Bombay High Court
The Indian Tobacco Company Limited vs The Industrial Court And Ors. on 25 October, 1989
Equivalent citations: (1994)IIILLJ459BOM
JUDGMENT H.D. Patel, J.
1. The petitioner is a Public Limited Company having branches throughout the country. One such branch is also at Nagpur and is registered under the Bombay Shops and Establishments Act, 1948. According to the petitioner, the employment of persons in the branch never exceeded seven in number.
2. The respondent No. 2 was appointed on probation as a Sales Representative for the establishment at Nagpur under the contract of employment vide order dated 14.2.1984. The relevant terms of the contract are reproduced below:
"1. You will be placed on probation in the designation 'Sales Representative' for a period of 12 months commencing from 14th February, 1984 up to 13th February 1985 or for such extended period as may be determined by Management and as advised to you.
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5. You will be bound by the terms and conditions of service as contained in the aforesaid Annexure-I as well as by the Standing Orders applicable to Nagpur Branch, enclosed herewith as Annexure-II.
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The respondent No. 2 accepted the offer and signed the contract of probationary employment. According to the petitioner, the work and activity of the respondent No. 2 was found to be unsatisfactory and, therefore, by letter dated 24.6.1985 the petitioner terminated his services with effect from 24.7.85. A cheque of Rs. 2006-64 was also sent to respondent No. 2 being salary for the month of June, 1985, leave encashment benefit, retrenchment compensation, etc., under a covering letter dated 19.7.1975.
3. The respondent No. 2 moved a complaint before the Labour Court, Nagpur under Section 28 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as "the Act No. 1 of 1972") alleging that the petitioner-Company by terminating his services has indulged in unfair labour practices falling within the mischief of Item No. 1(a), (b), (d) & (e) of Schedule IV of the said Act. The simple case as pleaded in the complaint was that the Standing Orders of the Company which were given to respondent No. 2 at the time of appointment were not certified under the provisions of Industrial Employment (Standing Orders) Act, 1946 and the Bombay Industrial Employment (Standing Orders) Rules, 1959 framed thereunder. Since the establishment of the petitioner is registered under the Bombay Shops and Establishments Act, 1948, Model Standing Orders as framed under the Industrial Employment (Standing Orders) Act, 1946 and Bombay Industrial Employment (Standing Orders) Rules, 1959 govern the relations between the employees engaged by the petitioner and the petitioner-Company. It was further pleaded that according to the Model Standing Orders, the period of probation of an employee could only be three months and not more and, therefore, the respondent No. 2 must be deemed to have successfully completed the period of three months and the Manager of the petitioner was under an obligation ; to issue him a letter of confirmation. The respondent No. 2 had, therefore, become regular employee of the petitioner and consequently, the management of the petitioner had no right to terminate the services of the respondent No. 2 under the pretext that his services were found to be unsatisfactory during the alleged probationary period of about 17 months. It was also pleaded in the complaint that during the alleged probationary period of 12 months, no letter was addressed to the respondent No. 2 pointing out any flaws or mistake in his day to day working and, therefore, even otherwise, the respondent No. 2 is deemed to have successfully completed the probationary period. The letter dated 24.6.1986 was received as a surprise wherein his performance as a Probationary Sales Representative was described as poor and unsatisfactory. The termination was alleged to be effected by the petitioner only with a view to ensure that the respondent No. 2 should not complete 18 months period after which, in any case, the petitioner would have to be treated as a regular employee. Bringing an abrupt end to the services of respondent No. 2 was described as mala fide and colourable exercise of the employer's right. Violation of Section 25-F and Section 25-G of the Industrial Disputes Act, 1947 was also raised. The respondent No. 2 also made it clear that he did not encash the cheque received by him from the petitioner. For all these reasons, it was alleged that the management of the petitioner has indulged in unfair labour practices and claimed reinstatement in service and payment of full back wages.
