146

A GUJARAT STEEL TUBES LTD.

v.

GUJARAT STEEL TUBES MAZDOOR SABHA

N<Wember 19, 1979

D [V. R. KRISHNA IYER, D. A. DESAI AND A. D. KosHAL, JJ.]

Industrial Disputes Act, 1941-Section llA-Scope· of-Whether the arbitra­

tor could exercise the powers conferred on; a Tribunal under seutlon 11A of the

Act and interfere with the punishment awarded by the management to the work­

men.

C Constitution o'f' India, 1950, Article· 227-Power of the lfigh Court to inter·

/ere with the decision of the management and revise the puni.Thment to the·

delinquent workmen.

Model Standing orders made under Section

15(2) of the

Industrial Employ•

ment (Standing Orders) Act, 1946-M.S.Os. 23, 24 and 25 scope of-Whether

the discharge en masse of workmen valid.

D Value rision of Indian Industrial Jurisprudence-Conrlitution of India-

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Articles 39, 41, 42, 43 43A and the Golden Rule for the Judicial resolution of '!"

industrial dispute.

The appellant manufactures steel tubes in the outskirts of Ahmedabad city.

It started its business in 1960i went into production since 1964 and waggled

from infancy

to adulthood with snli1ing profitsJ and growling workers, punctuated

by smouldering demands, strikes and settlement until there brewed a confron­

tation culminating

in a head-on collision following upon certain unhappy

happenings.

A total strike ensued whose chain reaction was a

whole..gale termi­

nation of

all en1ployees followed by fresh recruitment of workmen defacto

breakdown of the strike and dispute over restoration of the

removed workmen.

As per the last settlem'ent between the management and the workmen of

4th August, 1972, it was not open to the workmen to resort to a strike till the

expiry of a period of five years; nor could the1 management decfare· a lock out

till then. Any dispute arising between the parties, aiccording to the terms arrived

nt were to be sorted out through negotiation or, failing that by recourse to

arbitTation. The n1atter was therefore, referred

to an arbitrator and the arbitrator

by his award held the

oction cf the management warranted. The respondent

.Fhallenged the decision of the arbitrator under Article 226/227 of the Con·

stitution and the High Court of Gujarat reversed the award and substantially

directed reinstat~ment. Hence the appeals both by the Management a-nd the

workmen.

Di:sroissing the appeals and modifying the awards substantially, the Court

HELD : (By Majority)

H Per Iyer J. 011 behalf of D. A. Desai J. and himself.

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(i) The basic assumption is that the strike was not only illegal but also .,.,

unjustified. [210 HJ

GUJARAT STEEL TUBES V. MAzPQOR SABHA 147

(ii) Tho management did .punish its 853 workmeru when it discharged them

for reasons of misconduct set out

in separate but .integrated _proceedings; even

though with legal finesse, the formal order was phrased in harmless verbalism. (211 Al

(iii) The action taken under the general law or the standing orders, was

illegal in rhe absence ·of in<lividualised charge &beets,. proper hearing and

personalised punishment, if found guilty. None of these steps having been

taken, the discharge orders \Vere still born. But, the management could. as in

this case it did, offer to make out the delinquency of the employees El4ld the

arbitrator had, in such cases, the full jurisdiction to adjudge de novo both gllilt

and punishment. [211 B-C]

(iv) Section tJA of the Industrial Disputes Act~ 1947 does take in an .arbi~

trator too, and in ttm~ case, the arbitral reference, apairt from section 1 lA is

plenary in scope. [211 C-D]

(v) Article 226 of the Constitution, however restrictive in practice is a pcwer

wide enough in all conscience, to be a friend, in need when thel summons. comes

in a crisis from a victim of injustice; and more importantly this extra--ordinary

reserve power is unsheathed to gnmt final relief without necessary recourse ta

a remand. What the Tribunal may in its discre<tion do the High Court too under D·

Article 226, can, if facts compel so. [211 D-E] ·

(vi) The Award, in the instant case, suffers from a fundamental :flaw thait

it equates an illegal and unjustified· strike with brozen misconduct by every

workman without so much

as identification of

thei charge against each, after

adverting

to the gravamen of his misconduct meriting dismissal.

Passive :Partici­

pation in a strike which is both illegal and unjustified does not ipso facto invite

dismissal

or punitive discharge. There must be active individual

excess. such

as master-minding the unjustified aspects

of the strike, e.g.,, violence, sabotage or

other reprehensible role. Absent such gravamen in the accusation, the extreme

economic penalty of discharge

is wrong. An indicator of

the· absence of such

grievous

guilt is that the management, after stating in strong terms all the sins

of workmen, took back over

400 of them as they trickled back slowly and

beyond the time set, with continuity of service, sugg~sitve of the dubiety of the

tnftated accusations and awarene~s of the minor role of the mass of workmen

in the lingering strike. Furthernlore, even though all sainctions short of punitive

discharge may be employed

by a Management, low wages and high

cost of

living, dismissal of several hundreds with disastrous impact

on numerous families, i~ of such sensitive social concern that, save in exceptional situations, the1 law

will inhibit such a lethal step for the peace of the· industry, the welfare of the

workmen and the broader justice

that transcends transcient

disputes. The hiunan!

dimensions have decisional relevance. The discharge orders though approved bY

the Arbitrator are invalid. "[211 E-H, 212. A·B]

HELD FURTHER : I. In a society, capita1 shall be the brother and keeper

of Jabour and cannot disown this obligation of a partner in management,

especially because social justice and Articles 43 .and 43A are constitutional man­

dates. The policy directions in Articles 39, 41, 42., 43 and 43A speak ()If the·

right to an adequate means of livelihood, the right to work, humane conditions

of work, living

wages ensuring a decent standard of life and enjoyment of

leisure and participation of

\vorke1~ in management of industries. De hors these

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A mandatea, law will fail functionally. Such is the value-vision of Indian Industrial ;.... ,.

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Jurisprudence. [!SS B, G-H, 156 AJ

2. Jural resolution of labour disputes must be sought in t·he law life complex

beyond the factual blinkers of decided cases, beneath the lexical littleness of

statutory texts,

in the economic basics

of industrial justice which must enliven

the consciousness of the Court

and the

corpus ;uris. [154 F-GJ

The golden ntle for thei judicial resolution of an industrial dispute is first to

{\ersuade fighting parties, by judicious suggestions, into the pea·ce-making zone,

disentangle the differences, narro"'' the mistrust gap and convert them through

consensual steps, into negotiated justice. Law is not the last word in justice,

especially social justice. Moreover in an hierarchial system, the little man lives

in the short run but most litigation lives in the long1 r:un. So it is that negotia­

tion first and adjudication next,

is a welcome formula

"'foT the Bench and the·

Bar, the Management and Union. [1S7 C-EJ

The anatomy of a dismissal order is not a mystery, once· it is agreed that

substance, not

se;mblance, governs the decision. Legal criteria are not so slippery

that verbal manipulations may outwit the Court. The fact

is the index of the

mind and an order fair on its

face may be taken at its face value. But there

is moro to it than that, because sometimes words are designed to conceal deeds

by linguistic engineering. The form of the order of the Janguage

in which it

is couched is not conclusive. The Court will lift the veil to see' the true nature

of the order.

[171 G-H, 172 Al

If two factors·-motive and

foundation! of the· order-co·exist, an inference of

punishment

is reasonable though not inevitable.

H the severence of service is

effected -the first condition is fulfilled and if the foundation or catua causans of

such severence

is the servant's misconduct, the second is 'fulfilled. If the basis or

foundation ,for

the order of termination is clearly not turpitudes or stigmatic or

rooted in misconduct or visited with

evil pecuniary effects, then the inference

of dismissal stands negated and

vie~ versa. These canons run right through the

disciplinary brainch of master and servant jurisprudence, both under Article 311

aud in other cases including workmen under managements. The law cannot be

stultified by verbal haberdashery because the Court will lift the mask and discover

the true face.

[172 C-E)

Masters and servants cannot

be permitted to play hide and seek with the

Is. w of dismissals and the plain and proper criteria are not to be misdirected

by terminological cover-ups or by appeal to psychic processf\'11 but must be

grounded

on the substantive

reason for the order, whether disclosed or un­

disclosed. The Court

will find out from' other proceedings or documents

cOn-:

nected with the formal order of termination what the true, ground for the termi ...

nation is. If thus scrutinised thei order has a punitive flavour in cause or conse­

quence, it is dismissal. If it fal1s short of this test, it cannot be called a

punishment. A tern1ination effected because the master is satisfied of the mis­

conduct and of the consequent desirability of terminating the service of the

delinquent servant, it

is a dismissal even if he had the right in Jaw to teiminate

with an innocent order under

the standing order or

otherwise. Whether, in:

such a case the grounds are recorded in ai different proceeding from the formal

order does not detract from

its nature. Nor the fact that, after being satisfied

of the guilt, the master abandons

the· enquiry and proceeds to terminate. Given

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GUJARAT STEEL TUBES V. MAZDOOR SABHA 149

an alleged misconduct and a live nexus between it and thej termination of service

the conclusion is dismissal, even if full benefits as on simple termination are

given and non-injurious terminology is used. [173 E-H, 174 A]

On the contrary, even if there is suspicion of misconduct, thel master may say

that he does not wish to bother about it and may not go into his guilt but

may feel 'like not keeping a man he is not happy with. He may not like to

investigate nor take the risk of continuing a dubious servant. There it is not

dismissal, but termination &impliciter, if no injurious record of reasons or punitive

pecuniary cut back on his full terminal benefits is found. For, in fact, mis·

conduct is not then the moving factor in the discharge. What is decisive is the.

plaiin reason for the discharge, not the strategy of a non-enquiry or clever avoid­

ance of stigmatising epithets. If the basis is not misconduct, thei, order is saved.

[174 B·Dl

Management of Muruga1z Mills v. Industrial Tribunal [1965] 2 SCR 148;

Chartered Bank v. Employees' Union [1960) 3 SCR 441; Western India Auto•

niobi/e As.wciation v. Jndustriul Tribunal, Bombay [1949] S.C.R. 321; Assam

Oil Co. v. Workmen, [!960] 3 SCR 457; Tata 01'/ Mills Co. v. Workmen,

[1964] 2 SCR 125 @ 130; Tata Engineering & Locomotive Co. Ud. v. S. C.

Prasad & ,for. [1969] 3 SCR 372; L. Michael and Anr. v. Ml s. Johnson Pumps

India Ltd., [1975) 3 SCR 372; Workmen of Sudder Office, Cinnamore v.

Management, (1970] 2 L.L.J. 620; Municipal Corporation of Greater Bombay v.

P. S. Malvankar, (1978] 3 SCR 1000; referred to.

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Every wrong order cannot be righted merely because it was wrong. It can

be quashed only if it is vitiated by the fundamental flaws of gross mfacarriage·

of justice, absence of legal evidence, pcr-verse misreading of facts, serious errors

of law on the face of the order, jurisdictional failure and the like. [182 F-GJ

While the remedy under A11. 226 is extraordinary and is of Anglosaxon

vintage, it is not a carbon copy of English processes. Article 226 is a sparing

surgery but the lancet operates where injustice suppurates. While traditional

restraints like availability of alternative remedy hold back the Court, and judicial

\. . .,power should not ordinarily rush in where the other two branches fear to tread.,

r judicial daring is not daunted where glaring injustice demands even affirmative

action.. The wide words of Article 226 are designed for service of the lowly

numbers in their ·grievances if the subject belongs to the Court's province ana the

remedy is appropriate to the judicial procet!8. There is a native hue ~bout

article 226, without being anglophilic or anglophobic in attitude. Viewed from

this jurisprndentia! perspective the Court should be cautious both in not over

stepping as

if Article 226 were as large as an

appeal and not failing to interve11e

where a grave error has crept in. And an appellate power interferes not when:

the order appealed is not right but only when it is clearly wrong. The difference

is real, though lino. [182 G-H, 183 A-Bl

The principle of law is that the jurisdiction of the High Court under Article 226

• ' of the Constitution is limited to holding the judicial or quasi judicial powers

witein the leading strings of legality and to see that they do not exceed their

statuory jurisdiction and corrtCtiy administer the law laid down by the statute.

under the Act. So long as the hierarchy of officers and appellate authorities

created by the statute function \1thin their ambit tho manner in which they

do so can be

no

ground for intcrlerence. The power of judicial supervision of

the High Court under Article 227 of the Constitution (aa it thea stood) ill not

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A greater than those under Article 226 and it must be lilnited to seeing that a

tribunal functions \Vithin the limits of its authority. The v.·rit power is la.rge, t-. _..,

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given illegality and injustice even if its use is severely disciplinary. The au1ended

Article 226 would enable the liigh Court to interfere with an A"vard of the

industrial adjudicator

if that is based on a complete misconception of law or it

is based on

no evidence, or that no reasona.ble man would come to the conclu·

sion to which the Arbitrator has· arrived. [185 E-G 186 O-E]

Navinchandra Shanker Chand Shah v. Manager, Aflmedabad Cooperative

Department Stores Ltd., [1973] !'.> Guj. L.R. 108 @ 140; approved.

Rohtas Industries & Anr. v. Rohtas Industries Staff U11io11 and Ors. [1976] 3

SCR 12: followed.

Nagendranath Bara and Anr. v. The Con1missioner of Hills Divisions and

Appeals, Assani & Ors., [1958] SCR 1240; Engineering lvlazdoor Sabha v. HiiTd

Cycle Ltd., [1963] Suppl. I SCR 625; State of A.P. v. Srel'rama Rao, [1964] 3

SCR 25 @ 33; P. H. Kalyani v. Mis Air France, Calcutta, [1964] 2 SCR 104;

referred to.

"Tribunal" sirnpliciter has a sweeping signification and does not exclude

Arbitrator. A tribunal literally means a seat

of justice, may be, a commission,

a Court

or other adjudicatory

organ created by the State. All these are tribunal

and naturally

the. import of the

word, in Section 2(r). ofl the Industrial Disputes

Act, embraces an arbitration tribunal. [188 E-F-H 189 A]

Dawki11g v. Rokely, L.R. 8 Q.B. 255; quoted with approval.

An Arbitrator has all the po~veys under the terms of reference, t'o which

·E both sides are party, confer. In the instant case, the Arbitrator had the authority

to investigate into

the propriety of the discharge and the ver,acity of the mis­

conduct. Even

if section llA of the Industrial Disputes Act is not

applicable,

an Arbitrator under Section 10A is· bound to act in the spirit of the legislation

under which he

is to function. A commercial Arbitrator who derives his

juris~

diction from the terms of reference will by neca;sary implication be botind to

decide according to law and when one says "according to law", it only means

F existing law and the law laid down by the Supreme Court being the law of land,

an Arbitrator under section 10A will have; to decide keeping in view the spirit

of section llA. [196 B-DJ

Union of Ilidia v. Bungo Steel F"!niture (P) Ltd. [1967] I SCR 324; reterred

to.

