Madras High Court
M. Arunagiri vs Bata India Ltd. And Ors. on 13 September, 1990
Equivalent citations: [1991(62)FLR677], (1992)IILLJ46MAD
JUDGMENT Somasundaram, J.
1. The petitioner in W.P. No. 372 of 1980 is the appellant in this writ appeal. The respondents in the said writ petition are the respondents in this writ appeal. The parties are referred to by the nomenclature given to them in the writ petition.
2. The facts necessary for disposal of the writ appeal are as follows :- The petitioner joined the first respondent as a helper in July, 1959. He was in their services for over fourteen years. The first respondent by the letter dated August 28, 1975 terminated the services of the petitioner. The order of termination dated August 28, 1975 runs as follows :-
"We find from your records at our end that :
In the year 1973, apart from your availing due leave you kept yourself away from your availing due pay on a number of occasions, obviously, we found it extremely difficult to conduct normal business of the shop because of your unpredictable attendance. This sort of irregularly was brought to your notice for immediate improvement.
Thereafter, in the year 1974, when we reviewed the matter again, we found to our utter surprise that instead of any improvement in this respect, the situation has deteriorated further and you stayed away from duty for 222 1/2 days (which includes 173 days without pay). As such, we again drew your attention to such unhappy state of affairs and advised you to be careful about your attendance in the shop.
In the year 1975 when we found no improvement in regard to your attendance since you were away from the shop for 64 days on 47 occasions during the period beginning from January 1, 1975 to April 10, 1975, we called you to sales office in Calcutta to explain your position in regard to your irregular attendance along with other lapses on your part. In course of your visit to sales office, you admitted your mistakes and expressed your regret and assured us of non-repetition of such or similar acts in future. On the basis of your written assurance vide your letter dated April 17, 1975 wherein you requested for clemency in order to afford you another opportunity to mend yourself with a strong note of warning only, you were asked to resume your duty in our shop at Tiruppur.
We have again reviewed your attendance position for the period beginning from April 21, 1975 to August 1, 1975 and we find to our utter disappointment that our warnings and advice have been of no avail, as during this period you again kept yourself away from the shop for 83 days on 48 occasions. In view of your habitual and or frequent absence and irregular attendance, you have proved yourself to be thoroughly undependable for the position and no useful purpose will be served retaining you in our employment. As such, your services are terminated under Clause 27 of the Standing Orders and Rules of the Company governing your employment, which will be effective from September 8, 1975.
We are remitting one month's salary in lieu of notice as provided in the aforesaid Clause of the Standing Orders and Rules.
Arrangements are, however, being made to clear off your dues as soon as possible."
Aggrieved by the said order of termination dated August 28, 1975 the petitioner resorted to the remedy under the Tamil Nadu Shops and Establishment Act, 1947, hereinafter referred to as the Act, by filing an appeal before the second respondent under Section 41(2) of the Act. The petitioner was successful in the first instance in that, the second respondent held that the order of discharge by the first respondent was null and void and consequently allowed the petitioner's appeal. The aggrieved management, the first respondent herein, approached this Court under Article 226 of the Constitution of India in W.P. No. 3575 of 1976. Mohan, J., as he then was, by judgment dated February 3, 1977 set aside the order of the appellate authority and remitted the matter for fresh disposal. After such remand, the appellate authority by the order dated July 31, 1978 held that management has reasonable cause in terminating the services of the petitioner in accordance with Clause 27 of the Standing Orders of the company and therefore dismissed the appeal. The said order of the second respondent dated July 31, 1978 was challenged by the petitioner in W.P. No. 372 of 1980 on the file of this Court. In W.P. No. 372 of 1980 the following three contentions were raised before the learned single Judge, who disposed of the writ petition :
(a) On the facts of the case the termination of the petitioner is not one under Clause 27 of the Standing Orders, but really one under Clause 22 of the Standing Orders and, therefore, the termination of the petitioner's service without holding an enquiry is illegal.
(b) The termination of the petitioner's service in this case will attract the application of Section 25F of the Industrial Disputes Act and inasmuch as the said provision is not admittedly complied with, the termination is bad in law and the petitioner should be reinstated.
(c) On the facts of the case, the management has not established a reasonable cause within the meaning of Section 41(2) of the Act and hence the order of termination made in this case is illegal.
The learned single Judge repelled all the three contentions raised on behalf of the petitioner and dismissed the writ petition. Aggrieved by the order in the writ petition the petitioner has preferred the present writ appeal.
3. Mr. N. G. R. Prasad, learned counsel for the petitioner, made the following submissions before us :
(i) The order of termination dated August 28, 1975 challenged in the writ petition will attract Section 25F of the Industrial Disputes Act and since the said provision is not complied with, by payment of the retrenchment compensation, the termination is bad in law and the petitioner is entitled to the relief of reinstatement.
(ii) The termination order contains allegations of misconduct against the petitioner falling under Standing Order 22 and the order of termination passed without holding an enquiry is illegal.