4. The complaint was resisted by the petitioner vehemently. It was contended that the termination of services of the respondent No. 2 was much before the expiry of the probationary period for the reason that he failed to attain the required standard of work and upon assessment of his performance in course of his field work and written test, he was found not suitable for the job in respect of which he was on probation. Such an action which is in conformity with the law cannot constitute any unfair labour practice. The termination of the services of the respondent No. 2 was bona fide and cannot be described as victimisation or as brought out or effected in undue haste. While admitting that the petitioner is an establishment duly registered under the Bombay Shops and Establishments Act, 1948, it was asserted that the relations between the parties were governed by the contract of employment and the Standing Orders referred therein. The petitioner emphatically denied that the respondent No. 2 had successfully completed the probationary period. The petitioner also denied that the provisions of Section 25-G of the Industrial Disputes Act, 1947 were attracted in respect of probationer. A further averment is also to be found that the Court is not expected to sit in appeal over the question of satisfaction, which the management of the petitioner has found that the respondent No. 2 is unsuitable for the job and that he has not completed his period of probation to the satisfaction of the petitioner. They also relied upon their letter dated 28.11.1984 addressed to the respondent No. 2 about casual attitude adopted by him towards his work. A further contention was also raised that the respondent No. 2 failed in the written test. Finding that the respondent No. 2 had no aptitude for the job, the Branch Manager of the petitioner was constrained to arrive at the decision that he is not suitable for the job as Sales Representative. Though the decision was arrived at on 3.5.85, he was allowed to continue up to June, 1985 so as to facilitate him in finding out another job in the meanwhile. It was for that reason that the services of the respondent were terminated by letter dated 24.6.1985 by giving him a notice of one month. He was also offered retrenchment compensation and other dues before actual termination was effected. The petitioner hence denied that they indulged in unfair labour practices as alleged.
5. The learned Labour Court found that the respondent No. 2 has successfully completed the probationary period and he had become a permanent employee. The Court also found that the petitioner failed to prove that the respondent No. 2 was not suitable for the job during the probationary period. A further finding was also given that the petitioner was bound to follow the provisions of Section 25-G of the Industrial Disputes Act, 1947. For all the aforesaid reasons, the learned Labour Court held that the petitioner by terminating the services have engaged in unfair labour practices. Ultimately, after calling upon the petitioner to cease and desist from engaging in such unfair labour practices, the petitioner was directed to reinstate the respondent No. 2 in service and also pay him full back wages. It is this order which is impugned in this petition.
6. It was not disputed by the petitioner Company that the copy of Standing Orders referred to in the letter of appointment and given to the respondent No. 2 was not certified by the concerned Authorities. Therefore, if the provisions of the Industrial Employment (Standing Orders) Act, 1948 are applicable to the establishment of the petitioner Company, only the Model Standing Orders framed under the said Act and Bombay Industrial Employment (Standing Orders) Rules, 1959 would govern the relations between the employees engaged by the petitioner and the petitioner Company.
7. Admittedly, the petitioner Company is also registered as an establishment under the Bombay Shops and Establishments Act, 1948 and by the reason of Section 38-B as contained therein, the provisions of the Industrial Employment (Standing Orders) Act, 1946 apply to all the establishments to which the Bombay Shops and Establishments Act, 1948 applies, as if they were industrial establishments within the meaning of Industrial Employment (Standing Orders) Act, 1946. Section 38-B as it then was is extracted below for proper appreciation:
"Section 38-B : The provisions of the Industrial Employment (Standing Orders) Act, 1946, in its application to the State of Maharashtra (hereinafter in this section referred to as "the said Act"), and the rules and standing orders (including model standing orders) made thereunder from time to time, shall, mutatis mutandis, apply to all establishments to which this Act applies, as if they were industrial establishments within the meaning of the said Act".