G Per Koshal J. (Contra)

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1. The orders of discharge could not be regarded as orders of their dismissal

and were on the other hand, orders of discharge simp1iciter properly passed

under Model Standing Order 23. [235 C-D]

(a) Cl&Uses (3) and (4) of M.S.O. 25 speak of an inquiry only in the

case of an order falling under sub-clause (g) of clause (1) of that M.S.O.

The only sub clause of clause (I) of M.S.O. 25 to which the provisions of

~lauses (3) and. (4) of that M.S.O. wonld be attracted is sub clause (g) and

if an order of discharge falls under M.S.0. 23, an inquiry under clauses (3) and

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GUJARAT STEEL TUBES V, MAZDOOR SABHA 151

(.4) of }.f .S.0. 25 would not be a pre-requisite thereto even though such an

order is mentioned in sub-clause (f) clauso (I) of tbat M,S.0. ' [222 H, 223 A]

(b) Under M.S.0.s. 23 and 25, the Management has tbe powers to effect

termination of the services

of an empJoyee by having recourse

to either ot: the1n.

Jn action taken under I\.f.S.O. 23, no element of punishment is involved and

the discharge

is

a discharge simpliclter; and that is why no opportunity to the

.concerned employee

to

show cause against the termination is provided for.

Dismissal~ however~ which an employer may order is in its very nature, a punish­

ment, the infliction of which therefore has been made subject to the result of an

inquiry (having the semblance of a trial in a criminal proceeding). Exercise of

each of the two powers hais the effect of the termination of the services of the

concerned employee but must be regarded, because of the manner in which each

bas been dealt with by the M.S.O. as separate and distinct from the other.

[223 C-E]

(c) To contend that once it was proved that the order of discharge of a

workman was passed by reaeon of a misconduct attributed. to hin1 by the·

management, the order cannot but amount to an order of dis missal is wrong for

two reasons. For one thing, clause (1) of M.S.0. 25 specifically states iii sub~

dames (f) tbat a workman guilty of misconduct may be dischargod under M.S.O.

23. This cleairly means that when. the employer is satisfied that a '\-·orkman has

been guilty of misconduct he may [apart from· visiting the workman with any

of tho punishments specified in sub clauses (a), (b), ( c), (cl) and ( e) of clause

(1) of M.S.O. 25] either pass against him an order of discharge for which

no inql!iry precedent as provided for

in

clauses (3) and ( 4) of M.S.0. 25 would

be

necessary, or n1ay dismiss him

a-ftoc holding such an inquiry which of the

two kinds of order, the employer shall pass is left entirely to his: discretion.

[223 E-H]

It is true that the employer cannot pass a real order of dismissal in the

garb

of

one of discharge. But that only means that if the order of termination

of services of an employee is in reality intended ta push an employee amd not

merely

to get rid of

tim because he is considered useless, inconvenient or

troublesome, the order even though specified to be an order of dismissal covered

by sub clause (g)

of clause (I) of

M.S.O. 25. On the other hand if no such

intention is made out the order would remain one of discharge simpliciter even

though it has been passed for the sole reason that a misconduct

is imputed

to

the employee. That is bnw M.S.Os. 23 and 25 have to be interpreted. M.S.O. 25

specifically

gives to the employer the power to get rid of

"a workman guilty

of misconduct" by passing an order of his discharge under M.S.O. 23 .

[224

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Secondly, the

reasons for the termination of service of a permanent ""'orkn1an

under M.S. 0. 23 havo to be recorded in writing and communicatod to him, if he

so desires, under clause ( 4-A) thereof. Such reasons must obviously consist of

an opinion derogatory to the workman in relation to the performance of his

duties,

and whether such reasons consist of negligence, work shirking or of -serious overt acts like theft or en1bezzlement~ they would in anY case amount to

misconduct for which he may be punished under M.S.O. 25. There being no

case

in which such reasons would not amount

to misconduct, the result is that

M.S.O. 23 would be render otiose if terminMion of service thereunder for

misconduct could be regarded as a dism.issal and such a result strikes at the very

root

of accepted canons of interpretation. If it

Wlls open to the Court to "lift

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the veil" and to hold an order of discharge to amount to dismissal merely

because the motive behind it was a misconduct attributed to the employee, the

services of an employee could be terminated without holding against him an

inquiry such as is contemplated by clauses (3) and (4) of M.S.O. 25. (224 D-GJ

Bombay Corporation v. Malia11kar, [1978] 3 SCR 1000; applied.

Merely because it

is the reason which weighed with

tho employer in effective

the termination of services \vould not make

1 thei order of such termination as one

founded

on misconduct, for such a proposition would run counter to. the plain

meaning of clause ( 1) of

M.S. 0. 25. For Ml order to be "founded" an mis·

conduct, it must be intended to have been passed by way of punishment, that

is, it must be intended to chastise, or cause pain in body· or mind or harm

or loss in reputation or money to the concerned worker. If such an intention

cannot be spelled out

of the prevailing circumstances, the crder of discharge or

the reasons for which it was ostensibly passed, it

cannot be regarded as an order

of dismissal. Such would be the C'3.Se when the employer orders discharge 1n

the interests of the factory or of the general b~dy of workers. (226 A.CJ

Chartered Bank, Bombay v. The Chartered Bank Employees Union, [1960] 3

SCR 441; The Tata Oil Mills Co. Ltd. [1964] 2 SC!t p. 123; The Tata Engineer­

ing and Locomotives Co, Ltd. v .. S. C. Prasad, [1969] 3 S.C.C. 372; Workmen

D of Sudder Office, Cinnamore v. Management, [1970] 2 L.L.J. 620 followed.

E

The real criterion which forn1cd the touchstone of a test to determinel whether .

an order of termination of services is an order of discharge simpliciter or

amounts to dismissal is the real nature of the order, that! is, the intention with

which it was passed. If the intention was to punish, that is tol chastise; the order

may be regarded as an order of dismissal; and for judging the intention, the

question of mala fides (which is the same thing as colourable exercise of power)

becomes all important. If no mala fides can be attributed to the management,

the order of discharge must be regarded as one having been passed unde.r

M.S.O. 23 even though the reason for its passage is serious misconduct.

[228 CDJ

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(2) The arbitrator could not exercise tho powm conferred on a Tribunal -~

under section 11A of the 1947 Act and could not therefore interfere with the

F punishment awarded by the Management to the workmen (even if the discharge

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could be reaarded a punishment). [235 D-EJ

Throughout the I.D. Act, while ~arbitrator' would include an umpire. a Tri~

bunal would not include an arbitrator but would mean only an Industrial

Tribunal constituted under the

Act unless the context makes it

necessary to give

the word a different connotation. In sub section (1) of section 11, the word

'Tn'bunal' has been used in accordance with the definition appearing in clause (r)

section 2 because an arbitrator is separately mentioned in that sub"'5eCtion~ In

sub-sections (2) and (3) of that section a Board, a Labour Court, a Tribunal

and a National Tribunal have been invested with certain powers. A Tribunal

as cootemplated by sub-sections (2) and (3) then, would not include an

arbitrator.

[233 A-BJ

It is a well

settled canon: of interpretation of statutes that the language used

by the Legislature must be regarded as the only oource of its intention uni..,.

such language is ambiguous, in which situation the Preamble to !he Act; the

statement Of Objects of and Reasons for bringing it on the statute book rutd

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GUJARAT STEEL TUBES V. MAZDOOR SABHA 153

the pnrpose underlying the legislation may be taken into consideration for A

ascertaining such intention. That the purpose of the legislatjon is to fulfil a

socio-economic need, or the express object underlying it does not con1e into the

picture till an ambiguity is detected in the language and the Court n1ust steer

clear of the temptation to mould the written word according to its own concept

of what should have been einacted, It is thus not permissible for the Supren1e

Court to take the statements of objects and Reasons or the purpose underlying

the enactment into consideration, while interpreting section 1 lA of the I.D. B

Act. [231 F-G, 234 Cl

3. The High Court exceeded the limits of its jurisdiction in interfering with

the said punishment, in the instant case, purporting to act in the exercise of its

powers under Article 227 of the Cnnstitution of India. [235 E·F]

The High Court, \Vhile discharging its functions as envisaged by that Article, C

does not sit as a Court of Appeal over the Award of the' Arbitrator but exercises

lin1itcd jurisdiction \vhich extends only to seeing that the arbitn1.tor uas functioned

within the scope

of his Jegal authority. In this view of the

m~tter it was not

open

to

the High Court to revise the punishment (if the discharge is regarded

as such) meted out

by the

l\<Ianagement to the delinquent workmen and left

intact

by the arbitrator whose authority in doing

so has not been shown to have

been exercised beyond the limits

of his jurisdiction. [234 G-H, 235 A-CJ D

Nagendra .'Vath BoJ'a and Anr. v. The Con1missio11et of Hills Division and

Appeals,

Assanl

tu1d Ors., [1958] SCR 1240; P. H. Kalyani v. ,''J/.s Air Ftance,

Caic111ta, [1964] 3 SCR 25, State of A.P. v .. Sree Rama Rao, [1964] 3 SCR 25;

l\'avinchandra Shakerclzand Shah v. Manager Ahmeda~ad Conp,erath·e Dept.

Stare.• Ltd., [1978] 19 Guj. LR. 108; referred to.

CIVIL APPELLATE JURISDICTION; Civil Appeal Nos. 1212, 2089

and 2237 of 1978.

From the Judgment and Order dated 15-6-1978 of the Gujarat

High Court

in

Special Civil Application No. 1150 of 1976.

Y. S. Chitale, I. C. Bhatt, A. K. Sen, I. M. Nanavati, D. C.

Gandhi, A. G. Menses, K. J. John and K. K. Manchanda for the

Appellants in C.A. 1212 and 2237 /78 and RR. 1 in CA 2089.

V. M. Tarkunde, Y. S. Chitale, P. Ii. Parekh and N. I. Mehta for

the Appellant

in CA

2089 and R. 1 in CA 1212.

M. C. Bhandare and B. Datta for the Intervener in CA 1212

(Ahmedabad Nagar Employee Union) .

R. K. Garg, Vimal Dave and Miss Kai/ash Mehta for the Interve­

ner Gujarat Steel Tubes Mazdoor Sabha in CA 1212.

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The Judgment of V. R. Krishna Iyer, and D. A. Desai, JJ was H

delivered by Krishna Iye;r, J. A. D. Koshal, J. gave a dissenting

Opinion.

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154 SUPREME COURT REPORTS [1980] 2 S.C.R.

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h:ive many, the foremost being that the economics of !aw is the es· !'-;,

scnce of labour jurisprudence.

· The case in a nutshell-

An affluent Management and an indigent work force are the two

wings

of the Gujarat Steel

Tub~ Ltd. which manufactures steel tubes

in the outskirts of Ahmedabad city and

is scarred by an

industrial dis­

pute resulting in these appeals. This industry, started

in

1960, went

into production since 1964 and waggled from infancy

to adulthood with smiling profits and growling workers, punctuated by Smouldering de­

mand, strikes

and

settlements, until there brewed a confrontation cul·

minating in a head-on collision following upon certain unhappy hap·

penings. A total strike ensued, whose chain reaction was a wholesale

termination

of all the

employees, followed by fresh recruitment of

workmen, de facto breakdown of the strike and dispute over restora­

tion of the removed workmen. This cataclysmic ep~ode and its .

sequcl formed the basis

of a Section lOA arbitration and award, a writ

petition and judgment, inevitably spiralling up

to

this Court in two

appeals--0nc by the Management and the other by the Union-which

have been heard together and are being disposed of by this common

judgment. The arbitrator held the action of the Management wanant­

ed while the High Court reversed the Award and substantially directed

reinstatement.

The Jural

Perspective

A few fundamental issues, factual and legal, on which bitter con­

troversy raged

at the bar, settle the decisional fate of this

case. A

plethora of precedents bas been cited and volumes of evidence read

for our consideration by both sides. But the jural resolution of labour

disputes must be sought

in the law-life complex, beyond the factual

blinkers of decided cases, beneath

the lexical littleness of ~tatutory

texts, in the economic basics of industrial justice which must enliven

the consciousness of the court and the corpus juris. This Court has

developed Labour Law

on this broad basis and what this Court has

declared holds good for the country. We must

first fix the founding

faith in

tl1is juristic branch before unravelling the

details of the parti­

cular case.

Viewing from this vantage point, it is relevant to note that the

ethical roots

of jurisprudence, with economic overtones,

are the cum

•

•

H vital of any country's legal system. So it is that we begin with two ,

quotations-one from the Old Testament and the other from Gandhiji

the Indian New

Testament-as perspective-setters. After

all'. ...,,..

•

0

GUJARAT STEEL TUBES V. MAZDOOR SABHA (Krishna Iyer, J.) 155

industrial law must set the moral-legal norms for the modus vivendi

between the partners in management, namely, Capital and Labour. Cain

reported, when asked by God about his brother Abel, in the Old Testa­

ment: 'Am I my brother's keeper?',

'Yes' was the implicit answ~r

in God's curse of Cain. In the fraternal economics of national pro­

<juction, worker is partner in this biblical spirit. In our society, Capi­

tal shall

be the brother and keeper of Labour and cannot disown

this

·obligation, especially because Social Justice and Articles 43 and 43A

are constitutional mandates.

Gandhiji, to

whom the Arbitrator has adverted in passing in his

award, way back in March 1946, wrote on Capitalism and

Strikes in

the Harijan:

"How should capital behave when labour strikes? This question

is in the air and has great importance at the present moment. One

way is that of suppression named or nicknamed 'American'. It con-

A.

B

c

sists in suppression of labour through organised goondaism. Every­

body

would consider this as wrong and destructive. The other way, D

right and honourable, consists in considering

every strike on its

merits

and giving labour its due-not what capital considers as due, but what

labour itself would

so consider and enlightened public opinion acclaims

as

iust(') ........... .

Jn my opinion, employers and employed are equal partners, even

if employees are not considered superior. But what

we see today is

the

reverse. The reason is that the employers harness intelligence

on

tl1eir side. They have the superior advantage which concentration

of capital brings with it, and they know how to make use of it ..... .

Whilst capital

in India is fairly organised, labour is

>till in a more or

less disorganised condition in spite

of

Unions and Federation. There­

fore,

it lacks

the power that true combination gives. (2)

Hence, my advice to the employers would be that should willingly

regard workers as the real owners of the concerns which they fancy

they have created. (

3

)

..•••.•..• "

E

F

Tuned to these values are the policy directives in Articles 39, 41, G

42,

43 and 43A. They speak of the right to an adequate means of • • livelihood, the right to work, humane conditions of work, living wage

ensuring a decent standard of life and enjoyment of Je[sure and parti­

cipation of workers in management of industries.

