1999 Supreme(SC) 711

1999(6) Supreme 104
Supreme Court of India
(From Bombay High Court)
S.B. Majmudar and S.S. Mohammed Quadri, JJ.
M/s. Lokmat Newspapers Pvt. Ltd. -Appellant
versus
Shankarprasad -Respondent
Civil Appeal No. 3826 of 1999
(@ SLP (C) No. 9899 of 1997)
Decided on 19-7-1999
Counsel for the Parties :
For the Appellant : H.W. Dhade, Sr. Advocate, Manish Pitale, A.K. Sanghi, Advocates.
For the Respondent : S.D. Thakur, Ms. Chandan Ramamurthi, Advo­cates.

Important points
1. Closure of conciliation proceedings under Section 12 of I.D. Act does not automatically amount to termination of conciliation proceedings; conciliation proceedings would terminate only as provided by Section 20(2)(b) of the Act, meaning thereby, till the failure report reaches the appropriate State Government, conciliation proceedings cannot be said to have terminated.
2. Where on very date of closure of conciliation proceedings, workman was terminated without permission of Conciliation Officer it amounted to violation of Section 33(1) of I.D. Act.
3. Introduction of rationalised scheme by itself would amount to alteration of condi­tions of service of the workmen to their prejudice. It, therefore, follows that before effecting such a change, meaning thereby, before introducing such a rationalisation scheme which has a tendency to change the conditions of service of workmen, notice under Section 9-A as a condition precedent becomes a must.
4. The word ‘discharge’ as employed by the Legislature in item No. 1 of Schedule IV of the Maharashtra (Recognition of Trade Unions and Prevention of Unfair Labour Practices) Act cannot necessarily be confined only to punitive discharges; order of discharge whether punitive or non-punitive if found to be the result of undue haste on the part of the employer, the inevitable result will be that the employer would be guilty of ‘unfair labour practice’ as laid down by Schedule IV item No. 1 clause (f) second part.

Headnote:(i) Letters Patent Appeal-Main­tainability of-Writ petition chal­lenging dismissal of complaint of unfair labour practice under Section 18 of Maharashtra (Recogni­tion of Trade Unions & Preven­tion of Unfair Labour Practices) Act, 1971-Dismissal holding retrenchment did not amount to unfair labour practice-Letters patent appeal invoking Articles 226 and 227-Plea of management that letters patent appeal not maintainable as Single Judge exercised his jurisdiction under Article 227-Not tenable-Order of Single Judge show­ed that he was exercising writ petition moved under Article 226 as well as 227-Letters patent appeal was rightly entertained.

       Held : The learned Single Judge dismissed the said Writ Petition, but his order itself shows that he was considering the Writ Petition of the respondent which was moved before him invoking the High Court’s Jurisdiction under Articles 226 and 227 of the Constitu­tion of India. In the said Writ Petition under Arti­cles 226 and 227 of the Constitution, the respondent requested the High Court to call for the record and proceedings of Revision Petition No. 70 of 1990 and after perusal thereof to be further pleased to quash and set aside the Order dated 30.1.1990 passed by the Second Labour Court, Nagpur in Complaint No. 262 of 1982 and order dated 20.11.1990 passed in Revision by the Industrial Court. In para 9 of the Writ Petition, it was averred that the impugned orders of the Courts below had further resulted in infraction of his fundamental rights guaranteed to him under Articles 14, 21 and other Articles as enshrined in the Constitu­tion of India. It is, therefore, obvious that the Writ Petition invoking juris­diction of the High Court both under Articles 226 and 227 of the Constitution had tried to make out a case for High Court’s interfer­ence seeking issuance of an appropriate Writ of Certiorari under Article 226 of the Constitution of India. Basic averments for invoking such jurisdiction were already pleaded in the Writ Petition for High Court’s consideration. It is true, as submitted by learned counsel for the appellant, that the order of the learned Single Judge nowhere stated that the Court was considering the Writ Petition under Article 226 of the Constitution of India. It is equally true that the learned Single Judge dismissed the Writ Petition by observing that the Courts below had appreciated the contentions and rejected the complaint. But the said observation of the learned Single Judge did not necessarily mean that the learned Judge did not inclined to interfere under arti­cle 227 of the Constitution of India only. The said observation equal­ly supports the conclusion that the learned Judge was not inclined to interfere under Articles 226 and 227. As seen earlier, that he was considering the aforesaid Writ Petition moved under Articles 226 as well as 227 of the Constitution of India. Under these circumstances, it is not possible to agree with the contention of learned counsel for the appellant that the learned Single Judge had refused to interfere only under Article 227 of the Constitution of India when he dismissed the Writ Petition of the respondent. (Paras 14, 15 & 16)

