1. Employment termination under company standing orders — Challenge to validity of termination and applicability of standing orders — Petition under Article 226 of the Constitution. (Para 1 , 2 )
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1958 Supreme(SC) 52
SUPREME COURT OF INDIA
11th April 1958.
S.R. DAS, C.J.I., T.L. VENKATARAMA AYYAR, S.K. DAS, P.B. GAJENDRAGADKAR AND VIVIAN BOSE, JJ.
Nagpur Electric Light & Power Co., Ltd. and others, Appellants
Versus
K. Shreepathirao, Respondent.
Civil Appeal No.5 of 1958.
Advocates appeared
Mr. M. C. Setalvad, Attorney-General of India and Mr. B. Sen, Sr. Advocate (M/s. D. B. Padhye and I. N. Shroff, Advocates with them), for Appellants; Mr. R. V. S. Mani, Advocate, for Respondent.
Advocates:
B.SEN, B.V.S.Mani, D.B.PANDYA, I.M.SHROFF, M.C.SETALVAD
B.SEN, B.V.S.Mani, D.B.PANDYA, I.M.SHROFF, M.C.SETALVAD
Standing Orders must be construed to include all employees per statutory obligations. A requirement in a definition clause (e.g., possessing a ticket) is not an essential characteristic if the context indicates a distinction between a general class of employees and a specific subclass of workmen.
Headnote:(A) Industrial Employment (Standing Orders) Act, 1946 and Central Provinces and Berar Industrial Disputes Settlement Act, 1947 - Interpretation of "employee" and "workman" in Standing Orders - Whether the requirement of having a ticket number in the departmental muster is an essential characteristic of an employee - If the Standing Orders distinguish between a larger group of employees and a smaller group of workmen, the requirement of a ticket applies only to the latter - A definition clause must be read in the context of the entire document and the statutory obligation to provide Standing Orders for all employees. (Paras 7-14)
(B) Construction of Rules - Where a rule contains a requirement that cannot apply to all persons within the class it purports to cover, such requirement should be read as applying only to those capable of fulfilling it, rather than excluding others from the class. (Para 14)
Facts of the case:
An employee of a company was suspended and subsequently terminated under a Standing Order that allowed termination without disclosing reasons. The employee challenged the termination, arguing that he was not an "employee" under the Standing Orders because he had not been issued a ticket, and therefore the Standing Orders did not apply to him, making the termination illegal and the relationship governed by the ordinary law of master and servant.
Findings of Court:
The Standing Orders apply to the respondent. The distinction between "employee" and "workman" in the Standing Orders implies that while all workmen are employees, not all employees are workmen. The requirement of a ticket number is not an essential characteristic of an employee but applies only to those to whom tickets were issued.
Issues: Whether the respondent fell within the definition of "employee" under the Standing Orders despite not possessing a ticket number in the departmental muster.
Ratio Decidendi: The court held that the definition of "employee" must be construed in harmony with the rest of the Standing Orders and the statutory obligation under the local Act to make Standing Orders for all employees. The phrase "whose names and ticket numbers are included in the departmental musters" should be read as "whose names and ticket numbers, if any, are included," ensuring that employees without tickets are not excluded from the regulation of the Standing Orders.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether standing orders apply to employees without ticket numbers — Whether termination without disclosure of reasons is valid — Whether remedy lies in damages or writ jurisdiction. (Para 2 , 12 )
3. Distinction between employees and workmen — Interpretation of definition clauses in context — Statutory obligation to provide standing orders for all employees. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 )
4. Definition clauses must be construed in context; descriptive requirements like ticket numbers are not essential characteristics for determining employee status under standing orders. (Para 14 )
5. Appeal allowed — High Court order set aside — Writ petition dismissed — Termination held valid under standing orders. (Para 16 , 19 )
6. Do standing orders apply to employees who do not possess ticket numbers if the definition mentions ticket numbers in departmental musters?