De hors these man-

-

(1) Socialism of my Conception (M.K. Gandhi) by Anand T. Hingorani,

Bhartiya Vidya Bhavan.

(2) ibid.

(3) Ibid.

H

156 SUPREME COURT REPORTS [1980] 2 S.C.R.

, A dates, law will fail functionally. Such is the value-vision of Indian

Industrial Jurisprudence.

The matrix of facts-A

Pre-view

The nidus of facts which enwomb the issues of law may be elabo-

B rated a little more at this stage. In t1le vicinity of Ahmedabad City,

the appellant

is a prosperous

engineering enterprise which enjoys entrc­

preneureal excellence and employs over 800 workmen knit together

into the respondent Union called the Gujarat Steel Tubes Mazdoor

Sabha (lhe Sabha, for short). Fortunately, the indusry has had an

innings of escalating profits but the workmen have had a running com-

e plaint of a raw deal. Frequent demands for better conditions, followed

by ;iego:iated settlements, have been a lovely feature of this establish­

ment, although the poignant fact remains that till the dawn of the

seyenties. the gross wages of the workmen have hovered around a

harrowii;g hundred rupees or more in this thriving Ahmedabad indus-

D

E

F

G

H

try.

The course of this precarious co-existence was often ruffled, and

there \Vas, '110\V and then. some flare-up leading to strike, conciliation

anLl even reference under Section 10. When one such reference was

pending, another unconnected dispute arose which, after some twists

and tmns, led to an industrial break-down and a total strike. The

episodic s !ages of this bitter battle will have to be narrated at length

a little later. Suffice it to say that the Management jettisoned all the

853 workman and recruited some freshers to take their place and

to keep the wheels of production moving. In the war of attrition that

ensued, labour lost and capitulated to Capital. At long last, between

the two, a reference to arbitration of the disputes was agreed upon

under Section lOA of the Industrial Disputes Act 1947 (the Act, for

short). The highlight of the dispute referred for arbitration was

whether the termination orders issued by the Management against the

\vork1ncn whose names \Vere set oy.t in the annexure to the reference

\\'er~ "legal, proper and justified"; if not, \"hethcr the workn1un \Vere

'entitled to any reliefs including the relief of reinstatement with con­

tinuity of service and full back wages'. The arbitrator's decision went

against the Sabha while, on a challange under Article 226, the High

Court's judgment virtually vindicated

its stand. This is the hang of

the case. The substantial appeal

fr. Ly the Management while the

Sabha has a marginal quarrel over a portion of the judgment as dis­

closed in its appeal. The 'jetsam' workmen, a

few hundred in. number,

have been directed to be reinstated with full or partial back pay and

this

is the bitter bone of contention.

•

•

'

'

}

<;UJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 157

A stage-by-stage recapitulation of the developments iS: impo;rtant A

to get to grips with the core controversy.

Sri Ashok Sen, for the appellant-Management, and Sri Tarkunde

for the respondent-Sabha, have extensively presented their rival versions

with forceful erudition.

Sri

R. K. Garg, of course, for some workmen

has invoked with passion the socialist thrust of the Constitution

as a

substantive submission and,

as justificatory of the workmen's demands,

relied on the glaring

contrast between the soaring profits and the S'1g-

ging wages,. while Sri Dhandare has pressed the lachrymose case of the

several hundreds of 'inte.rregual' employees whose ren1oval fron1 ;,,crvice,

on re-instatement of the old, might spell iniquity.

Olive Branch Approach : At this stage we must disclose an: effort at

settlement

we made with the hearty participation of

Sri Ashok Sen and

Sri Tarkunde at the early stages of the hearing.

The golden rule for the judicial resolution of an industrial dispute

B

c

is first to persuade fighting parties, by judicious suggestions, into the

peace-making zone, disentangle

the differences, narrow the

mis1rust

·gap and convert them, through consensual steps, into negotiated

jGstice. Law is not the last word i11 justice, especially social jusiice.

Moreover, in our hierarchical court system, the little man lives in

D

the short nm but most litigation lives in the long run. So it is that

negotiation first and adjudication next, is a welcome formula for the

Bench and the Bar, Management and Union. This 'Olive Branch'

approach brought the parties closer in our court and gave use a better

understanding of the problem, although we could not clinch a scttie­

ment. So we heard the case in depth and felt that some of the legal

issues did merit this court's declaratory pronouncement, settlement

or no settlement. Mercifully, counsel abbreviated their oral argu­

ment~ into an 1~ight-day exercise, sparing us the sparring maraG10'.'.

of 28 labori.Pus days through which the case stretched out in the High

Court

Orality ad libitem may be the genius of Victorian era advocacy but

E

F

in our 'needy' Republic with crowded dockets, forensic brevity is a

necessity. The Bench and the Bar must fabricate a

new shorthand G

form of court methodology which will do justice to the pockets of the

poor who seek right and justice and to the limited judicial hours

humanly available to the court if the delivery system of justice

is not

to suffer obsolescence.

The facts : Back to the central facts.

Proof of the 'efficient' manage- H

ment of the Gujarat Steel Tubes Ltd. is afforded by the testimony of

larger turnover and profits, year after year, from the beginning down

--

A

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F

G

H

158 SUPREME COURT REPORTS [1980] 2 S.C.R.

to date. The mill was commissioned in January 1964 but by the

accounting year 1971-72 the turnover had leapt to Rs. 560 lal!.hs. It

scaled to Rs. 680 lakhs the next year, to Rs. 1136 lakhs the year after

and to Rs. 20 crores in 1974-75. This enterprise entered the export

trade and otherwise established itself as a premier manufactory in the

line. Steel shortage is the only shackle which hampers its higher pro­

ductivity. But its increasing shower of prosperity was a sharp contrast,

according to Sri Garg, to the share of the wage bill. The worker star­

ted on a magnificent sum per mensem of Rs. 100/-in toto even as late

as 1970, although some workmen, with more service, were paid some­

what higher. The extenuatorY plea of the Management, justificatory

of this parsimony, was that other mill-hands were receiving more ni!!­

gardly wages in comparable enterprises. Probably, unionisation, under

these luridly low-paid circumstances, caught on and a workers' union

was born somewhere around 1966. A sensible stroke

of

enlightened

capitalism persuaded the Management to enter into agreements with

the Union, somewhat improving emoluments and ameliorating condi­

tions. By 1968, the Sabha, a later union, came into being and com­

manded the backing of all

or most of the mill-hands. By March 1969,

the

Sabha presented a charter of demands, followed by resistance from

the Management and strike by the workers. By July 1969, a settle­

ment with the Sabha was reached. Agreements relating to the various

demands brought quiet and respite to the industry '.1 hough it proved

temporary.

A vivid close-up of the sequence and consequence of the dramatic

and traumatic events culminating in the reference to arbitration and

the impugned award

is essential as factual foundation for the decision

of the issues. Even so, we must condense, since labyrinthine details

are not needed in a third tier judgment. Broad lines with the brush

bring out the effect, not minute etches which encumber the picture.

An agreement of futuristic import with which we may begin

thl'l

confrontatio~al chronicle is that of April 1970. Clause 6 thereof runs

thus:

"Management of the Company agrees to implement recom­

mendations of the Central Wage Board for Engineering

Industries as and when finally declared and all the increments

granted

to workmen from time to time under this agreement

shall be adjusted with those recommendations provided that

such adjustment shall not adversely affect the wages of work­

man''.

The engineering industry, where India is forging ahead, was appa­

rently exploitative towards labour, and to make amends for this un-

,,.;,__ -·

v

•

_., .

I ,J

--, ..

llUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) I 59

healthy position, the Central Wage Board was appointed in 1964

although it took six long years

to recommend revision of wages to

be

implemented with effect from 1-1-1969. Meanwhile, the masses of

workers were living 'below the broad line' Saintly patience in sncll a

milieu was too much to expect from hungry demands and pressing

for the recommendations of the Wage Board

to be converted into immediate cash. But, as we will presently unravel, Wage Board

expectations' were proving teasing illusions and premises of unreality

because of non-implementation, viewed from the Sabha's angle. The

Management,

on the other band, had a contrary version which we will

briefly consider. Luckily, agreed mini-increases in wages were taking

place during the years 1970, 1971 and 1972. Likewise, bonus was

also the subject of bargain and agreement. But in September 1971.

an allegedly violent episode broke up the truce between the two, spawn­

ed criminal cases against workers, led to charges of go-slow tactics

and lock-outs and burst into suspension, discharge and dismis.sal of

workmen.

The crisis was tided over by continued c'.>nciJ'at'ons and two settle­

ments. We MC not directly concerned with tho cluster of clauses there­

in save one. 64 workmen bad been discharged or dismissed, of whom

half the number were agreed to be reinstated. The fate of the other

half (32 workers) was left for arbitration by the Industrial Tribunal.

The dark clouds clem:ed for a while but tho sky turned murky over

again, although the previous agreement bad promised a long, spell of

normalcy. The Sabha, in October 1972, met and resolved to raise de­

mands of which the principal ones were non-implementation of tbc Wage

Board recommendations, bonns for 1971 and wages during the lock­

out period. The primary pathology of industrial friction is attitudinal.

The Management could have (and, indeed, did, with a new Uriion)

solved these problems had they regarded the Sabha as partner, not sabo­

teur.

Had the bitter combativeness of

the Sabha been moderated,

may be the showdown could have been averted.

Apportioning blame does not help now,

but we refer to it here

because Sri Ashok

Sen, with feeling fury, fell fow of the criticism by

the Hlgh Court that the Management had acted improperly in insisting

on arbitration, and argued that when parties disagreed, arbitral reference

was the only anGwer and the workers' fanatical rejection of arbitration

made

no sense. We need not delve into the details of the correspon­dence relied on by either side to reach the truth. For, the Unions

case is that in the prior settlement between tho two parties arbitral

refenince came only after negotiations failed. That was why they

A

B

c

D

E

F

G

H

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160 SUPREME COURT REPORTS (1980) 2 S.C.R.

A pressed the Management to reason together, avoiding wrestling with

each other before a slow-moving umpire.

n

c

D

E

Sri Tarkunde, for the Sabha, urged that the workmen were not in­

transigent but impatient and pleaded for a negotiated settlement since

· the main point in dispute, namely the implementation of the Central

Engineering Wage Board's recommendations,

was too plain to admit

of difference, given good faith on both sides. W c will examine the

substance of this submission later but it needs to

be emphasised that

workmen, surviving on starving wages and with notoriously fragile

staying power, are in no mood for adjudicatory procedures, arbitral or

other, if the doors of negotiation are still ajar. The obvious reason

for this attitude

is that the litigative length of the adjudicatory appara­

tus, be it the tribunal, the court

or the arbitrafur, is too lethargic and

long-winded for workmen without the wherewithal to survive and

is

beset with protracted challenges either by way of appeal upon appeal

or in the shape of writ petitions and, thereafter, appeals upon appeals.

The present case illustrates the point. Where workmen on hundred

rupees a month demand immediate· negotiation the reason

is that priva­

tions have no patience beyond a point. Now and here,

by negotiation,

is the shop-floor glamour.

In this very matter, although the contro­

versy before the arbitrator

fell within a small compass, he took a year

and ninety printed pages to decide, inevitably followed by a

few years

and hundred and thirty printed pages of judgment in the High Court

and a longer

spell in this Court with slightly lesser length of judgment.

Which workman under Third World Conditions can withstand this

wasting disease while hunger leaves no option save to do or die?

Raw life, not rigid logic,

is the mother of law.

~

G

After the demands were raised by the Union, the main issue being

implementation of the

Wage Board recommendations, a stream of cor­

respondence, meetings and inchoate settlements ensued, but the

crucial

question, which would have meant 'cash and carry' for the workmen,

balled solution. Do negotiate since the appl;cation of the Wage Board

recommendations are beyond ambiguity, was the Sabha's peremptory

plea. We differ; therefore,

go to arbitration, was the Management's

firm response. A stalemate descended on the scene.

No breakthrough being visible, the

Sabha charged the Management

by its letter of January 25, 1973 with breach of clause 6 of the Agree­

ment of August 4, 1972 which ran thus :

H "That the parties agree that for a period of 5 years from

the date of this settlement

all disputes will be solved by

mutual negotiations

or, failing that, by joint arbitration under

1

•

•

GUJARAT STEEi TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 161

Section lOA of the I.D. Act, 1947. Neither party shall take

any direct action including go-slow, strike and lock-out for

a period of 5 years from the date of this settlement."

Various aspersions of anti-labour tactics were included in the Sabha's

letter

but

the most money-loaded item was the grievance about the

Wage Board recommendations. The temper, by now, was tense.

The Management, on the same day, (January 25, 1973) set out

its versinn on the notice board and the High Court's summary of

it runs thus :

"The notice stated that during the course of the meeting

with the representatives of the Sabha held on January 20,

1973 the Company had expressed i!IS willingness to implement

the Wage Board recommendations according to its interpreta­

tion oo and with effect from January 1, 1969 without prC:.

judice to the rights and contentions, of the workmen and leav­

ing it open to the parties to take the matter to1 arbitration for

resolution of the points of dispute. The Sabha, however,

had turned down

thi.s suggestion and it came to the notice

of the Company that workmen were being instigated by mak­

ing false representations. The Company clarified that on

and with effect from January

1, 1972 every workman would

be entitled to the benefits of Wage Board recommendations,

irre.;pective of whether the concerned workman had put in

240 days attendance."

The Sabha's answer was a strike two days later. This event of

January 27 was countered quickly by the Management restating its

attitude on the Wage Board recommendations, asserting that the strike

was illegal and in breach of the settlement of August

4, 1972 and

wholly unjustified because the offer

of reference to arbitration, nego­

tiations failing, had been spurned,

by the Sabha. The notice wound up

with a command and a caveat :

"If the workmen do not immediately resume duty, the

Company would not be under any obligation to continue in

service those 32 workmen

who have been taken back in service

pursuant to the settlement dated August 4, 1972.

Be>ides,

if (the workmen) continue causing loss to the Company from

time to time in this manner, the Company

will not also be

bound to implement the Wage Board, recommendations on

and with effect

from January 1, 1969, which may

a15o be

noted. The Company hereby withdraws all its proposals

unless the Workmen withdraw the strike and resume work

within two days."

A

B

c

D

E

p

G

H

-~w,.._,"""'*"'·"·------

I

I

,

!

i

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B

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E

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162 SUPREME COURT REPORTS [1980] 2 S.C.R.