(iii) The Standing Orders under which the order of termination was passed are not certified Standing Orders, and in the absence of certified Standing Orders, the statutory prescription in Section 41(1) of the Act will operate and an enquiry is necessary before passing the order challenged in the writ petition.
(iv) Even if the present case falls under Section 41(2) of the Act, the order of termination passed without calling for explanation from the petitioner and without giving an opportunity to the petitioner to put forth his case before finding out whether there was reasonable cause for dispensing with his service, is violative of the principles of natural justice and, therefore, the order of termination dated August 28, 1975 is illegal.
4. Let us first take up the first submission of the learned counsel for the petitioner for consideration :
Section 2(oo) of the Industrial Disputes Act defines retrenchment as follows :
"'retrenchment' means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include -
(a) voluntary retirement of the workman; or
(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
(b) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or
(c) termination of the service of a workman on the ground of continued ill-health."
A perusal of order of termination dated August 28, 1975 shows that it will not fall under the exception clauses (a), (b), (bb) and (c) of Section 2(oo) of the Industrial Disputes Act and, therefore, the termination of the petitioner in this case amounts to retrenchment within the meaning of Section 2(oo) of the Industrial Disputes Act and consequently Section 25F of the Industrial Disputes Act is attracted. Admittedly, no retrenchment compensation was paid to the petitioner as contemplated in Section 25F of the Industrial Disputes Act. The learned single Judge refused to accept the plea of the petitioner based on Section 25F of the Industrial Disputes Act on two grounds : Firstly, on the ground that no reliance could be placed by the petitioner under Section 25F of the Industrial Disputes Act in a matter arising under the Tamil Nadu Shops and Establishments Act, 1947. The learned single Judge gives the reason in the following terms :
"Be that as it may, in my considered opinion, the petitioner is not entitled to claim relief under two enactments at the same time. He had the right to choose. If he were to resort to the Industrial Disputes Act, he had to follow certain procedures. Admittedly, that was not done. On the other hand, on his own volition the petitioner thought that he could get effective remedy under the Act and therefore presented an appeal to the second respondent against the order of termination under Section 41(2) of the Act."
The above reason given by the learned single Judge for refusing to grant the relief to the petitioner on the ground of non-compliance of Section 25F of the Industrial Disputes Act is not correct in view of the decision of the Supreme Court in Krishna District Co-operative Marketing Society Ltd. Viyayawada v. N. V. Purnachandra Rao (1987-II-LLJ-365). The question considered by the Supreme Court in the above decision is as to whether the rights of a workman under Chapter 5A of the Industrial Disputes Act can be enforced by a workman by filing an appeal under Section 40(1) of the Andhra Pradesh Shops and Establishments Act, 1966. The Supreme Court held that Section 40, sub-sections (1) and (3) of the Andhra Pradesh Shops and Establishments Act prescribed alternative authorities to settle a dispute arising out of a retrenchment. Those authorities may exercise their jurisdiction under the Shops Act, but they have to decide such disputes in accordance with the provisions of Chapter 5A of the Industrial Disputes Act. Sub-section (2) of Section 25J of the Industrial Disputes Act which makes the procedure for securing relief under Section 40(1) and (3) of the Shops Act available to a workman emphasises that the rights and liabilities arising out of retrenchment shall be decided in accordance with Chapter VA of the Industrial Disputes Act. The said rights can be enforced by a workman personally by himself filing an appeal under Section 40(1) of the Shops Act. It is not necessary that reference should be sought under the Industrial Dispute Act by collective action of workers. In para 10 of the judgment the Supreme Court has laid down the principle in the following terms at page 372 :
"The result of the above discussion is that if the employees are 'workmen' and the management is an 'industry' as defined in the Central Act and the action taken by the management amounts to 'retrenchment' then the rights and liabilities of the parties are governed by the provisions of Chapter VA of the Central Act and the said rights and liabilities may be adjudicated upon and enforced in proceedings before the authorities under Section 41(1) and Section 41(3) of the State Act."
The second reason given by the learned single judge for refusing to accept the contention of the learned counsel for the petitioner based on Section 25F of the Industrial Disputes Act is that the said contention was not raised in the earlier Writ Petition No. 3573 of 1976. It must be remembered that the order challenged in the earlier writ petition was in favour of the petitioner and we are of the opinion that in such circumstances merely because the contention based on Section 25F was not raised in the earlier writ petition, it is not a ground for refusing to consider such a plea in the present proceedings particularly when the plea sought to be raised is based on a question of law without dispute over facts and the application of the provisions of Section 25F of the Industrial Disputes Act to the admitted facts in the present proceedings. Admittedly in this case, the provisions of Section 25F of the Industrial Disputes Act were not complied with by the first respondent while terminating the services of the petitioner. In these circumstances we hold the order of termination dated August 28, 1975 challenged in the writ petition will attract Section 25F of the Industrial Disputes Act and inasmuch as the provisions of Section 25F are not complied with by the first respondent by paying the retrenchment compensation to the petitioner, the termination of the petitioner's services is bad by law and it is liable to be set aside.