The very section was the subject-matter of interpretation by the Division Bench of this Court in the case between C.B. Bhaskaran and Sri S.A. Patil v. Gannon Dunkerley & Co. 1986 I LLJ 163. In that case, Bhaskaran was a Stenographer in the employment of the respondent No. 2. He was suspended on 20.3.1978, pending disciplinary enquiry against him. He made an application claiming full wages. The Lower Court declared that Bhaskaran was entitled to 50% of wages for the first three months, 75% of wages for the subsequent three months and full wages for the balance period minus the usual deductions. This was on the basis that the Industrial Employment (Standing Orders) Act, 1946 and in particular the Standing Orders framed thereunder are applicable. The employer in that case pleaded for exclusion of Industrial Employment (Standing Orders) Act, 1946 on the ground that the Act itself limited its application to industrial establishments wherein 50 or more workmen were employed which was not the case with Bhaskaran's employment. The contention having been overruled by the Labour Court and the Single Judge, Bhaskaran preferred an appeal to the Division Bench and in appeal what transpired is best stated in the following excerpt from the above judgment:
"Shri Menon, learned counsel appearing for the appellant also did not dispute this definition. But, however, according to him, Section 1(3) of the Industrial Employment (Standing Orders) Act, 1946 must be read as integral part of Section 38-B of the Bombay Shops and Establishments Act, especially in the absence of any notification having been issued by the Government in regard to the number of employees employed in the establishment. This submission, in our opinion, is wholly misconceived. It is well settled that the phrase "mutatis, mutandis" is often used in legislation in applying or extending legislative provisions to same or similar circumstances or to same or similar subjects. It is nothing but a rule of adaptation. If the contention of Shri Menon is accepted, it will amount to adding some words in Section 38-B and, in our opinion, this is not permissible. Section 38-B of the Shops and Establishments Act makes no provision for the number of employees that the establishment (covered by Bombay Shops and Establishments Act) should employ for the satisfaction of the condition imposed by Section 1(3) of the Industrial Employment (Standing Orders) Act. In our opinion, the interpretation placed by the learned Single Judge on Section 38-B of the Bombay Shops and Establishments Act, is perfectly legal. By Section 38-B, in effect the provisions of the Industrial Employment (Standing Orders) Act, 1946 are engrafted into the Bombay Shops and Establishments Act, 1948 with only the necessary consequential changes in points of detail in so far as they are applicable".
It is thus clear that Section 38-B as it stood then made no provision for the number of employees that an industrial establishment should employ or for the satisfaction of the condition imposed by the Section 1(3) of the Industrial Employment (Standing Orders) Act, 1946. By Section 38-B, in effect, the provisions of the Industrial Employment (Standing Orders) Act are engrafted into the Bombay Shops and Establishments Act with only necessary changes in points of details.
8. On behalf of the petitioner, reliance was heavily placed on another decision of this Court in the case of Kalyanpur Keshav Venkatrai Pai. v. Corporation Bank 1987 Mh.L.J. 404 and it was contended that the Judge who decided the case did not follow the dictum laid down by the Division Bench in Bhaskaran's case and, therefore, it was urged to make a reference to the Full Bench for finding out the extent or applicability of Section 38-B of the Bombay Shops and Establishments Act to industrial establishments. I do not think that it is necessary to refer the question to the Full Bench, firstly because Kalyanpur's case (cited supra) can be distinguished on facts. Secondly Section 38-B is now amended and, therefore, even otherwise, the reference to Full Bench would only be academic.
9. In Kalyanpur's case, a Manager of a Nationalised Bank drawing salary of Rs. 4,500/- per month was suspended by order dated 16.3.85 and for that period of suspension, he was granted subsistence allowance which worked out at 43rd of the basic salary and admissible dearness allowance for the first six months and at half the rate for the period commencing from the expiry of six months. The Bank manager claimed subsistence allowance under Clause 25(5-A) of the Model Standing Orders framed under the Industrial Employment (Standing Orders) Act, 1946 by virtue of Section 38-B of the Bombay Shops and Establishments Act, 1948, according to which, he would have been entitled to full salary and allowances after 180 days and 75% immediately after expiry of 90 days. According to the management, the subsistence allowance was paid to the officers in accordance with Regulation 14 of the Bank Officers Employees' Regulation. On these facts, the Single Judge held as follows:
"13. At first blush there may appear to be some substance in the contention that the above passage governs the problem that has arisen in this case. But the function of the rule of 'mutatis mutandis' should not be forgotten. The very words imply, in fact mean, 'that the necessary changes made'. If the S.O. Act and the Rules framed thereunder are made applicable to the establishments governed by the Shops Act, the extent of the applicability in the S.O. Act and Rules, cannot be ignored. Section 10-A of the S.O. Act and Rule 25(5-A) of the Bombay Industrial Employment (Standing Orders) Rules, repeatedly make a reference to 'workman'. A workman within the meaning of S.O. Act and Rules are mutatis mutandis made applicable for the purpose of subsistence allowance to the employ- : ees of the establishments governed by the Shops Act, would not justify ignoring the limitations in the S.O. Act and the rules framed thereunder. The better approach will be to read the engraft legislation to the extent required and permitted. Thus, the S.O. Act and Rules will apply to only such of the employees of the Shops Act who would be 'workmen' within the meaning of the S.O. Act and Rules. Such of the employees who are not workmen within the S.O. Act and Rules, will not be within the sweep of Section 38-B........"