This threat was dismissed by the workmen as a brutum fulmen

and the strike continued. The Management, therefore, came up on

the notice board castigating the Sabha with irresponsible obduracy in

waging an illegal and unjustified strike, A warning of the shape of

things to come was given in this notice. The High Court has summed

it

up thus : "The Company gave an intimation that in view of such

obstinate attitude on the part of the Sabha and the workmen,

it had decided to withdraw its earlier offer to implement the

Wage Board recommendations on and with

effect from

January 1, 1969

as already cautioned in the

notice dated

January

27, 1973. The said decision must be taken to have

been thereby

co=unicated to the workmen and

Sabha.

The notice further stated that having regard to the obdurate,

unreasonable and illegal attitude adopted by ~he workmen

and Sabha, the Company had decided to take disciplinary

proceedings against the defaulting workmen. In this connec­

tion, the attention of the workmen

was drawn to the fact that

the

strike was illegal not only because of the terms of the

settlement dated August

4, 1972 but

also because of the pen­

dency of the reference relating to reinstatement of 32 workmen

before the Indnstrial Court and, that, therefore, the Company

was entitled to take disciplinary action against them. Finally,

the Company appealed to the workmen to withdraw their

illegal and unjustified strike forthwith and to resmne work."

These exercises notwithstanding, the strike raged undaunted. the

production

was paralysed and the Management retaliated

by an elabo­

rate notice which dilated on its preparedness to negotiate or arbitrate

and the Sabha's unreason in rejecting this gesture and persisting on the

war path. The stern economic sanction was brought home in a critical

paragraph :

"By this final notice the workmen are informed that they

should withdraw the strike and resume work before Thursday,

February 15, 1973.

If the workmen

resume duty according­

ly, the management would be still

willing to pay salary

according to the recommendations

of the Wage Board on and

with effect from January !, 1969. Furthermore, the mana­

gement is ready and willing to refer to the arbitration of the

Industrial Tribunal the question

as

lo whether the fflflnage­

ment has implemented the settlement dated August 4, 1972

and all other labour problems. In spite of this, if the work­

men do not resume duty before Thursday, February 15,

1973.

then the

Company will terminate the serv!ces of all

workmen who are on strike and thereaftu it will run the

•

(

•

1

•

•

•

~

I

GUJARAT STEEL TUBES v. MAWOOR SABHA (Krishna Iyer, J.) 163

factory by employing new workmen. All workmen may take

note of this fact."

The count-down thus began. February 15, 1973 arrived, and the

Management struck the fatal

blow of discharging the strikers-all the

labour force,

853 strong-and recruiting fresh hands and thus work

A

was resumed by February 19, 1973. I

This public notice was allegedly sent to the Sabha and circulated

to such workmen as hovered around the factory. It is common case

that the notice of February 15, 1973, was not sent to individual work­

men but

was a signal for action. The drastic consequence of dis­

obedience

was spelt out in no uncertain terms :

"The workmen are hereby informed that \.hey ;hould

resume duty on or before Monday, February 19, 1973 failing

which

the Management will presume that the workmen want

to continue their strike and do not wish to resnme work

until their demands

as aforesaid are accepted by. the manage­

ment. '}

Parallel negotiations were going on even while mailed fist mano­

euvres were being played up-thanks to the basic goodwill and tradi­

tion of dispute settlements that existed in this company. Even amidst

the clash of arms, bilateral diplomacy has a place in successfnl indns­

triaf relations. The Management and the Sabha allowed the talks to

continue which, at any rate, clarified the area of discord. One thing

that stood out of these palavers

was that both

sides affirmed the pre­

condition

of negotiations before arbitration over differences although

the content.

accent and connotation of 'negotiations' varied with each

side. No tangible results flowed from these exercises and the inevitable

happened on February 21, l 973 when the Management blotted out

the entire lot

of 853 workmen from the roster, by

separate orders of

discharge from service, couched in identical terms. The essential terms

read thus :

"Your services are hereby terminated by giving you

one month's salary in lieu of one month's notice and accord­

ingly you are discharged from service.

You should collect immediately from the cashier of the

factory your one month's notice-pay

and due pay, leave

entitlements and gratuity,

if you are entitled to the same.

The payment will be made

between 12 noon and 5 p.m.

Tf and when you desire to be employed, you may apply

in writing to the Company in that behalf and on receipt of

. the application, a reply will be sent to you in the matter."

----·'ft1'0"--~ ....

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I64 SUPREME COURT REPORTS [1980] 2 S.C.R.

Casual workmen were issued separate but similar orders. The

Management did record its reasons for the action taken, on Febru­

ary 20, 1973 and forwarded them to the Sabha and to the individual

workmen on request. The anatomy of this proceeding

is of critical

importance in deciding the character of the action.

Was it a harm­

less farewell to the workmen who were unwilling to rejoin or a

condign punishment of delinquent workmen

?

The separate memorandum o! Reasons refers to the strike as illegal

and unjustified and narrates the hostile history of assault

by workmen

of the officers, their go-slow tactics and sabotage activities, their

contumacious and a host of other perversities vindicating the drastic

. ~

action of determining the services of all the employees. The conclud- ~ · c

D

•

E

ing portion reads partly stern and partly non-committal :

"In the interest of the Company it is decided to termi­

nate the services of all the workmen who are on illegal and

unjustified strike since 27th January, 1973.

Under the circumstances, it is decided that the services

of all the workmen who arc on illegal and unjustified strike

should be terminated

by way of discharge simpliciter.

These workmen, however, may be given opportunity to

apply for employment

in the Company and in case applica­

tions are received for employment from such

employee~,

such applications may be considered on their merits later

on.

It may be mentioned here that while arriving at the

aforesaid decision to terminate the services of the workmen,

various documents, notices, correspondence with the Union

F and others, records of production,. etc. have been considered

and . therefore the same are treated as part of the relevant

evidence to come to the conclusion

as aforesaid.

G

FINAL

CONCLUSION

The services of all the workmen who are on illegal anc

unjustified strike since 27-1-1973 should be terminated by

way of discharge simplicitcr and they should be offered

all

their legal dues immediately.

The Administrative

Manager is hereby directed to pass

orders pn individual workers as per draft attached.

H

We thus reach the tragic crescendo when the Management and

the workmen

fell apart and all the workmen's services were severed.

Whether each of these orders using, in the contemporaneous

rerrsons,

•

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer,!.) 165

the vocabulary of misconduct but, in the formal part, the expression

~ . 'discharge simpliciter', should be read softly as innocent termination

1

~ or sternly as penal action, is one of the principal disputes demand­

~¥ ing decision.

We may as well comolete the procession of events before taking

up the major controversies decisive of the case. The total termina­

tion of the entire work force

of 853 employees was undoubtedly a

calamity of the first magnitude

in a country of chronic unemployment

/ and starving wages. Nevertheless, under certain circumstances, dis­

~. charge of employees may well be within the powers of the Manage-

. ment subject to the provisions of the Act. With all the strikers

struck off the rolls there

was

. for a time the silence of the grave.

The conditional invitation to the employees

to seek de nova employ­

ment by fresh apolications which would be considered on their

merits, left the workers cold.

So the factory remained closed until

April 28, 1973 when, with new workers recruited from the open

market, production recommenced. Among the

· militans, the morale

which kept the strike going, remained intact but among the others the

pressure to report for employment became strong. Re-employment

of discharged workmen began and slowly snowballed, so that by July

31, 1973 a substantial number of 419 returned to the factory.

The crack of workman's morale was accelerated by escalating re­

employment and the Management's restoration of continuity of ser­

vice and other benefits for re-employed hands. The Employer relied

on this gesture as proof of his bona fides. Meanwhile, there were

exchanges

of letters between and

'trading' of charges against each

,_ other. The Management alleged that the strikers were violent and

prevented loyalists' return while the Sabha was bitter that goondas

were hired to break the strike and promote blacklegs. These impu­

tations have a familiar ring and their impact on the legality of the

discharge of workmen falls for consideration a little later. The stream

of events flowed

on. The

Sabha protested that the Management

was terrorising workmen, exploiting their sagging spirit and illegally

insisting on fresh applications for employment while they were in

Jaw

continuing in services. With more 'old workers' trickling back for

work and their discharge orders being cancelled, the strike became

·~ .

counter-productive. Many overtures on both sides were made

through Je•ters but this apistolary futility failed to end the embroglio

and brought no bread. The worker wanted bread, job, and no

phyrric victory.

A crescent of hope appeared on

the industrial sky. The Manage­

ment

nut out a 'final offer' on May 31, 1973, calling on all workmen

A

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•

E

G

H

166 SUPREME COURT REPORTS [1980] 2 S.C.R.

A to rejoin lest the remaining vacancies also should be fiiled by fresh

recruits. The Sabha responded with readiness to settle and sough' ~

B

c

•

E

F

G

H

some clarifications and assurances. The employer informed :

"Our offer is open till 10-6-1973. From 11-6-1973 we

shall recruit new hands to the extent necessary. Thereafter

workers

who will not have reported for work shall have

no chance left for re-employment with us.

We repeat that those workers who will report for work wiU be taken back in employment with continuity of their

services, that the orders

of discharge passed against them

on 21-2-1973

shalt be treated as cancelled and they will

also be paid the difference in wages from 1969 as per the

rec

1o'mmendations of the Wage Board."

The Sabha was willing and wrote back on June 8, 1973 but

sought details about the attitude of the Management to the many

pending de.mands. MeanwhHe, the sands of time were running out

and so the Sabha telegraphed on 9th June that the workers were

willing

to report for work but were being refused work. They de­

manded the presence of au impartial observer. The reply by the

Management repelled these charges, but there

was some thaw in the

estrangement, since the time for return

to work of the strikers was

extended upto 16-6-73. An apparent end to a long strike was

seemingly in sight with the

Sabha sore but driven to surrender. On

13-6-73 th<: Sabha Secretary v.Tote back :

"This is a further opportunity to you even now to show

your bona fides. If you confirm to take all the workmen

discharged on 21-2-1973 as stated in your various letters

and to

give them intimation and reasonable time to join, I

will see that your offer is accepted by the

workmen."

Here, at long last, was the Management willing to 'welcome' back

all the former employees and the Sabha limping back to the old

wheels

of work. Was the curtain being finally drawn on

the

feud? Not so soon, in a world of bad blood and bad faith; or may­

be,

new developments make old offers obsolete and the expected end

proves an illusion. Anyway, the victor

was the Management

and

the vanquished the Sabha and the re-employment offered was watet­

ed down. In pur materialist cosmos, offen Might is Right atfd

victory dictates morality !

GUJARAT STEEL TUBES .v. MAZDOOR SABHA (Krishna Iyer, J.) 167

) Hot upon the receipt of the Sabha's letter accepting the off er

~e Management back-tracked or had. second thoughts on full re..

1 employment. For, they replied with a long catalogue of the Sabha's

I sins, set out the story of compulsion to keep the production going

and explained that since new hands had come on the scene full re­

employment was beyond them. In i~ new mood of victorious righte­

ou~ess, the Management modified the terms of intake of strikers

and saddled choosy conditions on such absorption suggestive of

breaking the Sabha's solidarity :

L-_ .

''As on the present working of the Company, the Com­

pany,

may still need about

250 more workers including

thor-.:e to he on the casual list as per the employment position

prier to the start of the ::.trike.

You may, therefore, send to us inim.edintely per return

of

post the

list of the workers who can and are willing to

join duty immediately so as to e11ilble us to select and .em­

play the workmen as per the requirement of the Company.

Further,

it would also be necessary for you to state in your

·

reply that you have called 'off the strike and have advi5ed

the workers to resume the work as otherwise it is not

clear from your letter. as ·to whether you are still advocat­

ing the continuance of ·the strike or that you ·liave called off

the &trike. Therefore, unless we have a· very definite stand

known from you on this issue, it may not be even now

· possible _for us to enter into any correspondence with you.

We may 'pgain stress that if your tactics. of prolonging

the issue by· correspondence are continued the management

would bi constrained to take· new recruits and in that

· case, at n later date it 1JUIY not be even possible to emplcy

as many workmen as may be possible to employ now."

A

B

c

D

E

F

Nothing is more galling, says Sri Tarkunde, than· for a Union · G

which has lost

the battle and offered to go back to work to be told , that it should further humilate itself by formally declaring the call-

~--ing o!I of the strike. Sentiment. apart;the Sabha had agreed to go

back, but then the Management cut down the number to be . re­

employed to 250 and, even this, on a selective basis.. This t5elec-

tion cou!d well be to weed out Union activists or to . drive a wedge II

among the Union members. These sensitive thoughts and hard

bargains kept the two apart. The Sabha, wounded but not wiped

;,J"

168 SUPREME COURT REPORTS [1980] 2 s.c.R.

A out, did not eat the humble pie. The Management, on account of

the intervening recruitments and injuries inflicted --by the strike, did

not budge either.

c

D

At this point we find that out of 853 employees who had been

sacked 419 had wandered back by July 31, leaving 434 workmen

at flotsam. Their reinstatement became the focus of

an industrial

dispute raised by the

Sabha. A few more were left out of this

jobless mass, and through the intercession of the Commissioner

of

Labour both sides agreed to resolve their disagreement by arbitral

reference under

Sec. 1 OA of the Act, confining the dispute to re-

instatement of 400 workmen discharged on February 21 1973. A

reference under Sec. lOA materialised. The 'Labour litigation' began

in May 1975 and becoming 'at each remove a lengthening chai'll'

laboured from deck

to deck and is coming to a close, hopefully,

by this decision. Is legal justice at such expensive length worth

the candle or counter-productive of social justice

'I Is a streamlined

alternative beyond the creative genius of Law India?

An aside

As urgent as an industrial revolution is an industrial law revo­

lution,

if the rule of law were at all to serve as social engineering.

The current forensic process needs thorough overhaul because it

E is over-jndicialised

and under-professionalised, lacking in social

orientation and shop-floor know-how and, by its sheer slow moti,on

and high price, defects effective and equitable solution leaving both

Managements and Unions unhappy. If Parliament would heed, we

stress this need. Industrial Justice desiderates specialised proces-

F

G

II

sual expertise and agencies.

This factual panorama, omitting a welter of debatable details

and wealth ofl exciting enbellishmcnts, being not germane to the

essential issues, leads

us to a formulation of the decisive questions

which alone need engage our discussion. The Management might

have been right in its version

or the

Sabha m;ght have been wronged

as it wails, but an objective assessment of the proven facts and

unbiased application of the declared law

will yield the broad basisi

for working out a just and legal solution. Herc, it must be noticed

that a new

Union now exi~ts even though its numerical following

is perhaps slender. We are not concerned whether it is the favour­

ed child of the Management, although it has received soft treatment

in several settlements which have somewhat benefited the whole work

force and suggests a syndrome not unfamiliar among some indus­

trial bosses allergic to strong unions.

...

