1. Dismissal of employees for misconduct — Challenge to the constitutionality of Section 26 of the Bihar Shops and Establishments Act, 1954 regarding notice requirements for discharge. (Para 1 , 2 )
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1966 Supreme(SC) 66
SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO, M. HIDAYATULLAH, J.C. SHAH AND S.M. SIKRI, JJ.
Caltex (India) Ltd., Calcutta, Appellant
Versus
Presiding Officer, Labour Court, Patna and others, Respondents.
Civil Appeal No. 1006 of 1964.
Advocates appeared
Mr. Niren De, Addl. Solicitor-General of India, (M/s. A. N. Sinha and D. N. Gupte, Advocates, with him), for Appellant; Mr. N. S. Bindra, Senior Advocate, (Mr. R. N. Sachthey, Advocate, with him), for Respondent No. 4.
Advocates:
A.N.SINHA, D.N.GUPTA, N.S.BINDRA, NIREN DEY, R.N.SACH
A.N.SINHA, D.N.GUPTA, N.S.BINDRA, NIREN DEY, R.N.SACH
Delegation of power to the State Government to prescribe misconduct for dismissal without notice is constitutionally valid if the Act provides sufficient guidance, such as the industrial law distinction between major and minor misconduct, preventing the delegation from being excessive or arbitrary.
Headnote:(A) Bihar Shops and Establishments Act, 1954 - Section 26(1) and Section 40 - Constitutionality of proviso to Section 26(1) - Excessive delegation - Power of State Government to prescribe misconduct for which notice of dismissal is not required - If the legislature provides sufficient guidance in the Act, the delegation of power to the State Government to frame rules specifying the nature of misconduct is not ultra vires - In industrial law, misconduct is generally categorized as major (justifying dismissal) or minor (justifying lesser punishment); this distinction provides sufficient guidance to the rule-making authority to specify misconducts that warrant dismissal without notice. (Paras 4 and 5)
(B) Labour Law - Condonation of delay - Order passed by labour court condoning delay in filing applications - If the court, after hearing both parties, confirms an earlier ex parte order of condonation, such an order is not liable to be interfered with in the absence of perversity or illegality. (Para 6)
Facts of the case:
An employer discharged and dismissed two employees on charges of gross misconduct. The employees filed applications before the labour court under Section 26 of the Act, which were initially time-barred. The labour court condoned the delay ex parte. The employer challenged this order and further attacked the constitutional validity of the proviso to Section 26(1) of the Act, contending that it suffered from the vice of excessive delegation by giving the State Government arbitrary power to specify misconducts for which notice of dismissal could be dispensed with.
Findings of Court:
The proviso to Section 26(1) is constitutionally valid. The power delegated to the State Government under Section 40 to frame rules regarding the nature of misconduct is guided by the inherent understanding in industrial law regarding major and minor misconducts. The rules framed by the State Government properly identified major misconducts, and thus, there was no excessive delegation of legislative authority.
Issues: Whether the proviso to Section 26(1) of the Act, which allows the State Government to prescribe the nature of misconduct for which notice of dismissal or discharge is not necessary, is ultra vires on the ground of excessive delegation.
Ratio Decidendi: The court held that the legislature provided sufficient guidance by using the term "misconduct," which in the context of industrial law is understood to be divided into major and minor categories. By delegating the power to prescribe misconduct for dismissal without notice, the legislature intended the State Government to list those offenses generally understood as major misconducts. Such flexible delegation is permissible to allow the government to update the list as needed.
Result: Appeal dismissed.
Legal Category Hierarchy
Table of Contents
2. Proviso to Section 26(1) suffers from excessive delegation — State Government granted arbitrary power to specify misconduct justifying dismissal without notice. (Para 3 )
3. Guidance for specifying misconduct is inherent in the distinction between major and minor misconduct in industrial law — Rule 20(1) properly reflects this guidance. (Para 4 , 5 )
4. Delegation of power to specify misconduct is valid if the statute provides sufficient guidance, such as the industrial law distinction between major and minor misconduct. (Para 5 )
5. Appeal dismissed with costs. (Para 7 )
6. Does the proviso to Section 26(1) of the Bihar Shops and Establishments Act, 1954, suffer from excessive delegation?
No. The legislature provided sufficient guidance by implying that the State Government should prescribe misconducts generally understood as major misconducts in industrial law, which justify dismissal or discharge. (Para 5 )
7. How does the court distinguish between types of misconduct in industrial law to determine the validity of delegated legislation?