       It was open to the respondent to invoke jurisdiction of the High Court both under Articles 226 and 227 of the Constitution of India. Once such jurisdiction was invoked and when his Writ Petition was dismissed on merits, it cannot be said that the learned Single Judge had exercised his jurisdiction only under Article 226 of the Constitution of India. This conclusion directly flows from the rele­vant averments made in the Writ Petition and the nature of jurisdic­tion invoked by the respondent as noted by the learned Single Judge in his Judgment, as seen earlier. Consequently, it could not be said that Clause 15 of the Letters Patent was not attracted for preferring appeal against the judgment of learned Single Judge. lt is also neces­sary to note that the appellant being respondent in Letters Patent Appeal joined issues on merits and did not take up the contention that Letters Patent Appeal was not maintainable. For all these reasons, therefore, the primary objection to the maintainability of the Letters Patent Appeal as canvassed by learned counsel for the appellant, has to be repelled. (Para 16)

       (ii) Industrial Disputes Act, 1947-Section 33(1) r/w Sections 9A and 12(4)-Bar to change conditions of service etc.-Violation of-Notice under Section 9A issued by management was challenged and conciliation failed - Conciliation clos­ed-On very day manage­ment terminated workmen without obtaining permission from Concil­ia­tion Officer-Workmen’s stand Sec­tion 33(1) stood violated-Man­age­­ment’s plea that conciliation stood terminated and as such permission not required - Not tenable-On closure of conciliation proceedings conciliator does not become functus officio - Closure does not amount to termination of proceedings-Under Section 20(2) conciliation proceeding is deemed to have concluded only when failure report is received by appropriate Government.

       Held : A mere look at Section 12(4) of I.D. Act shows that if the Conciliation Officer finds during conciliation proceedings that no settlement is arrived at between the disputing parties, then after closing the investigation he has, as soon as practicable, to send to the appropriate Government a full report setting forth the steps taken by him for ascertaining the facts and circumstances relating to the dispute and has also to men­tion all other details as required to be mentioned in the report under Section 12(4) of the I.D. Act. The aforesaid statutory requirements leave no room for doubt that after closing the investigation and after having arrived at the con­clusion that no settlement is possible between the parties, the Con­ciliation Officer has to spend some more time before submitting his detailed written report about failure of consideration for informa­tion and necessary action by the State Government. In the very nature of things, therefore, such requirement will take at least a couple of days, if not more, for the conciliator after closing the investigation to enable him to send an appropriate report to the State Government. It is, therefore, obvious that on 22.6.1982 when by 4.35 p.m. the Conciliation Officer declared that settlement was not possible between the parties and he closed the investigation, neither his statutory function did not come to an end nor did he become functus officio. His jurisdiction had to continue till he submitted his report as per Section 12(4) to the appropriate Government. Even such preparation of the report and sending of the same from his end to the appropriate Government would obviously have taken at least a few days after 22.6.1982. It must, therefore, be held that the conciliator remained in charge of the conciliation proceedings at least for a couple of days after 22.6.1982. It is, therefore, difficult to appreciate how within half an hour after the closing of investigation by the concili­ator and before his getting even a breathing time to prepare his detailed written report about failure of conciliation to be sent to the Government as per Section 12(4), the appellant could persuade itself to presume that conciliation proceedings had ended and, there­fore, it was not required to follow the procedure of Section 33(1) and straightaway could pass the impugned order of retrenchment within 25 minutes of the closing of the investigation by the conciliator on the very same day. It is difficult to appreciate the reasoning of the Labour Court that after the closer of investigation the conciliator became functus officio and the management could not have approached him for express written permission to pass the impugned order. It is easy to visualise that even on the same day i.e. on 22.6.1982 or even on the next day, before the conciliator had time even to start writing his report, such an express permission could have been asked for by the appellant as the conciliator by then could not be said to have washed his hand off the conciliation proceedings. He remained very much seized of these proceedings till at least the time the report left his end apart from the further question whether conciliation proceedings could be said to have continued till the report reached the State Government. Thus; on the express language of Section 12(4) the conclusion is inevitable that closer of investigation by 4.35 p.m. on 22.6.1982 did not amount to termination of conciliation proceedings by that very time. The argument of learned counsel for the appellant was that closer of investigation automatically amounted to termination of conciliation proceedings. This argument proceeds on a wrong premise that closer of investigation by the conciliator is the same as closer of conciliation proceedings. The legislature while enacting Section 12(4) has deliberately not used the words ‘closer of conciliation’ but, on the contrary, provided that after closer of investigation something more was required to be done by the conciliator as laid down under Section 12(4) before he can be said to have done away with conciliation proceedings earlier initiated by him. (Paras 24 and 25)