/

•

•

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Tyer,!.)' 169

11ie central problem on the answer to which either the award of

the

arbitrator or the judgment of the High Court can be sustained

as sound is whether the

disclpuge of the w,drkmen en masse was an

innocuous termination

or a disciplinary action. If the latter, the High

Court's reasoning may broadly be invulnerable. Secondly, what has

been mooted before

us is a question as to whether the evidence before

the Arbitrator, even if accepted

at its face value, establishes any mis­

conduct of any discharged workman and further whether the mis-

• · conduct, if any, made out is of such degree as to warrant punitive

) discharge. Of course, the scope of Section 1 !A as including arbi-

~ .!~ators, the power of arbitrators, given sufficiently wide terms of refer­

.,.. ' -ence, to examine the correctess and propriety of the punishment, inter

alia, deserve examination. Likewise the rules regarding re-instatement,

retrenchment, back wages and the like, fall for subsidiary consi­

deration.

I,

.....

•

'4r·

Prefatory to this discussion is the appreciation of the constitutional

consciousness with regard-to Labour Law. The Constitution of India

is not a non-aligned par~hment but a partisan of social justice with

a dire~ou and destination which it sets in the Preamble and Art. 38,

and so, when

we read the evidence, the rulings, the statute and the rival

pleas we must be guided

by the value set of the Constitution. We not

only appraise

, Industrial Law from this perspective in the dis­

putes before

us but also realise

that ours is a mixed economy with

capitalist mores, only slowly wobbling towards a . socialist order,

notwithstanding Sri Garg's thoughts. And, after all ideals apart, 'law

can never be higher than the economic order and the cultural deve­

lopment of society brought

to pass by that

economic order'. The new

jurisprudence in industrial relations must prudently be tuned to the

wave-length of our constitutional values whose emphatic expression

is found in a passage quoted by Chief Justice Rajamannar of the

Madras High Court. The learned judge observed :

(1) "The doctrine of 'laissez faire' which held sway in the

world since the time of Adam Smith has practically given

place to a doctrine which emphasises the duty of the state

to

interfere in the affairs of individuals in the interests of the

social

well-beiilg of the entire community. As Julian Huxley

remarks in his essay on "Economic Man and Social Man" :

"Many of our old ideas must be retranslated, so to speak,

into a

new language

.. The democratic idea of freedom, for

instance, must lose its nineteenth century meaning

of indivi­

dual liberty

in the economic sphere, and become adjusted

to new conception of social duties

and responsibilities.

(I) Law and the Poop le -A collc<tioa of Essays by V. R. Krisbna Iyer, p. 36

1Z.-868SCI!7'

..

'

)

l

A I

B

c

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E

F

G

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A

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17 0 SUPREME COURT REPORTS [1980]). S.C.R.

When a big employer talks about his democratic rights to

individual freedom, meaning thereby a claim to socially irres­

ponsible control over a

huge industrial concern and over the

lives of tens of thousands of human beings whom it happens

to employ,

he is talking in a dying

language."

•

Homo economicus can no longer warp the social order. Even

so the Constitution is ambitiously called socialist but realists will agree ~

that a socialist transformation of the law of labour relations is a •

slow though steady judicial desideratum. Until specific legislative~

mandates emer~e from Parliament the court may mould the old but ·

not make the new law. 'Interstitially, from the molar to the mole- .

cular'

is the limited legislative

role of the court, as Justice Holmes, . c

D

E

F

said and Mr. Justice Mathew quoted (see [1976] 2 S.C.C. at p. 343).

The Core Question

Right at the forefront falls the issue whether the orders of dis­

charge are,

as contended by

Sri Tarkunde, de facto dismissals, punitive

in impact and, therefore, liable to be voided if the procedural impera­

tives

for such disciplinary action are not

qYIIlplied with, even though

draped in silken phrases like 'termination simpliciter'.

It is

common

case that none of the processes implicit in natural justice and man-

dated

by the

relevant standing orders have been complied with, were

we to construe the orders impugned as punishment by way of discharge

m dismissal. But Sri Ashok Sen impressively insists that the orders

here

are simple terminations with

no punitive component, as, on their

face,

the orders read. To interpret otherwise is to deny to the em­

ployer the right, not to

dismiss but to

discharge, when the law give'

him option.

An analysis of the standing orders in the background of discip­

linary jt'risprudence

is

necessitou~ at this point of the case.

The Model Standing Orders prescribed under Section 15 of the

Industrial Employment (Standing Orders) Act, 1946, apply to this

G factory. Order 23, clauses (1) and (4), relate to termination of

employlJlent of permanent workmen. Termiation of their services on

giving the prescribed notice or wages in lieu of such notice is provided

for. But clause ( 4A) requires reasons for such termination of service

of permanent workmen to be recorded and, if asked for, communicated.

This

is obviously intended to discover the real reason for the dis-

H charge so that remedies available

may not be defeated by clever

phraseology of. orders of termination. Clause (7) permits the

services of non-permanent workmen to be terminated without notice

y

i

'4l-,

•

, '

•

ti

•

•

•

. GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) I 71

except when such temporary workmen are discharged by way A.

of punishment. Punitive discharge is prohibited unless opportunity

to show-cause against charges of misconduct

is afforded (Standing Order 25). Orders of termination of service have to be by the

Manager and in writing and copies of Orders shall be furnished to the

workmen concorned. Standing Order 24 itemises the acts and

omissions which amount

to misconduct : B

'According to clause

(bf of the said Standing

Order,

going on an illegal strike or abetting, inciting instigating

or acting

in furtherance thereof amounts to misconduct. Standing Order 25 provides for penally imposable on a

workman guilty of misconduct. Accordingly amongst other

punishments, a workman conld be visited

with

th·~ ·penalty of

discharge under Order 23

of dismissal withont notice for a

misconduct

[see sub-clauses (f) and (g) of

clause (1) j.

Clause (3) provides that no order of dismissal under sub­

clause (g) of clause ( 1) shall be made except after holding

an enquiry against the workman concerned in respect of the

·alleged misconduct in the manner set forth in clause ( 4).

Clause ( 4) provides

for giving to the concerned workman

a charge-sheet and

an opportunity to answer the

charge· and·

the right to be defended by a workman working in the same

department

as himself and production of witnesses and

cross-examination of witnesses

on whom the charge rests.

Under clause (6), in awarding punishment the Manager has

to take into account

the gravity of the misconduct, the

prit­

vious record, if any, of the workman; and any other extenua­

ting or aggravating circumstances."

The finding of the Arbitrator that the workmen went on a strike

.,,hich was illegal and in which they had participated is not disputed.

ln this background, the application of tl)e procedural imperatives before

termination of services of the workmen, in the circumstances

of

tbe

present case, has to be judged. This, in turn, depends on the key

c

D

E

F

1inding as to whether the discharge orders

issued by the management G

were punitive or non-penal.

The anatomy of a dismissal order

is not a mystery, once

we agree

that substance, not semblance, governs the decision. Legal criteria

are not so slippery that verbal manipnlations may outwit the court.

Broadly stated, the face is the index to the mind and an order fair H

on its face may be taken at its face value. But there is more to it 'lhan that, because sometimes words are designed to conceal deeds

A

B

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172 SUPREME COURT REPORTS [1980] 2 S.C.R.

by linguistic e'ngineering. So it is beyond dispute that the form of

the Older or the language in which it is couched is not conclusive

The court

will lift the veil to see the true nature of the order.

Many situations arise where courts have been puzzled because

the

manifest language of the termination order is equivocal or misleading

..

•.

•

and dismissals have been dressed up as simple termination. And so,

judges have dyed into distinctions between the motive and the foundc

ation of the order and a variety of other variations to discover the-~

true effect of an order of termination. Rulings are a maze on this

question but, in sum,

the conclusion is clear. If two factors

cO'-exist, .

an inference

of punishment is reasonable though not inevitable. What

are they?

If the severance of service is effected, the first condition is

fu]C

filled and if the foundation or causa causans of such severance is the

servant's misccrnduct the second is fulfilled. If the basis or fouhdation

for the order of termination

is clearly not turpitudinous or stigmatic

or rooted in misconduct or visited with evil pecuniary effects, then

the inference

of dismissal stands negated and vice versa.

These­

canons rim right through the disciplinary branch of master and servant

jurisprudence, both under Article 311 and

in other cases

include

ing workmen under -managements. ]be law cannot be stultified

by verbal haberdashery because the court will lifL the mask and dis-

cover the true

face. It is true that decisions of this Court and of

the

High Courts since Dhingra's case (1958 SCR 828) have been at timeJ

obscure, if cited de h01·s the full facts. In Samsher Singh's case(

1

) thet

unsatisfactory state of the law was commented upon by one of us,

per Krishna Iyer, J., quoting Dr. Tripathi for support :

"In some cases, the rule of guidance has been stated

to be 'the substance

of the matter' and the 'foundation' of

the order. When does 'motive' trespass into 'foundation'

r

When do we lift the veil of form to touch the 'substance'?

When the Court

says so.

These 'Freudian' frontiers obvious­

ly fail in the work-a.,day world and Dr. Tripathi's observations­

in this context arc not without force. He says :

'As already explained, in a situation where the order of·

termination purports to be a mere order of dischar~ without

(!) {1975] 1 S.C.R. 814at pp. 880.

•

. .,._

•

..

Y'

,.

'<iUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna ['jer, J.) 17 3

stating the stigmatizing results of the departmental enquiry a

search for the 'substance of the matter' will be indistinguish­

able

from a search for the motive (real, unrevealed object)

·of the order. Failure to appreciate this relationship between

motive (the real, but unrevealed object) and from (the

apparent, or officially revealed object) in the present con­

text has lead to an unreal inter-play of words and phrases

wherein symbols like 'motive', 'substance' 'form' or 'direct'

parade

in

differen_t combinations without communicating pre­

cise situations or entities in the world of facts.'

The ne~d, in this branch of .iurisprudence, is not so much

·to reach perfect justice. but to lay down a plain test which

the administrator and civil servant can understand without

subtlety and apply without

difficulty. After all, between 'un­

suitability' and 'misconduct' thin partitions

do their bounds

divide'. And over the years, in the rulings

of this Court

the accent bas shifted, the canons have varied and

predic~

tability has proved difficult because the play of legal light

and shade has been baffling. The learned Chief Justice has

in his judgement, tackled this problem and explained the rule

which must govern the determination of the qirostion as to

when termination of service of a probationer can be said to

amount to discharge simpliciter and

when it can be said to

amount to punishment

so as to attract the inhibition

of Art

311."

Masters and servants cannat ·be permitted to play hide and seek

with the law of dismissals and the plain and proper criteria are not

to be misdirected by terminological cover-ups or

by appeal to phychic

processes but must be gronnded on the substantive reason for the

order, whether disclosed or undisclosed. The Court

will find out from

other proceedings or documents connected with the formal order of

termination· what the trne ground for the termination is. If, thus

scrutinised, the order has a pnnitive flavour in cause

or consequence,

it is dismissal. If it falls short of this test, it cannot be called a

punishment. To put it slightly differently, a termination effected

be·

cause the master is satisfied of the misconduct and of the consequent

desirability

of terminating the service of the delinquent servant, it is

a dismissal,

e\l'on if he had the. right in law to terminate with an iuno­

-cent order under the standing order or otherwise. Whether, in such ai

case the grounds are recorded in a different proceeding from the formal

order does hot detract from it~ nature. Nor the fact that, after being

-satisfied of the guilt, the master abandons the enquiry and proceeds to

A

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174 SUPREME COURT REPORTS [1980] 2 S.C.R.

A terminate. Given an alleged misconduct and a live nexus between

it and the termination of service the conclusion is dismissal, even if

full benefits as on simple termination, are given and non-injurious

termir.ology is used.

B

c

D

E

G

H

On the contrary, even if there is suspicion of misconduct the

master may say that he does not wish to bother about it and may

•

not go into his guilt but may feel lik·~ not keeping a man he is not '-

happy with. He may not like to investigate nor take the risk of con-· •

tinuing a dubious servant. Then it is not dismissal but termination~

simpliciter, if no injurious record of reasons or punitive pecuniary

cut-back on his

full terminal benefits is found. For, in fact,

miscondw;t ·

is not then the moving factor in the discharge. We need not chase ·

other hypothetical situations here.

What

is decisive is the

plain reason for the discharge. not the

strategy of a non-ehquiry or clever avoidano~ of stigmatising epithets.

If the basis is not misconduct, the order is saved. In Murugan

Mills,(') this Court observed :

"The right of the employer to terminate the services of

his workman under a standing order, like

cl. 17(a) in the

present case, which accounts to a claim

"to hire and fire"' an

employee as the employer pleases and thus completely nega­

tives security of service which has been secured

to industrial

employees through industrial adjudication, came up for

consideration before the Labour Appellate Tribunal in

Buckingham and Carnatic Co. Ltd. v. Workers of the Com­

pany.(') The matter then came up before this Court also

in

Chartered Bank v. Chartered Bank Employees

Union(')

and the Management oif U.B. Dutt & Co. v. Workmen of

U. B. Dutt & Co.(

4

)

wherein the view taken by Labour

A ppe!late Tribunal was approved and

it was held that

even

in a case like the present the requirement of bona fides was

essential and if the termination

of service was a colourable

exercise of the power or as a

result of victimisation or unfair

labour practice the industrial tribunal would have the jurisdic­

tion to intervene

and set aside such termination. The form

of the order in such a case is not conclusive and the tribunal

can

go behind the order to find the reasons which led to

the

(1) [196512 S.C.R. 148 (at 151·152).

(2) [19521 L.A.C. 490.

(3) [1960] 3 S.C.R. 441.

(4) [19621 Supp. 2 S.C.R. 822.

...

'

~T

. '

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 17 5

order and then consider! for itself whether the tennination was

a colourable exercise of the power

or was a result of v'cfmi­

sation

or unfair labour practice. If it came to the conclusion

that the termination was a colourable exercise of the power

or was a result of victimisation or unfair labour practice it

would have the jurisdiction to intervene and set aside such

termination."

-. Again, in Chartered Bank v. Employees Union,(@) his Court

,L

emphasised :

" .... The form of the orcter of termination is not con­

-elusive of the true nature of the order, for it is possible that

the form may be merely a camouflage for an order of niis­

conduct.

It is, therefore, always open to the Tribunal to go

~--

•

'

behind the form and look· at the substance and if it comes

to the conclusion, for example, that though in form the order

amounts to termination simpliciter, it in reality cloaks a

dismissal for misconduct,

it will be open to it to set it aside

as a colourable exercise of the

Power."

A rain of rulings merely adds to the volume, not to the weight

of the proposition, and so we desist from citing all of them. A bench

of seven judges of this Court considered this precise point in Shamsher

Singh's ~ase(

1) and Chief Justice Ray ruled:

"The fonn of the order is not decisive as to whether the

otder is by way of punishment. Even an innocuously word­

ed order tenninating the service may in the facts and cir­

cumstances of the case establish that an enquiry into a!lega­

tio·ns of serious and grave character of misconduct involving

stigma has been made in infractio11 of the provision of Article

311.

