1. Termination of employee under standing order during pendency of industrial dispute — Alleged violation of Section 33(2)(b) of Industrial Disputes Act. (Para 1 )
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1964 Supreme(SC) 307
SUPREME COURT OF INDIA
11th November 1964
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO AND M. HIDAYATULLAH, JJ.
The Management of Murugan Mills Ltd., Appellant
Versus
The Industrial Tribunal, Madras, and another, Respondents.
Civil Appeal No. 1036 of 1963.
Advocates appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate (Mr. R. Ganapathy Iyer, Advocate, with him), for Appellant; (M/s. M. S. K. Sastri and M. S. Narasimhan, Advocates, for Respondent No. 2.
Advocates:
A.V.VISHWANATHA SASTRI, M.S.K.Shastri, M.S.NARASIMHAN, R.Ganapathy Iyer
A.V.VISHWANATHA SASTRI, M.S.K.Shastri, M.S.NARASIMHAN, R.Ganapathy Iyer
Termination under a 'hire and fire' clause must be bona fide. If it is a colourable exercise of power to punish for misconduct during a pending dispute, it falls under Section 33(2)(b) of the Industrial Disputes Act, requiring mandatory approval and payment of wages.
Headnote:(A) Industrial Disputes Act, 1947 - Sections 33(2)(a), 33(2)(b) and 33-A - Termination of service during pendency of industrial dispute - Discharge or punishment for misconduct - Requirement of approval from authority and payment of one month's wages - Non-compliance renders termination invalid. (Paras 1, 6, 7)
(B) Standing Orders - Termination under "hire and fire" clause - Requirement of bona fides - If termination is a colourable exercise of power, result of victimization, or unfair labour practice, industrial tribunal has jurisdiction to intervene and set aside such termination regardless of the form of the order. (Paras 5, 6)
(C) Industrial Disputes Act, 1947 - Section 33(2) - Proviso - Applicability - Proviso to Section 33(2) applies only to clause (b) and not to clause (a). (Para 7)
Facts of the case:
An employee was terminated under a standing order allowing termination with notice. The employee alleged victimization for trade union activities and filed an application under Section 33-A of the Industrial Disputes Act during a pending dispute. The employer claimed the termination was not for misconduct, but later argued it was due to the employee's negligence and "go-slow" tactics. The tribunal found these charges unproven and ordered reinstatement.
Findings of Court:
The court found that the termination, while framed under a general termination clause, was actually a punishment for alleged misconduct. This constituted a colourable exercise of power. Since the mandatory requirements of the proviso to Section 33(2)(b) were not met, the termination was illegal.
Issues: Whether the termination of service under a standing order was a bona fide exercise of power or a colourable exercise to punish for misconduct, and whether the proviso to Section 33(2) of the Industrial Disputes Act applies to both clauses (a) and (b).
Ratio Decidendi: Termination under a "hire and fire" clause must be bona fide; if it is a colourable exercise of power or victimization, the tribunal can look behind the order. If the termination is effectively a punishment for misconduct during a pending dispute, it falls under Section 33(2)(b), requiring compliance with the proviso. The proviso to Section 33(2) applies only to clause (b).
Result: Appeal dismissed.
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Table of Contents
2. Whether termination under a notice clause constitutes discharge for misconduct requiring tribunal approval under Section 33(2)(b) of the Industrial Disputes Act. (Para 1 , 2 )
3. Termination under notice clauses is not conclusive; if based on misconduct, it is a colourable exercise of power falling under Section 33(2)(b). (Para 5 , 6 )
4. Termination under standing orders must be bona fide; colourable exercise of power to punish for misconduct without tribunal approval violates Section 33(2)(b) of Industrial Disputes Act. (Para 5 , 6 )
5. Appeal dismissed; order for reinstatement with back wages upheld. (Para 7 )
6. Can an employer use a 'hire and fire' clause in standing orders to terminate an employee arbitrarily?
No. Bona fides are essential. If termination is a colourable exercise of power, victimisation, or unfair labour practice, the industrial tribunal has jurisdiction to intervene and set aside such termination. (Para 5 )
7. When does termination under a general notice clause fall under Section 33(2)(b) of the Industrial Disputes Act?
When the termination is actually a punishment for misconduct disguised as a termination under a notice clause, it constitutes a colourable exercise of power and is governed by Section 33(2)(b). (Para 6 )
8. Does the proviso to Section 33(2) of the Industrial Disputes Act apply to both clauses (a) and (b)?
No. The court held that a bare perusal of Section 33(2) shows that the proviso applies only to clause (b) and not to clause (a). (Para 7 )
Judgment
WANCHOO, J.: This is an appeal by special leave against the judgment of the Madras High Court. The appellant is a textile mill. Rangarathinam Pillai respondent was employed as an accountant in the mill for over 18 years by the appellant. On September 11, 1958, the appellant served a notice on the respondent under cl. 17(a) of the Standing Orders terminating his services on and from September 24, 1958. No reasons were given in the order terminating the service. The respondent protested against his dismissal and said that he had a blameless record and had not done anything meriting the termination of his services. He added that no show-cause notice had been served upon him, no explanation was asked for and no enquiry whatsoever had been held before the order was issued. He further alleged that he had been victimised for his trade union activities as he was a member of the Executive of the Coimbatore District Textile Mill Staff Union. When his protest had no effect, he made an application under S. 38-A of the Industrial Disputes Act, No. 14 of 1947, (hereinafter referred to as the Act), as an industrial dispute was pending at the time between, the appellant and its workmen. The main contention of the respondent was that the order terminating his services had been passed without obtaining the approval of the industrial tribunal and this was against the provision contained in S. 33(2)(b) of the Act which lays down that during the pendency of any proceeding in respect of an industrial dispute the employer may in accordance with the standing orders applicable to a workman concerned in such dispute, discharge-or punish him whether by dismissal or otherwise for any misconduct unconnected with the dispute, provided that no such discharge or dismissal may be made unless the workman has been paid wages for one month and an application has been made by the employer to the authority for approval of the action taken by the employer.
2. The contention of the appellant before the tribunal was that the services of the respondent had been terminated under cl. 17(a) of the Standing Orders. It enables the management to terminate the services of a worker by 14 days notice. It was further contended that the termination was not for any misconduct and was not meted out as punishment and, therefore, S. 33(2)(b) did not apply and it was not necessary to obtain the approval of the tribunal. It was also stated that the reason for the termination of service was that the respondent had been deliberately going slow in his work for some months prior to the date on which his services were terminated. This was because he had asked for increase in pay sometime back and that had been refused. It was further stated that the balance-sheet for the year 1957 had not been prepared till August, 1958 and, therefore, when the appellant found that the respondent was deliberately going slow his services were terminated as provided in the Standing Orders.
3. The tribunal took the view that as the termination of service had taken place under cl. 17(a) of the Standing Orders, this was not a case covered by S. 33(2)(b) of the Act, which provides for discharge or punishment by way of dismissal or otherwise for any misconduct unconnected with the dispute. The tribunal, however, held that the case was covered by S. 33(2)(a). It further held that the proviso to S. 33(2) not only applies to a case covered by cl. (b) but also to cl. (a). Therefore, as the proviso was not complied with, the tribunal held that the termination of service of the respondent was in contravention of the section and the application under S. 33-A of the Act was maintainable. However, as evidence had been adduced on both sides on the merits of termination of service, the tribunal went into the matter. It took the view that even under the Standing Orders, the appellant could terminate respondent s services only for proper reasons for the particular standing order provides that reasons should be recorded