If Section 38-B of the Bombay Shops and Establishments Act, 1948 is perused, the provisions of Industrial Employment (Standing Orders) Act, 1946 apply to all the establishments to which the Bombay Shops and Establishments Act, 1948 applies and hence, the Bank Manager though a managerial employee is also an employer as defined under Sub-section (7) of Section 2 of the Bombay Shops and Establishments Act, 1948. It was hence held in the aforesaid case that "the Standing Orders Act and Rules will apply only to such employees of the Shops Act, who would be 'workmen' within the meaning of the S.O. Act and Rules". In other words, the Bank Manager being an employer under the Bombay Shops and Establishments Act, he cannot come within the sweep of Section 38-B of the said Act and, therefore, the applicability of the Model Standing Orders framed under the Industrial Employment (Standing Orders) Act and the Bombay Rules is out of question.
10. In any event, the amended Section 38-B of the Bombay Shops and Establishments Act, 1948 now reads as follows:
"Section 38-B:- The provisions of the Industrial Employment (Standing Orders) Act, 1946, in its application to the State of Maharashtra (hereinafter in this section referred to as "the said Act"), and the rules and standing orders (including model standing orders) made thereunder from time to time, shall, mutatis mutandis, apply to all establishments wherein fifty or more employees are employed and to which this Act applies as if they were industrial establishments within the meaning of the said Act".
The amended Section makes the provision of Industrial Employment (Standing Orders) Act, 1946 applicable to establishments wherein 50 or more employees are employed and to which Bombay Shops and Establishments Act applies. Thus, the controversy is now set at rest and it will be futile exercise to make a reference to the Full Bench.
11. There is no doubt left that the Model Standing Orders framed under the Industrial Employment (Standing Orders) Act and the Bombay Industrial Employment (Standing Orders) Rules, 1959 will govern the relations between the employees engaged by the petitioner and petitioner Company. A probationer is defined under Clause (b) of Standing Order No. 2 as a workman who is provisionally employed to fill in a permanent vacancy or post and who has not completed three months' uninterrupted service in the aggregate in that post. It is suggestive of the fact that the moment three months are completed, the workman ceases to be a probationer and this is also apparent from the Standing Order No. 4-A which reads as follows:-
"4-A. Every probationer who has completed the period of three months' uninterrupted service in the post in which he is provisionally employed shall be made permanent in that post by the Manager by an order in writing, within seven days from the date of completion of such service:
Provided that, where certified standing orders which prevail on the date of coming into force of this rule prescribe a longer probationary period than three months, the probationer shall complete such probationary period:
Provided further that if the services of the probationer are found to be unsatisfactory, the manager may terminate his services after his probationary period.
Explanation : For the purpose of this clause, the probationary period shall not include any interrupted service and shall not be deemed to have been broken by such interrupted service".
The mandate of the aforesaid Standing Order is that upon completion of three months of uninterrupted service by the probationer, he has to be made permanent in that post by the management by an Order in writing within stipulated period of 7 days from the date of completion of the probationary period. The work of a probationer has to be judged within this period only. This is clear from the second proviso of Standing Order No. 4-A which provides that in case the work of the probationer is found to be unsatisfactory, the Manager is empowered to terminate his services immediately after probationary period. The words "after probationary period" appear to have been used in order to cover even the first proviso which is not applicable in the present case. The provisions if read together only convey that after expiry of three months of uninterrupted service of probationary period, the employer has a right to issue an order in writing to make the probationer permanent within 7 days after completion of three months or to terminate his services on completion of the probationary period. In this connection, it was contended on behalf of the petitioner that there cannot be an automatic confirmation unless terms of appointment clearly so provide or there is a rule which provides for automatic confirmation upon completion of the probationary period. For this purpose, reliance was placed on several judgments of the Supreme Court to which I shall shortly refer. The other contention was that even otherwise Standing Order No. 32 of the Model Standing Orders saves the right under a contract of employment if entered into between the parties. Both the aspects will be considered separately in the paragraphs that follow hereafter.