The court recognizes two types of misconduct: major misconducts, which justify punishment of dismissal or discharge, and minor misconducts, which call for lesser punishments. (Para 5 )
8. Is the condonation of delay by a labour court valid if the party is eventually heard?
Yes. Even if an initial order condoning delay is ex parte, if the court subsequently provides an opportunity for a hearing and confirms the order, it is not considered bad. (Para 6 )
Judgement
WANCHOO, J. - The main question raised in this appeal by special leave against the judgment of the Patna High Court is the constitutionality of S. 26 of the BIHAR SHOPS AND ESTABLISHMENTS ACT , No. VIII of 1954, (hereinafter referred to as the Act). The question arises in this way. The appellant is carrying on business in petroleum products in the Patna district. Habibur Rahman was serving as a watchman and Abdul Rahim as a driver in the permanent employee of the appellant at the Dinapore depot. They were charged with gross misconduct and an enquiry was held by the appellant in that connection. Habibur Rahman was discharged on May 5, 1960 and one month s pay in lieu of notice was offered to him. Abdul Rahim was dismissed on April 22, 1960. These two employees made applications under S. 26 of the Act in December 1960 before the labour Court. These applications were obviously barred by time. The labour Court condoned the delay without giving any notice to the appellant on the question and issued notice to show cause why the dismissal/discharge be not set aside. On receipt of this notice, the appellant learnt that delay in making the applications had been condoned without hearing it. Consequently the appellant moved the High Court at Patna under Art. 226 of the Constitution for quashing the order of the labour court condoning the delay on the ground that it had been passed without hearing the appellant. Thereafter in March 1961, the appellant moved the labour Court for recalling the ex parte order of condonation. The labour Court heard the appellant on March 27, 1961 and decided on April 4, 1961 to condone the delay and confirm the exparte order already passed. Thereupon the appellant filed another writ petition in the High Court out of which the present appeal has arisen. In this petition the order, dated April 4, 1961, was attacked on various grounds. Besides the appellant also attacked the validity of S. 26 of the Act. It may be mentioned that a number of other petitions had also been filed before the High Court attacking the validity of S. 26 of the Act. All these petitions were heard together and the High Court held that S. 26 was constitutionally valid. It also held that the order of April 4, 1961, showed that delay had been condoned after hearing the appellant and, therefore, there was no cause for interference with that order. The appellant moved the High Court for a certificate to appeal to this Court, which was refused. It then applied for special leave, which was granted and that is how the matter has come before us.
2. The attack of the appellant is on the proviso to S. 26 (1) of the Act and the only ground that has been urged before us on its behalf is that proviso suffers from the vice of excessive delegation and should, therefore, be struck down. The relevant part of S. 26 is in these terms :
"26. Notice of dismissal or discharge. - (1) No employer shall dismiss or discharge from his employment any employee who has been in such employment continuously for a period of not less than six months except for a reasonable cause and without giving such employee at least one month s notice or one month s wages in lieu of such notice :
Provided that such notice shall not be necessary where the services of such employee are dispensed with on a charge of such misconduct as may be prescribed by the State Government, supported by satisfactory evidence recorded at an inquiry held for the purpose."
It is not necessary to set out the rest of S. 26 for that is not under attack.
3. The contention on behalf of the appellant is that when the proviso lays down that no such notice would be necessary as is mentioned in the main part of S. 26 (1) where services are dispensed with on the charge of misconduct and the State Government is given full power to specify the nature of the misconduct which would eliminate the necessity of a notice, there is excessive delegation of its authority by the legislature in the matter of specifying the