5. The next question we have to consider is, should we order reinstatement of the petitioner in the services of the first respondent. The Supreme Court as well as this Court have taken the view that reinstatement for violation of Section 25F of the Industrial Disputes Act is not the universal rule in all cases and compensation can be awarded in lieu of reinstatement in exceptional cases. The Supreme Court in Surendra Kumar Verma v. Central Government Industrial Tribunal, New Delhi (1981-I-LLJ-386) adverted to this question in the following terms at page 389 :
"But there may be exceptional circumstances which make it impossible or wholly unequitable vis-a-vis the employer and workmen to direct reinstatement with full back wages. For instance, the industry might have closed down or might be in severe financial doldrums; the workmen concerned might have secured better or other employment elsewhere and so on. In such situations, there is a vestige of discretion left in the court to make appropriate consequential orders. The court may deny the relief of reinstatement where reinstatement is impossible because the industry has closed down. The Court may deny the relief of award of full back wages where that would place an impossible burden on the employer. In such and other exceptional cases the Court may mould the relief, but, ordinarily the relief to be awarded must be reinstatement with full back wages. That relief must be awarded where no special impediment in the way of awarding the relief is clearly shown. True, occasional hardship may be caused to an employer but we must remember that, more often than not, comparatively far grater hardship is certain to be caused to the workmen if the relief is denied than to the employer if the relief is granted."
In Management of Coimbatore Pioneer B. Mills v. Presiding Officer, Labour Court, Coimbatore (1979-I-LLJ-41) a Bench of this Court consisting of V. Ramaswami, J., (as he then was) and Ratnavel Pandian, J. (as he then was) and in Mount Mettur Pharmaceuticals Ltd. v. Second Additional Labour Court, Madras (1985-II-LLJ-505) a Bench of this Court consisting of G. Ramanujam and M. A. Sathar Sayeed, JJ., have also taken the view that compensation can be awarded in lieu of reinstatement in exceptional cases. In the present case the first respondent seemed to have lost the confidence in the petitioner's service to it and his sincerity in the discharge of his duties. It would perpetuate the ruptured feeling between the parties if we should order reinstatement. A perusal of the termination order dated August 28, 1975 shows that the petitioner stayed away from duty for 222 1/2 days in 1974; for 64 days on 47 occasions during the period from January 1, 1975 to April 10, 1975; and for 83 days on 48 occasions during the period from April 21, 1975 to August 1, 1975. The habitual and frequent absence and irregular attendance of the petitioner as noted above during the years 1974-75 dissuade us from ordering the normal relief of reinstatement in this case. Further, the petitioner has made an endorsement on the memorandum of grounds of writ appeal as follows :
"In the event of this Hon'ble Court countenancing my point regarding violation of Section 25F of the Industrial Disputes Act, 1947, I will be rest content with monetary relief and I will not insist on reinstatement."
In view of the exceptional circumstances present in this case, the proper order is to award compensation to the petitioner in lieu of reinstatement.
6. There is no consensus with regard to emoluments last drawn and would have been drawn in future by the petitioner. The petitioner has filed a memo of calculation stating that the last drawn wages including commission was Rs. 1200/- per month and in the event of awarding compensation in lieu of reinstatement he is entitled to a sum of Rs. 2,86,000/-. On the other hand, the first respondent filed a memo of calculation stating that the last drawn salary was Rs. 424/- per month and that the petitioner will be entitled to Rs. 35,285/- as compensation in lieu of reinstatement. Taking into consideration the facts and circumstances of the case and striking a via-media between the two extremes suggested by the Authorities with regard to the quantum of compensation to be awarded, we fix the quantum of compensation at Rs. 75,000/- and accordingly award the same to the petitioner in lieu of reinstatement.
7. In view of the fact that we are countenancing the plea of the petitioner and granting relief on the ground of violation of Section 25F of the Industrial Disputes Act, we are not dealing with the other submissions made by the learned counsel for the petitioner.
8. Accordingly, we allow the writ appeal, set aside the order of the learned single Judge in W.P. No. 372 of 1980 and allow the writ petition by quashing the impugned order of the second respondent. We further hold and direct that the petitioner, in lieu of reinstatement, should get only a compensation of Rs. 75,000/- as indicated above from the first respondent. The first respondent is directed to pay the said amount of compensation to the petitioner within a period of three months from today. We further direct that the amount of compensation shall be spread over the period from 1975 to 1995, 1975 being the year of termination of service of the petitioner and 1995 being the presumed year of retirement of the petitioner on superannuation. Since the compensation is being paid in a lump sum, we have directed the spread over. If the spread over amount in a particular year is not taxable, no income tax shall be deducted from the amount payable for that year. We make no order as to costs in this writ appeal.