       Further a mere look at Section 20(2) shows that the legislature has introduced by way of legal fiction an irre­butable presumption as per sub-clause (b) of Section 20(2) that when during conciliation proceedings no settlement is arrived at between the parties, the conciliation proceedings shall be deemed to have conclud­ed when the failure report of the Conciliation Officer is received by the appropriate Government. Consequently, the legislative intention becomes clear that conciliation proceedings initiated under Section 12(1) whether of a discretionary nature or of a mandatory nature shall be treated to have continued and only to have concluded when the failure report reaches the appropriate Government. As noted earlier, it is not in dispute between the parties that after the closer of investigation on 22.6.1982 when the conciliator sent the failure report, it reached the State Government only on 13.8.1982. Therefore, it has to be held that the conciliation proceedings in the present case had not got terminated and got concluded only on 13.8.1982 as per the aforesaid statutory presumption created by the legal fiction provided in Section 20(2)(b). Therefore, as a necessary corollary, it must be held that these conciliation proceedings were pending till 13.8.1982. It is axiomotic that conciliation proceedings which are deemed not to have concluded must be deemed to have continued or remained pending. That which is not concluded is pending, equally that which is pending cannot be said to be concluded. (Para 26)

       Section 20(2) has created an irrebuta­ble presumption by way of legal fiction and that presumption covers the very question as to when conciliation proceedings once commenced can be said to have concluded. In other words, when they can be said to have not remained in pending. As seen earlier, the legal fiction which is created for that purpose by Section 20(2) has to be given its full effect. As it is well-settled while giving effect to the legal fiction for the purpose for which it is created by Legislature it has to be given full play for fructifying the said legislative intention. We cannot allow our imagination to boggle on that score. Legal fiction created by Section 20(2) is for the purpose of laying down as to till what stage conciliation proceedings can be said to be pending and when they can be said to have concluded. On that basis if it is held that conciliation proceedings once validly started under Section 12(1) of the I.D. Act can by way of an irrevocable presumption be treated to have continued till the failure report reached the appropriate Government, during the inter­regnum of necessity such conciliation proceedings have to be treated as pending before the conciliation officer. (Para 28)

       Conciliation proceedings would terminate only as provided by Section 20(2)(b) of the Act. Meaning thereby, till the failure report reaches the appropriate State Government, conciliation proceedings cannot be said to have terminated. Hence, breach of Sec­tion 33(1) during the pendency of such proceedings could attract penal liability of the employer under Section 31(1) of the Act. (Para 28)

       (iii) Industrial Disputes Act, 1947 - Section 9A - Notice of change-Point of time to issue-Notice must precede introduction of rationali­sation/proposed change.

