1. Termination of municipal employee without notice or enquiry — Dispute under U.P. Industrial Disputes Act. (Para 1 )
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2000 Supreme(SC) 1772
Supreme Court Of India
Nagar Palika, Dehradun
Versus
Parmanand
Decided on : November 9, 2000
A municipality's constitutional status does not disqualify it from being an "industry" under the Industrial Disputes Act, except for specific sovereign functions. Termination of a probationer is invalid if service rules are ignored and no evidence of unsatisfactory performance is provided.
Headnote:(A) U.P. Industrial Disputes Act, 1947 - Section 6-N - Definition of "industry" - Municipalities, except in relation to specific departments dealing with assessment and levy of house tax, assessment and levy of octroi, removal of encroachment, pulling down of dilapidated houses, prevention and control of food adulteration, and maintenance of cattle pounds, fall within the definition of "industry." The status of municipalities as constitutional creatures does not diminish their classification as an industry for the activities they carry on. (Para 5)
(B) Service Law - Termination during probation - Termination of a probationer's services must comply with the applicable service rules. In the absence of material evidence to show that the employee's work was unsatisfactory, and where mandatory rules for termination are not followed, the action of the employer cannot be sustained. (Para 6)
(C) Employment Rules - Alleged prohibition on siblings - A termination based on a rule prohibiting the employment of siblings in equivalent posts is invalid if no such rule is produced and evidence shows that other related employees are similarly employed. (Para 6)
Facts of the case:
An employee of a municipality had his services terminated during his probation period without prior notice or a domestic enquiry. The municipality contested the jurisdiction of the labour court, arguing that it was not an "industry" and the employee was not a "workman." Additionally, the employer claimed that a rule prohibited brothers from holding equivalent posts and that the employee's performance was unsatisfactory. While the labour court ordered reinstatement with full back wages, the High Court quashed the award, ruling that the municipality was not an industry and the termination was valid.
Findings of Court:
The court found that the engineering department of the municipality constitutes an industry. It noted that the employer failed to produce any rule prohibiting the employment of siblings and provided no evidence that the employee's work was unsatisfactory during probation. Furthermore, the mandatory service rules regarding the termination of services were not complied with.
Issues: Whether a municipality qualifies as an "industry" under the Industrial Disputes Act and whether the termination of a probationer's services was valid in the absence of compliance with service rules and evidence of poor performance.
Ratio Decidendi: The constitutional status of a municipality does not take its activities out of the definition of "industry." Termination of a probationer without adherence to statutory service rules or evidence of unsatisfactory performance is devoid of basis and is therefore illegal.
Result: Appeal allowed with costs.
Legal Category Hierarchy
- administrative law
- labour and industrial law
- practice and procedure
Table of Contents
2. Municipality contested jurisdiction claiming it is not an industry and appellant was a probationer with unsatisfactory work. (Para 2 )
3. Municipality is an industry under the Act; no evidence of unsatisfactory work; termination without complying with service rules. (Para 5 , 6 )
4. A municipality is an industry under the Industrial Disputes Act; termination of a probationer requires compliance with service rules. (Para 5 , 6 )
5. Appeal allowed; High Court order set aside; Labour Court award of reinstatement with full back wages restored. (Para 6 )
6. Is a municipality an 'industry' under the Industrial Disputes Act?
Yes, a municipality is an industry under the Act, except for purely governmental or sovereign functions like taxation and regulation. (Para 5 )
7. Can a probationer be terminated without complying with service rules?
No, termination of a probationer requires compliance with the relevant service rules, such as providing notice or showing unsatisfactory work. (Para 6 )
8. What is the evidentiary burden to justify termination of a probationer?
The employer must produce material evidence of unsatisfactory work; a bare statement without supporting proof is insufficient to justify termination. (Para 6 )
9. Does the constitutional status of municipalities affect their classification as an 'industry'?
No, the inclusion of municipalities in the Constitution does not alter their status as an 'industry' under the Industrial Disputes Act. (Para 5 )
( 1 ) THE appellant before us is working in the first-respondent Nagar Palika, Dehradun. He claimed that his services were terminated on october 31, 1987 without any prior notice or information or after holding a domestic enquiry, much less based on any reason and raised a dispute under the U. P. Industrial disputes Act, 1947 (hereinafter referred to as "the Act" ). The said dispute was referred to the Labour Court at Dehradun.
( 2 ) AFTER notice, the first respondent raised an objection to the jurisdiction of the labour Court to hear the matter on the ground that it is not an "industry" for the purpose of the Act and the appellant did not fall within the definition of "workmen". It is also contended that (i) there is a rule of the Nagar palika that two brothers cannot be employed to equivalent posts and the appellants brother was also working in a similar post held by the appellant; (ii) the appellant was a probationer on the date of his termination; he had been appointed on December 16, 1986, placed on probation for a period of one year and his services had been terminated on October 31, 1987. Before the expiry of that period his services had been put an end to. Hence the provisions of Section 6-N of the Act would not be attracted. The Municipality also contended that the work of the appellant was not satisfactory during the probation period.
( 3 ) THE Labour Court examined the matter on all aspects raised before it. It held that the Engineering Department of the first respondent was engaged in an activity which can be termed to be an industry and therefore held that the appellant fell within the definition of "workmen". So far as the termination of services of the appellant on the basis that his brother was also employed, it was noticed that there was no rule available in the Nagar Palika to terminate such service. Even otherwise, it was held that the workman being retrenched should comply with Section 6-N of the Act. The Labour Court also noticed that the evidence tendered through dw 1 (an officer of the Municipality) on behalf of the employer that he himself was not aware whether the appellants work was satisfactory or not during the probation period. No other material was produced before the labour Court to show that his services had been terminated on that ground. Therefore, the labour Court concluded that the appellant was entitled to reinstatement with full back wages and passed an award accordingly.
( 4 ) THE High Court on a writ petition being presented against that award took the view that the concept of industry should be excluded to the extent the appointments are regulated by statutory rules in a department and relied upon a decision of this Court in himanshu Kumar Vidyarthi v. State of Bihar air 1997 SC 3657 : 1997 (4) SCC 391 : 1998-II-LLJ-15 and further held that the appellants work had not been found satisfactory, as such, his services were terminated on October 31, 1987 before the expiry of the period of probation which was in accordance with the Service Rules and therefore action of the first respondent could not have been upset by the Labour Court and allowed the writ petition quashing the award made by the Labour Court. Hence this appeal.
( 5 ) SHRI Bharat Sangal, learned advocate for the appellant at the very outset pointed out that there are several decisions of this Court holding that a municipality except in relation to certain departments should certainly be treated as an industry for the purpose of the act, Shri Dinesh Dwivedi, learned senior advocate for the first respondent submitted that now the municipalities have become constitutional creatures and their position stands elevated to the status of State and they are carrying on certain Governmental functions and therefore the decisions rendered earlier which are not taking note of this position should not influence us in reaching the conclusion that the first respondent is an industry or not. This aspect need not detain us long for the purpose f