In such a case the simplicity of the form of the

order will not give any sanctity. That

is exactly what_ has

happened in the case

of Ishwar Chand

Ag;!rwal. The Order

of termination L< illegal and must be set aside."

Simple termination or Punitive Discharge ?

We must scan the present order of discharge of 853 workmen and

ask the right questions

to decide whether they' are punishments or

inno­

cent terminations. Neither judicial naivete nor managerial ingenuity will

put the court off the track of truth. What, then, are the diagnostic factors

in the orders under study ?

An isolated reading of the formal notices terminating their services

reveals no stigma, no penalty, no misconduct. They have just been told

(!) [1975]

I S.C.R. 814 at pp,841-842.

B

c

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D

E

F

G

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176 SUPREME COURT REPORTS [1980] 2 S.C.R.

off. But the Management admits that as required by the Standing Orders

it has recorded reasons for the discharge. There, several pages of

damnatory conduct have been heaped

on the workers collectively

accounting for the resort of the Management

to the extreme step of dis­

charging the

whole lot, there being no alternative. Sri A. K. Sen took us

through the various appeals made by the Management, the losses sus-

tained, the many offers to negotiate

and arbitrate, the Sabha's deaf .,

obduracy and resort to sudden strike and violent tactics and, worst of , •

all, ifs attempts to persuack! the Central GoV>~rnment to take over the

factory as a 'sick' mill. These ordeals were described by Sri Ashok Se~ (

graphically to justify the submission that the Management had no choic~

caught between 'Scylla of strike aud Charybdis of take-over, but to get

rid of the strikers and recruit new workers.

If the employer did not dis-

charge the strikers they were adamant and would not return to work,

and the very closure compelled by the

Sabha was being abused by it to

tell the Central Government that for three months there had been no

production and

so the

mill qualified to be taken over as 'sick' under the

Industries (l)evelopment and Regulation) Act.

If the Management

discharged the workers

to facilitate fresh recruitment and save the

factory from statutory takeover the cry

was raised that the action was

dismissal because an elaborate enquiry

was not held. TI1e Management

had avoided injury to the workmen, argued

Sri Sen, by merely terminat-

ing their services without resort to disciplinary action and recording the .

uncomplimentary grounds in a separate invisible order. He also under-

scored the fact that the strike

was illegal and unjustified.

as concurrently

held by the Arbitrator ahd the High Court.

)

We agree that industrial law promotes industrial life, not industrial

•. ~

death, and realism is the soul of legal dynamics. Any doctrine that

destroys industrial progress interlaced with social justice is lethal

juristic and cannot be accepted. Each side has its

own version of the

role of the other

which we must consider before holding either guilty.

Sri Tarkunde told us the tale' of woe of the workmen. In a country

where the despair of Government

is appalling unemployment it is a

terrible tragedy

to put to economic death 853 workmen. And for what?

For

insisting that the pittance of Rs. 100 per month be raised in terms

of the Central Wage Board recommendations, as long ago agreed to by

the Management but put

off by the tantalising but treacherous offer of

arbitration when the point admitted of easy negotiated solution. Arbitra­

tion looks nice, but, since 1969, the hungry

families have been yearning

for a morsel more, he urged. Blood, toil, sweat and tears for the workers

2nd all the profits' and production for the Management, was the indus­

trial irony! Knowing that every arbitral

or other adjudicatory agency in

•

GUJARAT STEEL TUBES V. MAZDOOR SABHA (Krishna Iyer, J.) 177

{ndia, especially when weak Labour is pitted against strong Capital in A

~1- the sophisticated procP..ssual system, consumes considerable time, the ·

lowly working class is allergic to this dilatory offer of arbitration. They

just don't survive to eat the fruits. Such was his ca5e.

'

The story of violence was also refuted by Sri Tarkunde, since

J

the boot was on the other leg. Goondas were hired by the

Management to sabotage the fundamental right to strike

and with

I

• broken hearts .several of them surrendered. When, at last, the Sabha

Jj

eed to see that all workmen reported for work within the extended

me, the Management took to the typical tactics

of victimisation, of

using work for all,

as first offered, and of picking and

choosing

· even for the 250 vacancies. Moreover, other conditions were put

upon the Sabha calculated to break unionism which those familiar

with trade union movements would painfully appreciate. This insult

and injury apart, the

.orders of termination were painly dismissals for

a series

of alleged misconducts which were chronicled in separate pro­

ceedings. The formal order

was like a decree, the grounds recorded

contemporaneously. were like the judgment, to use court vocabulary.

It was obvious that the foundation for

the termination was the

catena

oi charges set out by the Management. The true character of

the order could not be hidden by the unfair device of keeping a

separate record and omitting it from

th~ formal communication. Law

is not such an ass as yet and if the intent and effect is damnatory the

action

is disciplinary.

•

Between these two competing cases, presented by counsel, we

have to gravitate towards the correct factual-legal conclusion. A

number of peripheral controversies have been omitted from this

statement, for brevity's sake. When

two high tribunals have spread

Qut the pros and cons it is supererogation for this Court to essay like­

wise, and miniaturization

is a wise husbandry

Of judicial resources.

First,

we must decide whether the order of termination was a puni-

tive discharge or a simple discharge .

B

c

n-

E

F

Here

we reach the dj!emma of the law for discovering unfailing G

guidelines to distinguish

b~tween dischar!i~ simpliciter and dismissal

sinister. The search for infallible formulae

is vain and o'nly pragma-tic humanism can help navigate towards just solutions. We have

earlier explained that from

·Dhingra's case to Shamsher

Singh's case,

the law has been dithering but some rough and ready rules can be

decocted

to serve in most situations. Law, in this area, is a pragma-H 1ist, not a philologist, and we have set out the dual diagnostic tests

applicable in such cases.

-·~-,---···-~-

A

B

178 SUPREME COURT REPORTS [1980] 2 S.C.R.

It was not retr2nchment, according to the Manag~ment. Then

· what was it ? If there was work to be done, why terminate services

of workmen except

as punishment ? Because, argued

Sri Sen, the·

workers did not work, being on strike and the Management, bent on

keeping the factory going, needed workmen

who work. To recruit

fresh hands into the lists and to keep the old hands on the roster

was

double burden, and, therefore, the

stri~ers had to be eased out to

yield place to new recruits. The object was not to punish the work-

,

•

c

men but to keep the factory working. Accepting this plea, as it were, {

the award ~f t~e arbitr.ator has _exonerated the Managem~nt of th~e .

charge of

d1sm1ssal

while the High Court has held the achoo to be' ·

dismissal for misconduct and therefore bad in law.

D

E

F

In our opinion, the facts of the case before us speak for them­

selves Here are workmen on strike. The strike

is illegal.

The·

Management is hurt because production is paralysed. The strikers

allegedly indulge in objectionable activities. The exasperated Manage­

ment hits back by orderin'g their discharge for reasons set out ill'

several pages in the appropriate contemporaneous proceeding. Mis­

conduct after misconduct

is flung on the workers to justify the drastic

action.

In all conscience and common sense, the discharge is the

punishment for the misconduct. The Management minces no

wocds.

What is explicitly stated is not a colourless farewell to make way for ,

fresh hands to work the fac'ory until the strike is settled but a hard

hitting order with grounds of gL@ and penalty of removal.

The inference

is inevitable, however, ingenious the contrary

argument, that precisely because the Management found the work­

men refractory

in their misc,onduct they were sacked. Maybe,

the­

Management had no other way of working the factory but that did not

change the character of th~ action taken. Once we hold the discharge

punitive the necessary consequence

is that enquiry before punishment

was admittedly obligatory and confessedly not undertaken. The orders

were bad on this score alone.

G

Sri A. K. Se'n urg·od that in a dismissal the employee is denied sotne

of the "lira! and other benefits which he gets in a simple discharge,

aod here all the empfoyees were offered their full monetary benefits,

so that it was wrong to classify the orders of discharge as punitive.

Maybe, a dismissed servant may

well be disentitled to some, at least,

of the financial benefits which

his counterpart who-is simply discharged

H may draw. But that

is not a conclusive test. Otherwise, the master

may 'cashier'

his servant and camouflage it by offering full retiral

benefits. Dismissal

is not discharge plus a price.

The substance of

•

•

x

tlUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 179

1!he action is the litmus test. In th~ present case, the penal core, 'tied

in tooth and claw", shows up once we prok; and the non-committal

frame of the formal order

is a disguise. For a poor workman loss of

his job

is a heavy penalty when inflicted for alleged misconduct, for

he is so hungry that, in Gandhiji's expressive words, he sees God

Himself in a loaf of bread.

Before

we leave this part of the case, a reference to some indus-

' · trial law aspects and cases may be apposite though a little repetitive.

ding orders certified for

an industrial undertaking or the model

ding Orders framed under the Industrial Employment

Standing:

rs Act provide for discharge simpliciter, a term understood in

contradistinction to punitive discharge or discharge by way of_pe'nally.

It is not unknown that an employer resorts to

camouflage by garbing:

or cloaking a punitive discharge in the innocuous words of discharge

simpEciter. Courts have to interpose in order to ascertain whether the

discharge is one simpliciter or a punitive discharge, and

in doing so.

the veil of langnage

is lifted and the realities perceived. In the initial

stages the controversy raised

was whether the court/tribunal had any

jurisdiction to lift such a veil. Prove and penetrate so as to rev>~al the

reality, but this controversy bas been set at rest by the decision

in Western India Automobile Association v. Industrial Tribunal.

Bombay.(')

The wide scope of the jurisdiction of industrial tribunal/

court

in

(his behalf is now well established. If standing orders or the

terms of contract permit the employer

to terminate the services ·of

his employee by discharge simpliciter without assigning reasons,

it

would be open to him to take recourse to the said term or condition

~ and terminate the services of his employee but when the validity of

__,..,.___ such termination is challenged in industrial adjudication it would be

competent to the industrial tribunal to ensure whether the

impugned discharge has been effocted in the bona fide exercise of

the power coµferred by the terms of employment. If the discharge bas

been ordered by the employer

in bona fide exercise of his power, then

the industrial tribunal may not interfere with it; but the words used

in the order of discharge and the form which it may have taken are

not conclusive

in the matter and the industrial tribunal would be

entitled

to go behind the words and form and decide whether the

discharge

is a discharge simpliciter or not. If it appears that the

pul'­

ported exercise of power to terminate the services of the employee

was in fact the result of the misconduct alleged against him, then the

tribunal would be justified

in dealing' with the dispute on the

basis

c

D•

E

F

G.

that, despite its appearance to the contrary, the order of discharge is If

in effect an order of dismissal. In the exercise of this power, the

(1) [1949] S.C.R. 321.

180 SUPREME COURT REPORTS [1980] 2 S.CI!..

.A court/tribunal would be entitled to interfere with the order in question

[see

'Assam

Oil Co. v. Its Workmen(')]. fn the matter of an order of

discharge of an employee

as understood within the meaning of the

B

c

F

H

Industrial Disputes Act the form of the order and the language in

which it

is couched are not decisive. If the industrial court is

.>atis-

fied that the order of discharge is punitive or that it amoun~s to

victimisation or unfair labour practice it

is competent to the court/

tribunal to set aside the order

in a proper case and direct

reimtate··

ment of the employee [see Tata Oil Mills Co. Ltd. v. Workmen(')].

The form used for terminating the service is not conclusivy and the

'

tribunal has jurisdiction to enquire into the reasons which led to s:;:u;:.ch~_...r--,i('

termination. In the facts of the case it was found that Standing Or ers

provided that an employee could ask for reasons for discharge i'l the

case of discharge simpliciter. Those reasons were. given before the.

tribunal by the appellant, viz., that the respondent's services were

terminated because

he deliberately resorted to go-slow and was

negligent in the discharge of his duty. It was accordingly held that

the services of the employee were terminated for dereliction of duty

and_ go-slow in his work which clearly amounted to punishment for

misconduct and, therefore, to pass

an order under cl. 17(a) of the

Standing Orders permitting discharge simpliciter

in such circumstances

was clearly a colourable exercise of

power to terminate services of a

workman under the provisions of the Standing Orders. Ii1 these

circumstances, the tribunal would be justified in going behind the

order and deciding for itself whether the termination of the respon-

dent's services could be sustained (vide

Management of Murugan

Mills Ltd.

v. Industrial Tribunal, Madras & Anr.

(3) This view was

affirmed in Tata Engineering & Locomotive Co. Ltd. v. S. C. Prasad ~

& Anr.(

4

). Aftw approving the ratio in Mumga11 Mills case, this

Court in

L. Michael & Anr. v. M/s.

Joh11son PumpsJ11dia Ltd(•)

observed that the manner of dressing up an order did not matter. The

slightly different obs•:wation i'n Workmen of Sudder Office, Cinna­

mare

v.

Ma11agmie11t(

6

) was explained by the Court and it was

further affirmed that since the decision of this Court in The Chartered

Bank v. The Chartered Bank Employee's Union(7) it has taken the

consistent view that if the termination of service

is a colourable exer­

cise of power

''~sted in the management or is a result of victimisation

(I) [19601 3 S.C.R. 457 at 462.

(2) [1964] 2 S.C.R. 125 at 130.

(3) [1965] 2 S.C.R. 148 at I 52.

(4) [1969] 3 S.C.R. 372 at 373.

(5) [1975] 3 S.C.R. 489.

(6) [19701 2 L.i.J. 620.

(7) [[960] 3 S.C.R. 441.

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 181

-

or u.'lfair labour practice, the court/tribunal would have jurisdiction

to intervene and set aside such termination.

It was urged that a

diffe­

rent view was taken by this Court in Municipal Corporation of Greater

Bombay

v.

P. S. Ma/venkar & Ors.(

1

). The employee in that was

qiscbarged ·from service by paying one month's wages in lieu of

notice. This action

was challenged by the employee before the Labour

Court and it

was contended that it was a punitive discharged. The

Corporation contended that under Standing

Order No. 26 the Corpo-

~ ration had the power to discharge but there was an obligation to give

reasons if so demanded by the employee. The Corporation had also

~ower to disc~arge by way of punishment. The Court in this con­

nect•on observed as under :

"Now one thing must be borne in mind that these are two

distinct and · independent powers and as far as possible

neither should

be construed so as

.to· emasculate the other

or to render

it ineffective.