       Held : A mere look at Section 9A shows that if an employer proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Sched­ule, such change has to be preceded by the procedure laid down in the said section. So far as item Nos. 1-9 and 11 of Fourth Schedule are concerned, it becomes obvious that before any such change in conditions of service of the workmen is to be effected, as a pre-condition for such pro­posed change, notice under Section 9-A has to be issued; without complying with such a pre-condition of notice, proposed change would not legally come into operation. We are directly concerned with item No. 10 of this Schedule. It, therefore, becomes obvious that before any rationalisation, standardisation or improvement of plant or technique is to be resorted to by any management if by such an exercise retrenchment of workmen is likely to result, then before introducing such rationalisation, standardisation or improve­ment of plant or technique, as the case may be, a prior notice under Section 9-A is to be issued to the workmen who can get an opportunity to show that they may not be retrenched because of the new scheme of rationalisation etc. which is in the offing and can suggest ways and means available to the management to avoid such proposed retrenchment of the workmen despite such introduction of a new scheme. Consequently, it must be held on the very wordings of Section 9-A read with item No. 10 of Fourth Schedule “that any management which seeks to introduce a new working pattern for its existing work force by any future scheme of rationalisation, standardisation or improvement of plant or technique which has a tendency to lead to future retrenchment of workmen” has to give prior notice of proposed change. Therefore, it must be held that notice under Section 9-A must precede the introduction of rationalisa­tion concerned, it cannot follow the introduction of such a rationali­sation. (Paras 30 and 31)

       Introduction of rationalised scheme by itself would amount to alteration of condi­tions of service of the workmen to their prejudice. It, therefore, follows that before effecting such a change, meaning thereby, before introducing such a rationalisation scheme which has a tendency to change the conditions of service of workmen, notice under Section 9-A as a condition precedent becomes a must. If the proposed scheme of rationalisation has a likelihood of rendering existing workmen surplus and liable to retrenchment, then item No. 10 of Schedule IV would squarely get attracted and would require as a condition precedent to introduction of such a scheme a notice to be issued under Section 9-A by the manage­ment proposing such an introduc­tion of the scheme of rationalisation. (Para 34)

       In the present case, it is not in dispute between the parties that in the composing department of the appellant where the respondent was working, composing work was earlier being done by hand i.e. manu­ally. That was the existing condition of service of the respondent. By substitution of that type of work by mechanical work having resort to photo type composition through machine, the then existing service condition of the respondent was bound to be affected adversely. Conse­quently, before introducing such a change in the condition of service of the respondent by installing photo type composing machine, intro­duction of which was directly likely to lead to retrenchment of the respondent, a notice under Section 9-A was a must before commissioning such a photo type machine at the work place of the appellant. In view of the aforesaid settled legal position, there is no escape from the conclusion that the impugned notice dated 25th March, 1982 under Section 9-A which was issued long after the actual instal­lation of the photo composing machine had fallen foul on the touch­stone of Section 9-A read with Schedule IV Item No. 10. The im­pugned termination or discharge of the respondent was violative of the provisions of Section 9-A of the I.D. Act and he was discharged from service without the appellant’s following the mandatory requirements of Section 9-A of the I.D. Act. Effect of non-compliance of Section 9-A of the I.D. Act renders the change in conditions of service void ab initio. (Paras 31 & 35)

       (iv) Industrial Disputes Act, 1947 -Section 25F r/w Section 9A- Re­trenchment-Notice of rationalisation issued after rationalisa­tion brought into effect-Retrenchment thereafter pursuant to notice under Section 9A-Not valid-Notice under Section 9A must precede proposed change-Change in conditions of service void ab initio-Retrenchment void. (Paras 34 and 35)

       (v) Maharashtra (Recognition of Trade Unions & Prevention of Unfair Labour Practices) Act, 1971-Sections 28 and Schedule IV, item 1(a) and (b)-Unfair labour practice -Victimisation-Management want­ed to switch over to process of composing by photo type-setting-Hand composing workmen became surplus-Termination of service-Work­mens’ plea that they were victimised falling within item 1(a) of Schedule IV-Not tenable-Action of management cannot be treated as victimisation-Clause (a) and (b) of item 1 of Schedule IV not attrac­ted. (Para 41)

       (vi) Maharashtra (Recognition of Trade Unions and Prevention of Unfair Labour Practices) Act, 1971 -Section 28 r/w Schedule IV, item 1(a), (b), (d) and (f)-Section 9A r/w Section 33(1) of Industrial Disputes Act, 1947-Unfair labour practice - Management switched over to pro­cess of composing by photo type setting-Hand compos­ing workmen became surplus-Surplus workmen sought to be transferred to another unit in new place-Transfer held to be unfair labour practice-Subsequent notice under Section 9A of I.D. Act-Notice challenged and conciliation failed-Workmen were terminated on very day of closure of conciliation proceedings without permis­sion of Conciliation Officer-Work­men’s plea that termination order amounted to unfair labour practice falling within clauses (a), (b), (d) and (f) of item 1 to Schedule IV-Held, clauses (a) and (b) not attracted but case fell within clause (f)-Order of discharge was result of undue haste-Management guilty of unfair labour practice.