Yes. The court held that such requirements are not essential characteristics of an employee. The definition should be read as including those whose ticket numbers, if any, are in the muster, ensuring the orders apply to all employees. (Para 7 , 8 , 12 , 14 )
7. How does the court distinguish between an employee and a workman within the context of company standing orders?
An employee denotes a larger group of all persons employed in specified departments, while workmen are a smaller subset of employees declared as such by management and required to possess tickets. (Para 8 , 9 )
8. What is the principle for interpreting a definition clause when a literal reading might exclude certain persons?
Definition clauses must derive meaning from the context or subject. If a literal reading creates an absurdity or contradicts statutory obligations, the court may read the provision to include those to whom the descriptive requirement is inapplicable. (Para 13 , 14 )
9. Is termination of service valid if the employer refuses to disclose reasons based on the interests of the business?
Yes, provided the standing orders specifically allow the Managing Director to withhold reasons if they are satisfied that disclosure is not in the interests of the business. (Para 6 , 16 , 18 )
Judgment
S. K. Das, J. This is an appeal by special leave. The appellants before us are the Nagpur Electric Light and Power Co. Ltd. (hereinafter referred to as the Company), a public limited company having its registered office at Nagpur in Madhya Pradesh, its Manager, and Assistant Manager. The respondent, Shreepathi Rao, joined the service of the Company as a typist on a salary of Rs. 30 per month in July, 1936. He rose in rank from time to time and was appointed Deputy Head Clerk in 1947 in the grade of Rs. 120-10-225. Since 1952 he has been receiving a basic salary of Rs. 245 per month. On 28th November 1955, an explanation was called for from him with regard to the issue of certain bills to consumers of electricity called "high tension consumers", without having certain "notes for the information of consumers" printed at the back of the bills. The respondent submitted his explanation on the next day, marking a copy thereof to one of the directors of the Company. On 2nd December 1955, he was again asked to explain why he marked a copy of his explanation to one of the directors. The respondent submitted an explanation in respect of this matter also. On the same date, he was again asked to explain as to how and why certain "double adjustments" has been made in the accounts of 1954 relating to the consumers department of the Company, the allegation being that a sum of Rs. 1,05,894-7-7 which represented the amount of bills of the Central Railway had been deducted twice in the accounts. The respondent submitted an explanation on 3rd December 1955, in which he said that the charge was vague and that, after 1949, he was not in any way concerned with the preparation of summaries and annual statements of accounts of the consumers department. On 5th December 1955, an order of suspension was made against the respondent which stated that the order was to take immediate effect and to remain in force until further orders, pending some investigation against the respondent. Two days later, on 7th December 1955, a memorandum was served on the respondent terminating his services with effect from 31st January 1956. The memorandum, so far as it is relevant for our purpose, read-
"we hereby give you notice under Standing Order 16 (1) that your service will stand terminated as from 31st January 1956.
The Company s Managing Director is satisfied that it is not in the interests of the business of the Company to disclose reasons for terminating your services."
On 19th December 1955, a notice was served on the Company on behalf of the respondent wherein it was stated that the order of suspension dated 5th December 1955, and the order of termination dated 7th December 1955, were illegal and ultra vires and a request was made to withdraw the said orders and reinstate the respondent within 24 hours, failing which the respondent said that he would take legal action in the matter. On 26th December 1955, the Company sent a reply to the notice denying the allegations, and the Company further stated that it had no desire to enter into a discussion with the respondent as to the propriety of the orders passed.
2. On 2nd January 1956, the respondent filed a petition under Art. 226 of the Constitution in the High Court at Nagpur in which he prayed for the issue of appropriate writs or directions quashing the orders of suspension and termination dated 5th December 1955, and 7th December 1955, respectively and asking for certain other reliefs. This petition was heard by a learned single Judge on certain preliminary objections raised by the present appellants, and, by an order dated 14th April 1956, he upheld the preliminary objections and dismissed the petition. The preliminary objections taken were these : it was urged that the service of the respondent was terminated in accordance with the Standing Orders of the Company approved by the relevant authorities under the provisions of the Industrial Employment (Standing Orders) Act (XX of 1946), hereinafter referred