12. It must be made clear that all cases relied upon on behalf of the petitioner relate to service matters. None of the cases cited at the Bar deals with employment of probationers in establishments to which Industrial Law applies. Even then, it would be appropriate to consider the case-laws in order to find out the principles which emerge therefrom. To begin with is the case of S. Sukhbans Singh v. The State of Punjab, . It was held in this case that a probationer cannot, after expiry of the probationary period, automatically acquire the status of a permanent member of service, unless of course the Rules under which he is appointed expressly provide for such a result. The rules governing the Provisional Civil Services of Punjab do not contain any provision whereby a probationer at the end of probationary period is automatically absorbed as a permanent member of the Civil Service. It further held that reading Rules 23 & 24 together, it would appear that where a probationer is not reverted by the Government before the termination of his period of probation he continues to be a probationer but acquires the qualification for substantive permanent appointment.
13. In the case of The State of Punjab v. Dharam Singh, , it was held that where the service rules fix the certain period of time beyond which the probationary period cannot be extended and an employee appointed or promoted to a post on probation is allowed to continue in the post after completion of maximum period of probation without an express order of confirmation he cannot be deemed to continue in that post as a probationer by implication. The reason is that such an implication is negatived by the service rule forbidding extension of the probationary period beyond the maximum period fixed by it. In such a case, it is permissible to draw the inference that the employee allowed to continue in the post on completion of the maximum period of probation has been confirmed in the post by implication.
14. The next case relied upon on behalf of the petitioner was the case of Kedar Nath Bahl v. The State of Punjab and Ors. . Here again, the principle as laid down in the case of S. Sukhbans (cited supra) is reiterated. It is held that where a person is appointed as a probationer in any post and the probationary period is specified, it does not follow that at the end of the said specified period of probation, he obtains confirmation automatically; even if no order is passed in that behalf. Unless the terms of appointment clearly indicate that confirmation would automatically follow at the end of specified period or there is a specific service rule to the effect, the expiration of probationary period does not necessarily lead to confirmation.
15. The next case is of State of Maharashtra v. Veerappa A. Saboji and Anr. wherein it was held that continuation of a Judicial Officer even after period of probation will not give the right of automatic confirmation to him. A similar view is also expressed in the case of Pratap Singh v. Union Territory of Chandigarh and Anr. .
16. What emerges from the aforesaid case-laws is that there is no automatic confirmation of a probationer on expiry of the period of probation. Unless the terms of appointment clearly indicate that the confirmation would automatically follow at the end of the specified period or there is a service rule to that effect, expiration of probationary period does not necessarily lead to confirmation. At the end of probationary period, an order confirming the Government servant is required to be passed and if no such order is passed, the result merely is that he continues in his post as a probationer. There is however, one exception to the aforesaid rule and that rule is laid down in the case of the State of Punjab v. Dharam Singh, . In cases where the rule fixes a period of time beyond which the probationary period cannot be extended and a probationer is allowed to continue in that post after completion of maximum period of probation without an express order of confirmation, he cannot be deemed to continue in that post as a probationer by implication. In such a case, it is permissible to draw an inference that the employee allowed to continue in the post on a completion of the maximum period of probation has been confirmed in that post by implication.
17. Model Standing Order No. 4-A has been elaborately discussed above. The provision if read along with the definition of a probationer given in the said Standing Order makes it abundantly clear that after expiry of three months of uninterrupted service of the probationary period, the employer has a right to issue an order in writing either to make the probationer permanent within 7 days after completion of three months or terminate his services on completion of the probationary period. No extension of probationary period is provided and, therefore, three months' time is the maximum period for which a probationar can be employed. On failure to terminate the probationer on completion of three months, he cannot be deemed to have been continued as a probationer beyond the period of three months because extension is forbidden by the said Standing Order. It is, therefore, permissible to draw an inference that the employee allowed to continue in the post beyond the maximum period of probation has been confirmed in the post by implication. The respondent No. 2 is, therefore, even on the basis of service law reports confirmed in the post on completion of three months.