One is the power to punish an

employee for misconduct while the other

is the power to

terminate simpliciter the service

of an employee without any

other adverse consequence. Now, proviso (i) to clause (1)

of Standing Order 26 requires that the reason for termina­

tion of the employment should be given in writing to the

employee

when exercising the power of termination of

service of the employee under Standing

Order 26. There­

fore, when the se.rvice of an employee is terminated simpli­

citer under Standing Order 26, the reason for such termi­

nation has to be given to the employee and this provision

has been made in the Standing Order with a view to ensur­

ing that the management does not act in an arbitrary

manner. The management

is required to articulate . the

reason

which operated on its mind in terminating the service

of the employee. But merely because the reason for

termi­

nating the service of the employee is required to be given and

!he reason must obviously not be arbitrary, capricious or

irrelevant--it

would not necessa.rily in every case make the

order cf termination punitive

in, character so~ as require

compliance with the requirement of clause (2) of Standing

Order 21 read with Standing Order 23. Otherwise, the

power of termination of service of an employee under

Standing Order 26 wonld be rendered meaningless and

futile, for

in no case it would be possible to exercise it.

Of

course, ifmisconduct of the employee constitutes the

(l) 11978] 3 S.C.R. IOQO.

E

F

G

I

R

•

A

·c

182 SUPREME COURT REPORTS [l 980] 2 S.C.R.

foundation for terminating his service, then even if the

order of termination

is

purport·~d to be made under

Standing Order 26, it may

be liable to be regarded as

punitive in

charapter attracting the procednre of clause (2)

of Standing Otder 21 read with Standing Order 23, though

even in such a case it may be argued that the management

has not punished the employee but has merely terminated

bk service under Standing Order 26."

It does not purport to run counter to the established ratio that the ~

form of the order is not decisive and the Court can lift the veil. How-_...J.

ever, it may be noted that there was an alternative contention ~ .

the Court that even if the order of discharge was considered pl'l'nitive

in character, the employer corporation had Jed evidence before the

Jabour court to substantiate the charge of misconduct and that

finding was also affirmed.

We are satisfied that the Management, whatever its motives vis-a-vis

; D keeping the stream of production flowing, did remove from service, on

punitive grounds, all the 853 workmen.

;ff

The Jaw is trite that the Management may still ask for an opportu­

nity to make out a case for dismissal before the Tribunal. The refine­

ments of industrial

Jaw in this branch need not detain

'" because the

arbitrator did investigate and hold that the workmen were gnilty

of

misconduct and the 'sentence' of dismissal was merited, even as the

High Court did reappraise and reach, on both counts, the reverse con­

clusion.

The

Sweep of Article 226 ~

Once we assume that the jurisdiction of the arbitrator to enquire

into the alleged misconduct was exercised, was there any ground under

Article 226 of the Constitution to demolish that hl:>lding ? Every

wrong order cannot be righted merely because it is wrong. It can be

quashed only if it is vitiated by the fundamental flaws of gross mis­

carriage of justice, absence of legal evidence, perverse misreading of

facts, serious errors of la'v o·n the face of the order, jurisdictional

failure and the like.

While the remedy under Article 226

is extraordinary and is of

Anglo-Saxon vintage,

it is not a carbon copy of English

processes.

Article 226 is a sparing surgery but the lancet operates where injuoth:e

suppurates. While traditional restraints like availability of alternative

remedy hold back the court, and judicial power should not ordinarily

rush in where the other two branches fear to tread, judicial daring is

not daunted where glaring injustice demands even affirmative action.

I

~

'

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 183

The wide words of Article 226 are designed for service of the lowly

numbers in their grievances if the subject belongs to the court's pro­

vince and the remedy is appropriate to the judicial proces3-There is

a native hue about Article 226, without being anglophi!i~ or anglo­

phobic in attitude. Viewed from this jurisprudential perspective, we

have to be cautious both in not overstepping as if Article 226 were as

• large as an appeal and not failing to intervene where a grave error bas

erept in. Moreover, we sit here in appeal O\'~r the High Court's Judge-

µ

" ment. A.Jld an appellate power interferes not when the order appealed

not right but only when it

is clearly wrong. The difference is real,

ough

fine.

' '

What arc the primary facts which have entered the Tribunal's ver­

dict in holding the strikers guilty of misconduct meriting · dismissal ?

We must pause to remove a confusion and emphasise that the dismissal

-01:der is not against the Union but the individual workers. What did

each one do

? Did his conduct, when sifted and scrutinised,

have any

exculpation or extenuation

? Not strikers in the mass, but each worker

separately, inust be regarded as the unit of disciplinary action.

Eacl1

-0ne's role and the degree of turpitude, his defence on guilt and punislo­

ment, must be adjudged before economic death sehtence is inflicted. A

typical trial process instance will illumine the point. Suppose there iB

case of arson and murder in a village because of communal factioM

and a hundred men from the aggressive community are charged in court

with serious offences. Suppose further that convincing testimony of

the provocation and aggression by that community is produced. Caii

any single member of the violent community be convicted on 'mass'

_-... ·evidence, without specific charge.i; of participation or clear proof of

\_..--. 'constructive involvement ? Judicial petspicacity clears this common

fallacy.

It is dangerous to mass-convict on the theory of community 'iuilt. Anger sometimes brings in this error.

• >

In our assessment, the arbitrator has been· swayed by generalities

where particularities alone wonld have sufficed. A long story may be

·made short by skipping the details and focussing on essentials. We

· must, in fairness, state that the Arbitrator, an experienced and accepted

tribunal in labour disputes, has exhaustively brought into the Award

·all available details pro and con with over-emphasi~ hen: and there .

There are only a few confusions in his long award but, regrettably,

they happen to be

on a few fundamentals. The foremost, of course,

is

a mix-up between mob-misconduct and individual guilt. The next

is getting Jost in the oceanic evidence while navigating towards a

specified , port. The High Court too has excelled in marshalling the .

details

a'nd

l!a~dling the legal issues, although, even there, sbortcomir:gs'

--.:1

A

B

c

D

E

F

G

H

A

B

184 SUPREME COURT REPORTS [1980] 2 ~.c.a.

on basic issues have been pointed out by Sri A. K. Sen. We too are

apt to err and reverse ourselves altbough we try our best to avoid error,

The Supreme Court is final not because jt is infallible; it is infallible

because

it is final. We propose to examine the essential issues from

the perspective we have set out and in their proper jmisprudential

bearings.

lf misconduct was basic to the discharge and no enquiry precedent

to the dismissal was made the story did not end there in favour of the

workmen. The. law

is well-settled that the Management

may stiff

satisfy the tribunal about the misconduct.

As a fact the' arbitrator held misconduct proved. He further· tlund;

C that the circumstances justified dismissal though he decided the order

to mean discharge simpliciter. Was misconduct proved against each

discharged worker

at least before the arbili:ator ? If it was, did every

worker deserve punitive discharge ?

D

E

F

G

H

Dual jurisdictional issues arise here

whlch have beeu argued at

some length before us. The position taken up by Sri Sen was that the

High Court could not, under Article 226, direct re-instatement, and·

even if it felt that the arbitrator.had gone wrong in refusing reinstate­

ment, the court could only demolish the order and direct the arbitrator

to reconsider the issue. What belonged, as a discretionary power, to a

tribunal or other adjudicatory body, could not

be wrested by the writ­

court. To put

it. pithily, regarding the relief of reinstatement, the arbi­

trat.or could but would not and the High Court would bnt could not.

(We will deal later with the point that the arbitrator had himself no

power under Section l l A of the Act but did have it in view of the wide

terms· of reference.)

The basis of this submission, as

we conceive it, is the traditional

limitations woven around high prerogative writs. Without examining

the correctness of this limitation,

we disregard it because while Article

226 has been

inspired• by the royal writs its sweep and scope exceed

hide-bound British processes of yore. We are what we are because

our Constitution

-framers have felt the need for a pervasive reserve

power in the higher judiciary to right wrongs under our

comlitionsc

Heritage cannot hamstring nor custom constrict where the language

used

is wisely

wi~e. The British paradigms are not necessarily models

in the Indian Republic. So broad are the expressive expressions design­

edly used in Article 226 that any order which should have been made

by the lower authority could be made by the High Court. The very

width of the power and the disinclination

to meddfe, except where

gross injustice

or fatal illegality and the like are present,

ilihibit the

. exercise but do not abolish the power.

,.

•

I ~

•-IL.

. . '-·

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 185

We may dilate a little more on Article 226 vis-a-vis awards of arbi­

trators. The first limb of tbe argument is tbat when there is a volun­

tary joint submission of an industrial dispute to an Arbitrator named

by tbem under s. lOA of the Industrial Disputes Act, he does not func­

tioo as a Tribunal and is not amenable to the jurisdiction of that Court

under Article 227

or under Article 226. W'ithout furtl1er elaboration

this contention can be negatived on a decision of this Court in

Rohtas

Industries Ltd.

& Anr. v. Rohtas Industries Staff

Union & Ors.(')

This Court observed that as the Arbitrator under s. 1 OA has the power

., to bind even tbose who are not parties to the reference or agreement

.~·

.....

'

tbe whole exercise under s. 1 OA as well as the source of the force

e Award on publication derived from the statute, it is legitimate to

rd such an arbitrator now as part of the infra-structure of the·

sovereign's dispensation of justice, thus falling within the rainbow of

statutory tribunals amenable

to judicial review.

The second limb of tbe argument was tbat a writ of certiorari could

not

be issued to correct errors of facts. In this connection after affirm­

ing the ratio in' Engineering Mauloor Sabha v. Hind Cycle Ld., (')

this Court observes that what is important is a question of law arising

on the face of the facts found and its resolution ex facie or sub silentio.

The Arbitrator may not state tbe law as such; even then such acute

silence confers no greater

or subtler immunity on the award than plain

speech.

We do not dilate on this part of the argument as we are satis­

fied

that be the test the deeply embedded rules to issue certiorari or the

traditional grouncls

to set aside an arbitration award, 'thin partition do

their bounds divide' on the facts and circumstances of the present case.

Broadly stated, tbe principle of law is that the

juristliction of the High

Court under Article 226 of the Constitution is limited to holding the

judicial

or quasi-judicial tribunals or administrative

bod~;,s exercising

the quasi-judicial powers within the leading strings of legality and to

see that they

do not exceed tbeir statutory jurisdiction and

conectly

administer the law laid down by the statute wider which they act. So

long as tbe hierarchy of officers and appellate authorities created by

the statute function

within their

ambit the manner in which they do so

can be no ground for interference. The power of judicial supervision

of the

High Court under Article 227 of the Constitution (as it then

stood)

is not greater tban those under Article 226 and it must be

limited

to seeing that a tribunal functions

within the limits of its autho­

rity [see

Nagendra Nath Bora & Anr. v. The

Commis1ioner of Hills

DMsion & Appeals, Assam & Ors.(')]. This led to a proposition that in

(I) (1976] 3 S.C.R. 12.

(2) (19ti3] Supp. 1 S.C.R. 625.

(3) [1958] S.C.R. 1240.

13-868SCJ/79

A

B

c

D

E

F

G

H

.:_.; _____ ...-.. _____ __. ____________ ___

A

B

c

D

/

F

G

H

186 SUPREME COURT REPORTS [l 980! 2 S.C.R.

exercising jurisdiction under Article 226 the High Court is not constitut­

ed a Court of appeal over the decision of authorities, administrative or

quasi-judicial

.. Adequacy or sufficiency of evidence is not its

meat.

It is not ~e function of a High Court in a petition for a writ under Art.

226 to' review the. evidence and to arrive at an independent finding on

the evidence. [See State of Andhra Pradesh v. S. Sree Rama Rao.(')]

A con,titution Bench of this Court in P.H. Kalyani V· M/s. Air France,

Calcutt?(') succinctly set out the limits of the jurisdiction of the High

/

Court in dealing with a writ petition. It was sa'id that in orderµto

justify a writ of certiorari it must be shown that an order suffers from

an erro/apparent on the face of the record. It was further pointed out

that ii the finding of fact is made by the impugned order and it is sho n

that it suffers from an error of law

and not of fact, a writ under Article

226

w0uld issue, and, while so saying, the decision in Na~endra Nath

Bora's

case was affirmed. Following the aforementioned

d:dsion, the

Gujarat High Court in

Navinchandra Shakerchand

Shah v. Manager,

Ahmedabad Coop. Department Stores Ltd. (

8

)

observed that the

amended Article 226 would enable the High Court to interfere with an

Award of the industrial adjudicator if that

is based on

a complete mis­

conception of law or it is based on no evidence or that no reasonable

man would come to the conclusion to which the Arbitrator oos arrived.

Even apart from, but

while approving, the Gnjarat ruling in 19

G.L.R.

p.

108 cited before ns, we are satisfied that the writ power is

larger given illegality and injustice, even if its use is severely discre­

tionary

as decided cases have repeatedly laid down. We over-rule the

objectiop of invalidity of the High Courts order for want of power.

The more serious question

is whether the arbitrator had the plenti­

tude of power to re-examine the

punishment imposed by the

Man:rge­

ment, even if he disagreed w.ith its severity. In this case the arbitrator

expressed himself

as concurring with the punishment. Ilut if he bad

disagreed,

as the High Court, in his place, did, could he have inter­

fered

? Armed with the' language. of

Sec. 1 lA, which confers wide

original power to the tribunal to re-fix the 'sentence', Sri Sen argued

that an arbitrator was uncovered by this .new Section. So, even if he

would, he could not. And,

in this case if he contd, he would not.

There the matter ended,

was the argument. We disagree. Even if he

contd. he

would not, .true; but that did not preclude the High Court

from reviewing the order

in exercise of

its extraordinary constitutional

power. Moreover,

Sec. liA did clothe the arbitrator with similar

(!) [1964] 3 S.C.R. 25 at 33.

(2) [1964] 2

S.C.R. 104.

(3) [1978] 19G.L.R.108 atl40.

i

....... _'

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, I,) 187

power as tribunals, despite the doubt created by the ab>truse absence A J

of specific mention of 'arbitrator' in Sec. llA. This position needs

closer examination and turns on interpretational limitations. At this

stage,

to facilitate the discussion, we may read the provision : "llA. Where an industrial dispute relating to the dis-

<charge or dismissal of a workmen has been referred to a B

Labour Court, Tribunal or National Tribunal for adjudica-

tion and,

in

the course of the adjndication _proceedings, :he

Labonr Court, Tribunal or National Tribunal, as the case may

be, is satisfied that' the order of discharge or dismiss-al was not

j ified, it may, as it thi'nks fit, or give such other relief to

lhe Workman

on such terms and conditions, if any,

as it 'thinks C

fit, or give such other relief to the workman, including the

award of any lesser punishment in lieu of discharge or dis-

missal

as the circumstances of the case may require :

Provided that in any proceeding under this section the

Labour Court Tribunal or National Tribunal as the case D

may be, shall rely on the materials on record and shall not

take any fresh evidence in relation to the matter".

Sec. llA was introduced in purported implementation of the I.L.0.

recommendation which expressly referred, inter alia to arbitrators.