       Held : The appellant wanted to switch over to the process of composing by utilising photo type-setting machine and in the process the hand composing department engaging respondent and other workmen had to be wound up. That naturally re­sulted in the employees in the erstwhile hand composing department becoming excess and surplus. That is the reason why impugned notice under Section 9-A of the I.D. Act was issued to the respondent and other workmen and ultimately resulted in the impugned retrenchment order. It is difficult to appreciate how such an action on the part of the appellant can be treated to have been the result of victimisation. The respondent was not being victimised for any extraneous reason. On the contrary, it was based on a genuine factual reason. Hence clause (a) of item No. 1 of Schedule IV is out of picture. (Para 41)

       It cannot be gainsaid that the appellant had good reason to discharge the respondent who was rendered surplus in hand composing department because of the introduc­tion of the machine in question. It is difficult to impute any bad faith to the appellant as the appellant tried its best to provide alternative job to the respondent at Jalgaon but the said offer was not accepted by the respondent and, on the contrary, the transfer order was got declared illegal and an act of ‘unfair labour practice’ in proceedings culmi­nating before the Tribunal. Clause (b) of item No. 1 of Schedule IV, therefore, is also not attracted on the facts of the present case. (Para 44)

       The appellant had a genuine reason for terminating the services of the respondent as hand composi­tion department had become redundant on account of the introduction of the machine in question. It is true, as submitted by learned counsel for the respondent, that the impugned retrenchment order dated 22.6.1982 showed that the management, as per notice under Section 9-A, had noted that it may require to reduce 25 workmen from service for the purpose of introducing new technology. It is also true that the new technology was already introduced by the management months prior to the day of the termination order dated 2nd June, 1982, to be pre­cise from January, 1981 on an experimental basis as submitted by learned counsel for the appellant and on regular basis at least from November, 1981. Still it cannot be held that the proposed termination was not based on real reason or was effected on patently false rea­sons. If no such machine was ever introduced and still such a ground was made out for passing the impugned order, then it could have been said that the impugned termination was passed on patently false rea­sons. The patently false reason would be one which has no existence at all in fact and is a mere pretext or an excuse. Such is not the situa­tion in the present case. It may be that the reason given may not be strictly accurate in the sense machine was already introduced and was not likely to be introduced by the time notice under Section 9-A was given followed by the impugned termination order. That may have effect of non-compliance of the provisions of Section 9-A. The said notice, as we have seen earlier, on that score may become inoperative or illegal. Still the reason for termination cannot be said to be pat­ently false. We, therefore, disagree with the conclusion of the Divi­sion Bench of the High Court in view of our aforesaid findings regard­ing non-applicability of clauses (a), (b) & (d) of item 1 of Schedule IV. (Para 45)

       However, order of discharge whether punitive or non-punitive if found to be the result of undue haste on the part of the employer, the inevitable result will be that the employer would be guilty of ‘unfair labour practice’ as laid down by Schedule IV item No. 1 clause (f) second part. (Para 46)

       The conciliation proceedings had not terminated when the impugned order was passed. The result was that Section 33(1) got violated and the appellant became liable to be punished as per Section 31(1) of the I.D. Act incurring a penalty for being convicted of an offence punishable with imprisonment for a term which may extend to 6 months or with fine or with both. Thus the impugned order cannot, but be held to have been passed with undue haste. The intention behind passing such a hurried order was obviously to cut across and pre-empt the submission of failure report by the conciliator on the one hand and its consideration by the State on the other and even for avoiding the future possibility of a reference under the I.D. Act and also the future possibility of the Court’s intervention by way of interim relief against such order. But to crown it all by such undue hurry the appellant made itself liable to be punished and incurred a criminal liability for the same. All these consequences unequivocally project only one picture that the impugned order was passed in a great hurry and with undue haste. This conclu­sion is inevitable on the aforesaid facts which have remained well established on the record of the present case. Consequently, agreeing with the view of the Division Bench in the impugned judgment it must be held that the respondent’s complaint was well sustained at least under clause (f) second part of item 1 of Schedule IV and as the impugned order was passed with undue haste the inevitable result is that by the said act the appellant is liable to be treated as guilty of ‘unfair labour practice’. (Para 47)

