Judgment

SHELAT, J.:- Respondent No. 1 was, in 1955, admitted as a trade apprentice by the appellant-company in its works, the company agreeing to bear the costs of his training, as such apprentice, which it did for a period of 3 years. On completion of his training, he was appointed in September 1958 as a skilled workman, i.e., as a fitter. The letter of appointment under which he was engaged contained a clause which required him to execute a bond to serve the company for five years at least. The object of that clause evidently was to ensure that he served the company at least for five years in consideration of the company having borne the expenses of his training.

2. The evidence produced before the Industrial Tribunal shows that the practice of the company, set up at the instance of the Government of India and the Company s Board of Directors, was to have a confidential inquiry made to verify the antecedents of its employees. Such verification not being practicable at the time of the appointment of each employee, it used to be done after a workman was appointed. The object of such verification was to ascertain whether it was desirable or not in the interests of the company to continue the service of the employee in respect of whom such verification was made. The inquiry was made through the police. On receipt of a verification report from the police, the Senior Security Officer of the company would make his recommendation and the company would terminate the service of an employee where it was considered desirable in the company s interests not to continue such an employee in service after giving 3 months notice or salary for that period in lieu thereof.

3. Throughout the period of his service commencing from September 1958 no action was ever taken against respondent 1 although he had at one time joined a strike in the company s works and although he was an active member and the secretary of the workmen s union. A criminal case in relation to the said strike was filed against him but had been subsequently withdrawn. Prima facie, the fact that no action was taken against him indicated that the company did not consider his active participation in the union activities objectionable so as to warrant any interference on its part.

4. In accordance with the practice of the company, however, a verification report about him was called for as was done in the case of other workmen also. On such a report from the police, the Senior Security Officer recommended that it was not desirable to retain him in the company s service any longer. Respondent 1 at the time was working as a fitter in the blast furnace of the works. On December 9, 1960, he was served with an order by which his service was terminated and was informed that he would be entitled to 3 month s pay in lieu of a notice for that period.

5. On the union of which, as aforesaid he was the secretary, having raised a disputed, alleging that the termination of his service was the result of victimisation and unfair labour practice, the dispute was referred by the Government of Orissa to the Industrial Tribunal. After inquiry, the Tribunal rejected the union s allegation as to victimisation or unfair labour practice on account of any union activities carried on by respondent 1. Nevertheless, the Tribunal held that it was improper on the part of the company not to have disclosed the said report to respondent 1 and not to have given him an opportunity to contest its contents and vindicate himself. The Tribunal held that though the said order was in form one of termination of service, it was in fact punitive in nature and considering the action taken against respondent 1 as disproportionate further held that it was a case of victimisation, that consequently the order was illegal and unjustified and directed reinstatement with full back wages.

6. The company filed a writ petition in the High Court for quashing the said order. Before the High Court the company urged: (a) that the termination o