstatement musts weigh all the facts and exercise discretion properly whether to grant reinstatement or to award compensation. But there is a catena of decisions which rule that where the termination is illegal specially where there is an ineffective order of retrenchment, there is neither termination nor cessation of service and a declaration follows that the workman concerned continues to be in service with all consequential benefits. No case is made out for departure from this normally accepted approach of the Courts in the field of social justice and we do not propose to depart in this case.'

We may refer to a decision of the Supreme Court on which strong reliance was placed by Mr. Patel for the petitioner in support of his third contention. In the case of Binny Ltd. v. Workmen. (AIR) 1973 SC 1403 the Supreme Court was concerned with a fact situation where a departmental inquiry was held by the management on the charge of illegal absence of the workman from duty contrary to Standing Order 8(ii) of the Standing Orders. After the departmental inquiry, the workman was held to have violated Standing Order 8(ii) by absenting himself without leave for 8 consecutive working days and on that basis, his services were terminated. The workman raised an industrial dispute. The Labour Court ultimately came to the conclusion that on facts the management was not justified in revoking the leave which was already granted. In these circumstances, the Labour Court directed reinstatement of workman. But in view of the fact that he had obtained leave on false pretext granted only a consolidated compensation of Rs. 5,000/- as back wages. It is this award which was challenged by the company in the Supreme Court. The Supreme Court in the light of the aforesaid facts situation came to the conclusion. While negativing the order contention on behalf of the management, that the management could possibly have no confidence in the workman and therefor should not be required to reinstate the workman, was a valid contention and on that basis. The Supreme Court set aside the order of reinstatement and awarded compensation to the workman instead. We fail to appreciate how that decision can be of any avail to Mr. Patel. As observed earlier, in the present case, termination has been found to be void as being violative of Section 25F of the I.D. Act, No inquiry was held by the management for the alleged misconduct of the workman. Therefore, this is not a case in which powers under Section 11A could have been invoked by the Labour Court. This was a case in which the termination is found to be null and void and accordingly, strictly speaking, there was no question of reinstatement but only a declaration that the respondent workman had continued in service de hors the termination which was found to be violative of Section 25F. The fact situation in the present case is squarely covered by the decision of the Supreme Court in the case of Mohanlal (supra) and the decision of the Supreme Court in Binny's case (supra) is clearly distinguishable on facts and hence the ratio of that decisions is not at all attracted on the facts of the present case. Consequently, even the third contention has no substance and has to be rejected.

10. Before parting with the aforesaid contention, we may also mention that even assuming that the Labour Court's decision arose from the provisions of Section 11A of the I.D. Act, even then, it remains purely a discretionary order Looking to the facts and circumstances of the case the Labour Court has granted reinstatement to the workman but has given him back wages only from 4th October 1985 till reinstatement and that too only 25% of back wages. The workman has been deprived of 100% back wages from the date of his alleged termination i.e. 10th June, 1980 till 4th October 1985 and has been deprived of 75% of back wages from that date till reinstatement. All the peculiar facts of this case have been considered in para 13 of the judgment of the Labour Court and accordingly, the aforesaid order has been passed. It is well settled that Section 11A orders are purely discretionary in nature and cannot be interfered with in proceedings under Art 227 of the Constitution. In the case of Jitendra Singh v. Shri Baidyanath Ayurved Bhawan Ltd. (1984-II-LLJ-10) the Division Bench of the Supreme Court consisting of D. A. Desai and Ranganath Misra. JJ. had occasion to examine this very question. The following pertinent observations were made by the Supreme Court speaking through Ranganath Misra. J. in the said decision (p.11) :

'Under Section 11A of the Act advisedly wide discretion has been vested in the Tribunal in the matter of awarding relief according to the circumstances of the case. The High Court under Art. 227 of the Constitution does not enjoy such power though as a Superior Court, it is vested with the right of superintendence. The High Court is indisputably entitled to scrutinies the orders of the subordinate Tribunals within the well accepted limitations and therefore, it could in an appropriate case quash the award of the Tribunal and thereupon remit the matter to it for fresh disposal in accordance with law and direction if any. The High Court is not entitled to exercise the powers of the Tribunal and substitute an award in place of the one made by the Tribunal as in the case of an appeal where it lies to it.'

In our view, on the facts of the present case. It cannot be said that the exercise of discretion by the Labour Court in directing reinstatement of the respondent-workman with 25% back wages not from the date of termination which was 10th June 1980 but from 4th October 1985 i.e. after 5 years and four months of termination till reinstatement and that too at the rate of 25% was in any way perverse or uncalled for from any angle. It is purely a discretionary order which cannot be interfered with in the present proceedings. Consequently even the last contention of Mr. Patel fails and is rejected.

11. These were the only contentions canvassed in support of the petition and as there is no substance in any of them the result is that the petition fails and is summarily rejected.

12. Hearing the request of Mr. Patel for the petitioner and having heard the learned Advocate for the respondent, we direct that the order of reinstatement as passed by the Presiding Officer of the Labour Court, Surat on 6th May 1988 shall remain stayed upto 30th September 1988 on condition that petitioner pays full salary to the respondent from 15th July 1988 (which is the date on which one month's period from the publication of the award dated 15th May 1988 expired) till 30th September 1988, to enable the petitioner to prefer appeal to the Supreme Court against the present order. This amount will be paid within ten days from today to the respondent. If it is not paid the present stay order would stand vacated. It is also clarified that we do not grant any stay of direction of payment of back wages as contained in the order of the Labour Court, Surat ordering back wages of 25% from 4th October 1985.