18. Before diverting from this topic, it is also necessary to refer to the case of Western India Match Company Ltd. v. Workmen, 1973 II LLJ 403. The watchman in that case was employed as a probationer on six months probation when the certified standing orders only provided for two months' probation. He was discharged during the six months' probation for the reason that his service during probation was not approved. Upon industrial dispute being raised in the matter of discharge, it was held that the provision of six months was invalid since inconsistent with the standing orders and, therefore, the discharge was also rendered invalid. The Supreme Court endorsed the view by observing that the terms of "employment specified in the standing orders would prevail over the terms of conditions in the contract of service in existence in enforcement of the standing orders. It further observed that while standing orders are in force, it is not permissible for the employer to seek statutory modification of them so that there may be one set of standing orders for one set of employees and another set for the rest. The order of reinstatement of the watchman was not hence interfered with.
19. Obviously, therefore, the contract of service entered into between the parties can also be well described as inconsistent with the Model Standing Orders and the Standing Orders must prevail over the contract of employment. At this stage, it would be relevant even to refer to Standing Order No. 32 of the Model Standing Orders on which reliance was also placed on behalf of the petitioner Company. It reads as follows:-
"S.O. No. 32 :- Nothing contained in these Standing Orders shall operate in derogation of any law for the time being in force or to the prejudice of any right under the contract of service, custom or usage or an agreement, settlement or award applicable to the establishment".
The provisions contained in the Standing Orders shall not operate to the prejudice of any right under the contract of service, custom or usage or agreement, settlement or award. The prohibition is hence cast against the operation of Standing Orders only when better rights acquired by an employee under the contract of service are likely to be prejudiced. In the present case, it cannot be said that the contract of employment offers better rights to respondent No. 2 in respect of period of probation in comparison to what is contained in Model Standing Order No. 4-A. Therefore, it is not possible to accept the submission as canvassed on behalf of the petitioner that the contract of employment is saved by Model Standing Order No. 32. Even otherwise, if any other interpretation is possible, which will affect or is inconsistent with Standing Order No. 4-A as contained in the Model Standing Order, then such Standing Order like Standing Order No. 32 is also invalid and incapable of being enforced for reasons stated in the decision of the Supreme Court in the case of Western India Match Company Limited (cited supra).
20. Obviously, the petitioner has acted against the provisions of the Standing Orders applicable to the establishment of the petitioner. The learned Courts below hence held that terminating the services of the respondent No. 2 after 17 months of service treating him as a probationer and claiming that his performance was poor and unsatisfactory was clearly arbitrary and cannot be upheld. A submission was hence canvassed on behalf of the petitioner that unless victimisation was proved, the action of the management would not fall within the mischief of Item No. 1(a) of Schedule IV of the Act No. 1 of 1972, merely because the action impugned is held to be arbitrary. The Supreme Court had an occasion to consider the meaning of the word 'victimisation' in the case of Workmen of Williamson Magor & Co. Ltd. v. Williamson Magor & Co. Ltd. and Anr., 1982 I LLJ 35. After discussing the various shades of the word 'victimisation', the Supreme Court accepted the normal meaning as being the victim of unfair and arbitrary action, It is also held by Labour Appellate Tribunal of India in the case of Buckingham & Carnatic Mills Ltd. v. Their Workers 1951-2 LLJ 314 that arbitrary conduct or unnecessary harshness on the part of the employer, judged by normal standards of reasonable man, may be cogent evidence of victimisation or unfair labour practice. Once an action is held to be arbitrary, it must lead to an inference that the action is also not bonafide. The respondent No. 2 having ceased to be a probationer on completion of three months, the action taken by the petitioner of terminating the services of the respondent No. 2 whilst he has acquired the status of a permanent employee, such an action would be punitive in nature also attracting Items 1(d) & (f) of Schedule IV of the Act No. 1 of 1972.
21. From the above discussion, it is clear that the petition is devoid of any merit and is accordingly dismissed leaving parties to bear their respective costs. Rule stands discharged.