       Held, consequently, the appellant has to be asked to withdraw such ‘unfair labour practice’, meaning thereby, the impugned order has to be set aside and, thereafter, affirmative action including reinstatement of the employee with or without back-wages could be ordered by the Labour Court in these proceedings. (Para 50)

       (vii) Maharashtra (Recognition of Trade Unions and Prevention of Unfair Labour Practices) Act, 1971 -Section 28 and Schedule IV, item 1(a) to (g)-Unfair labour practice-‘Discharge or dismissal’ connota­tion of-Discharge and dismissal as employed in item No. 1 of Schedule IV cannot necessarily confined only to punitive dis­charge-Order of discharge whether punitive or not if found to be result of undue haste it amounts to unfair labour practice.

       Held : An employee who makes a grievance against order of discharge or dismissal passed against him can invoke any of the listed clauses (a) to (g) of item No. 1 of Schedule IV. First it should be alleged by the complainant-employee that he was discharged or dismissed from service by the employer and then he has to further show whether such an order attracted any of the clauses (a) to (g) of item No. 1 of Schedule IV. (Para 37)

       When we have a close look at clauses (a) to (g) of item No. 1 of Schedule IV, we find that the word ‘discharge’ is not intended by the Legislature to have the same or analogous meaning as the word ‘dismiss’. The reason is obvious. The word ‘dismiss’ necessarily connotes an action of the employer who seeks to impose punishment on his mis-conducting employee. Such a punishment cannot be imposed without following the principles of natural justice and the relevant applicable rules of domestic in­quiry. But the word ‘discharge’ is not necessarily confined to orders of termination by way of penalty only. The word ‘discharge’ has wider connotations. A mis-conducting employee facing charges in a domestic inquiry may be punished by way of imposing on him an order of dismiss­al which may make him ineligible for any other employment but if it is found that the charges which are proved are not that serious but the employee would not deserve to be continued in service then an order of discharge by way of lesser penalty can be imposed on him. Such an order would remain a punitive discharge. Thereby the employer wants to punish the employee for his misconduct but does not want him to become ineligible for employment elsewhere considering less serious nature of proved charges of misconduct against him in domestic inquiry. But that is not the end of the matter. In service jurisprudence the term ‘discharge’ has assumed a wider connotation and may include in its fold not only punitive discharge orders but also simpliciter dis­charge orders where the employer seeks to snap the relationship of employer and employee but without any intention to penalise the em­ployee. He does so because of exigencies of service and employment conditions which may require him to say goodbye to the employee but without any intention to punish him. The word ‘discharge’ as employed by the Legislature in item No. 1 of Schedule IV of the Maharashtra (Recognition of Trade Unions and Prevention of Unfair Labour Practice) Act cannot necessarily be confined only to punitive discharges. (Para 37)

       When the Legislature used the words ‘discharge’ or ‘dismissal’ of the employees under circumstances enu­merated in clauses (a) to (g) in Item No. 1 of Schedule IV it contem­plated dismissal orders which obviously are penal in nature but it also contemplated discharge orders which may either be penal or non-penal in nature and still if any of the relevant clauses of item No. 1 got attracted in connection with such discharge orders they would make the employer, author of such discharge orders answerable for the alleged ‘unfair labour practice’ permeating the passing of such simpliciter discharge orders. (Para 38)

       The words ‘discharge’ and ‘dismissal’ as employed by the Legislature in item No. 1 of Schedule IV covered different types of situations and circumstances under which they are passed. It is, therefore, not possible to agree with the submission of learned senior counsel for the appellant that unless the respondent shows that he was discharged by way of penalty, he cannot invoke any of the clauses of item No. 1 of Schedule IV. (Para 39)

       Order of discharge whether punitive or non-punitive if found to be the result of undue haste on the part of the employer, the inevitable result will be that the employer would be guilty of ‘unfair labour practice’ as laid down by Schedule IV item No. 1 clause (f) second part. (Para 46)