The Statement of Objects and Reasons which illumines the words of

the legislative text when it is half-lit, even if it cannot directly supple­

ment the section, does speak of the I.J-,.0. recommendations and, in

Ii terms of tribunals and arbitrators. When it came to drafting Section

"11.A the word 'arbitrator' was missing. Was-this of deliberate legis­

lative design to deprive arbitrators, who discharge identical functions­

as tribunals under the Industrial Disputes Act, of some vital powers ,

which vested -in their tribunal brethren ? For what mystic purpose

could such distinction be

? Functionally, tribunals and arbitrators

belong to the same

brnod. The entire scheme, from its I.L.0. genesis,

through the Objects and Reasons, fits in only with arbitrators being

covered by Section 1 lA, uuless Parliament cheated itself and the

nation by proclaiming a great purpose essential to industrial justice

.;i.nd, for no rhyme or reason and wittingly or unwittingly, withdrawing

one vital word. Every reason for clothing tribunals with Sec. 1 lA

powers applies a fortiori to arbitrators. Then why omit ? Could it

be a synopic omission which did not affect the semantics because a

tribunal,

in its wider connotation, embraced every adjudicatory organ,

including

an

arbitrator ? An economy of words is a legislative risk

before a judiciary accustomed to the Angla-Saxon meticulousness in

E ,,

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188 SUPREME COURT, RliPO!lTS [1980] 2 S.C.R.

drafting. We may easily see meaning by one construction. A 'tribu­

nal' is merely a seat of justice or a judicial body with jurisdiction to

render justice.

1f an arbitrator fulfils this functional role and he does

-how can he be excluded from these scope of the expression ? A caste

distinction between courts, tribunals, arbitrators and others,

is func­

tionally fallacious and,

in our context, stems from

confnsion. The'.

Section makes only a hierarchical, not functional, difference by speak-:~

ing of tribunals and national tribunals. So we see no ground to truncate

.the natural meaning of 'tribunal' on the supposed intent of Parliament

to omit irrationally the category of adjudicatory organs known as arbi­

trators. To cut down is to cripple and the art of interpretation ma~

whole, not mutilates, furthers the expressed purpose, not hampet( by

narrow literality. ·

Section 2 ( r) defines Tribunal thus :

'Tribunal' means

an Industrial Tribunal constituted

under Section

7 A and includes an Industrial Tribunal

constituted before. the

10th day of March, 1957, under thls:

Act;

Prima-fade it is a different category from arbitrators but all statu~

tory definitions are subject to contextual changes. It is perfectly open

to the court to give the natural meaning to a word defined in the Act

if the context in which it appears suggests a departure from the defic

nition because then there is something repugnant in the subject or

context.

Then what is the natural meaning of the expression "Tribunal"?

A 'tribunal' literally means a seat of justice. May be, justice is dis-·~

pensed by a quasi-judicial body, an arbitrator, a commission, a court

or other adjudicatory organ created by the State. All these are tribu­

nals and naturally the import of t:J:ie word embraces an arbitration

tribunal. Stroud's Judicial Dictionary (Vol. 4 p. 3093) speaks of

'tribunal' in this wider sense and quoted Fry, L.J. in Dawkins v.

Rokeby [L.R. 8 Q.B. 255, affirmed, L.R. 7 H.L. 744] :

"I accept that, with this qualification that I do not like

the word 'tribunal'. The word is, ambiguous, because it bas

not like 'court' any ascertainable meaning in English law"·

(Royal Acsuarium v. Parkinson. [1892] 1 Q.B. 431. cited

COURT).

There is a reference to the bishop's commission of enquiry as a

judicial tribunal and, significantly, specific mention has been made im

the11e terms.

•

I

Gl1.1ARAT STEEL TUBES v. MA7000R SABRA (Ktishna Iyer, l.) 189

"Disputes between employers and employees are

referred to such tribunals as the Civil Service Arbitration

Tribunal, National Arbitration Tribunal and the Industrial

Disputes Tribunal". (Stroud's Judicial Dictionary p. 3094)

We have hardly any doubt that 'tribunal' simpliciter has a sweep-

ing signification and does not exclude 'arbitrator'.

Here

we come upon a fundamental dilemma of interpretative

technology

vis-a-vis the judicative faculty. What are the limits of

statutory construction

? Does creativity in this jurisprudential area --.~ tiermit travel into semantic engineering as substitute for verbalism?

..

'

Ii is increasingly important for developing countries, where legisla-

tive transformation of the economic order is an urgent item on the

national agenda, to have the judiciary play a meaningful role in the

-constitutional revolution without ferretting out flaws in the draftsman,

once the object

ancj effect are plain. Judges may not be too

'anglo­

phonic' !es~ the system fail.

It is edifying to recall from Robert Stevens' Law and Politics of

the House of Lords as a judicial body :

"Moreover, Macmillan, who began to specialize in the

increasingly frequent tax appeals, continued to develop this

highly artificial approach

In Inland Revenue

Commissioner v.

Ayrshire Employers Mutual Insurance Asociation('), when

Parliament had clearly iritended to make the annual sur­

pluses of mutual irisurance companies, subject to tax,

Macmillan found a particularly formalistic argument to

show that this had not been the effect of section 31 of the

Finance Act of 1933. He

was then

happily able to announce,

/'The Legii;lature has plainfy missed · fire."('). Of this

decision Lord Diplock was later to say that "if, as in this

case, the Courts can identify the target oif Parliamentary

legislation their proper function is to see that it is hit : not

merely

to record that it has been missed. Here is judicial

legislation at its

worst." (

3

)

we' would rather adopt Lord Diplock's thought and have the court

help hit the legislative target,

within limits, than sigh relief that the

legislative

fire has missed the bull's eye.

Of course, the social philoso­

phy of the Constitution has, as ruled by this court in several cases, a

role

in interpretative enlightenment and judicial value vision.

(I) [1946] I All E.R. 637.

(2) Ibid, 641.

(3)

Sir Kenneth Diplock-The Courts as Legislators, 10.

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190 SUPREME COURT REPORTS [1980] 2 s.c.R.

We may reinforce this liberal rule of statutory construction, being

a matter of importance in the daily work of the Court, by reference

even

to Roman Law from Justinian's days down to the American

Supreme Court.

"Not all special cases can be contained in the laws

and resolutions of the Senate", said the Roman jurist Jullianus, "but

where their meaning is manifest in some case, the one, who exercis1<5

jurisdiction must apply the provision analogously and in this way

administer justice."(') Prof. Bodenheimer has explained that Civil Law·,

does not regard words as the sole basis of law but allows it to be modi­

fied by purpose. "Celsus added the following admonition to these gene­

ral principles of interpretation : "The laws should be liberallv

interpreted, in order that their intent

be

preserved".(')

"Samuel Thome has shown that, during certain periods of English

medieval history, the position of the Common Law towards the cons­

truction of statutes was similar to the general attitude of the Roman

and Civil Law. Statutes were frequently extended to situations not

expressly covered by them." (

3

)

Plowden pointed out that "when the words of a statute enact one

thing, they enact all other things which are in the like degree," (4)

Plowden demonstrated that a statutory remedy at that time was deemed

to be merely illustrative

of other analogous cases that deserved to be

governed by the

same principle.

"Our law (like all others) consists of two parts,. viz. of body and

soul, the letter

of the law is the body of the law, and the sense and

reason of the law

is

tbe soul of the law ........ And it often happens

thaf when you know the letter, you know not the sense, for sometimes

•

the sense is more confined and contracted than the letter, and some-~

times it is more large and extensive"(') . ·

Prof. Bodenheimer states that the American trend is towards a

purpose-oriented rather than a plain-meaning rule in its rigid ortho­

doxy. In United States v. American Trucking AsJociation(

6

). The'

U.S. Supreme Co,urt wrote :

"When the plain meaning has led to absurd or futile

results . . . . this Court has looked beyond the words to the

purpose of the Act. Frequently, however,

even when the

(1) Jurisprudence-The

Philosophy and method of the law by Edgar '-"·

Bodenheimer p. 474.

(2) Ibid p. 474.

(3) Jurisprudence-The Philosophy and Method of the law by Edgar

Bodenheimer-p. 414.

(4) Ibid p. 415.

(5) Ibid p. 115-116.

(6) 310 U.S. 534 at 543-544 (1940)

•

,

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 191

plain meaning did not produce absurd results but merely an

unreasonable

one

"plainly at variance with the policy of the

legislation

as a

whole" this Court has followed that purpose

rather than the literal words. When aid to construction of the

meaning of words,

as used in

th•e statut·e, is available, there

can certainly be no "rule of law" which forbids its use, how­

ever, clear 'the words may be on "superficial examination."

, In the present case, as the narration of the facts unfolded, the

J reference of the dispute was to an arbitrator. He reinvestigated and

•

eassessed the evidence bearing on the guilt of the discharged workmen

fter giving an opportunity to both

sides to adduce evidence

thereor,

Aamittedly, be bad this power. But had he the follow-up power, if he

held the men guilty of punitive misconduct, to reweigh the quantum

of punishment having regard to the degree of culpability ? This juris­

diction he enjoys if

Sec. llA includes 'arbitrators'. This, in turn, flows

from our inference as to whether the word 'tribunal' takes in an adjudi­

c,atory organ like the arbitrator. It is plain that the expression 'arbi­

trator'

is not expressly mentioned in Section llA. Nevertheless, if

the

meaning of the word 'tribunal' is wider rather than narrower, it will

embrace arbitrator as well. That is bow the dynamics of interpreta­

tion are,

in one sense, decisive of the fate of the present appeal.

Competing interpretative

angles have contended

for judicial accep­

tance. English preferences apart, Indian socio-legal conditions must

decide the choice in each situation. Sometimes Judges are prone to

castigate creative interpretation

in preference to petrified literality by

stating that Judges declare the law and cannot make law. The reply

to this frozen faith

is best borne out by Lord Radcliffe's blunt words :

" There was never a more sterile controversy than that

·Upon the question whether a judge makes law. Of course

he does. How can he help it? .... Judicial law is always a

reinterpretation.-0f principles in the light of new combinations

of facts. . . . . . Judges do 'not reverse principl•es, once well

established, but they do modify them, extend them, restrict

them and even deny their application to the combination

in hand."(')

Lord Devlin in his "Samples of Lawmaking", agreed that Judges

are fashioners of

law, if not creators out of material supplied to them

and went on to

obserw :

"If the House of Lords did not treat itself as bound by

A

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its own decisions, it might do its own lopping and pruning H

(I) Robert Stevens-Law and Politics, The House of Lords as a Judicial

Body, 1800-1976, p. 447.

A

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192 SUPREME COURT REPORTS [1980J 2 S;C.lt.

.... and perhaps even a little grafting, ins:ead of leaving

all that to the legislature. But it could not greatly alter the

shape

of the

tree."(')

Even so eminent a Judge as Lord Reid leaned to the view that the

law should be developed since it

was not static and, in this limited

sense, Judges are law-makers although this

view prevented

"technical

minded Judges (from pressing) precedents to their logical conclu-

sions".(') On the whole, a just and humanist i'nterpretative technique,

meaning permitting,

is the best. We do not mean to conclude

t;_\at

Judges can take liberties with language ad libitem and it is wholesome

to b;, cautious,as Lord Reid in. Shaw v. D.P.P.(

3

) warned: "Wb

Parliament fears to tread it is not for the courts to rush in."

We are persuaded that there is much to learn from Lord Denning's

consistent refrain about the inevitable creative element in the judicial

process in the interpretative area.

We permit ourselves a quote from

Lord Denning because Shri

A. K. Sen did

draw our attention to

straightening the creases

as permissible but not stitching the cloth,

making a

critical reference to the controversial activism of which Lord

Denning

was a leading light :

"The truth is that the law is uncertain. It does not

cover all the situations that may arise. Time and again prac­

titioners and judges are faced with new situations where the

decision

may go either way. No one can tell what the law is

until the courts

decide it. The judges do every day make law,

though it is almost heresy to say so. If the truth is recognised

then

we may hope to escape from the

dead hand of the past

and consciously mould

new principles to rrieet the needs of

the

present."

Mr. Justice Mathew in Kesavananda Bharti's case(') referred with ~

approval-and so do. we--to the observations of Justice Holmes(").

"I recognize without hesitation that Judges do and must

legislate, but they can do so only interestitially; they are

confined from molar to molecular motions."

(l) Devlin-Samples of Law making p. 116.

(2) Judge as Law Maker p. 28-470 (Stevens).

(3) 1962 A.C.C. 220, 275.

(4)

[1973]

Supp. S.C.R. p. I.

(5) Sources and Techniques of the Law "Jurisprudence" by Edgar

Dodenheimec .

••

•

,

. I

)

•

GUJAllAT STEEi. TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 193

Arthur Selwyn Miller writes, "Some have called it (the Supreme A

Court) the highest legislative chamber in the nation. Although there

is no que$tion that the Court can and does make law, and does so

routinely,.

.....

"(').

Assuming the above approach to be too creatively novel for

traditionalism, let

us approach the same problem from a conventional

angle authenticated by case-law. The question

of construction of s. 1 lA

was argued at length, as to whether an ommission of any reference to

Arbitrator appointed under

s.

lOA in s.1 lA would suggest that the

Arbitrator under

s. 1

OA, notwithstanding the terms of reference,

B

---~.ild not enjoy the power conferred on all conceivable industrial

i .,.. ____ _

'

adjudicators under s. l lA. It was said, after referring to the objects

and reasons in respect of the bill which was moved to enact s. 1 lA

in the Industrial Disputes Act, that while the I.LO. had indicated that

an arbitrator selected by the parties for adjudication

of industrial dis-

. pute must be invested

with power by appropriate legislation as found

in s. llA, the

Parliament, while enacting the section in its wisdom, did

·:iiot include the Arbitrator even though other adjudicators of industrial

disputes have been conferred such power and, therefore, it

is a case of Sasus omissions. Reliance was placed on Gladsto11e v. Bower('): where ·

the question arose whether a reference to a tenancy from year to year

ins. 2(1) of the Agricultural Holdings Act, 1948 would also cover a

tenancy for

18 months which could be terminated at the end of the

first year. The submission

was that

even though no notice was necessary

at common law because the tenancy

would automatically terminate at

the expiry of the specified

peribd 'of tenancy, the tenancy took effect

as tenancy from year to year by virtue of S. 2(1) of the Act so that it

-continued until termim ed by notice to quit and, therefore the landlord

was not entitled to possession without notice.

It was further contended

that if a tenancy from year

to year was to get the protection of the Act

it

is inconceivable that tenancy for a longer duration would not qualify

for that protection. Court of Appeal negatived

this contention holding

that this

is a case simply of casus omissus and the Act is defective. The

court further held that

if it were ever permissible for the Court to

repair a defective Act of

Parliament, the Court would be very glad to

do so in

this case so far as the Court could. The Court will always

allow the intention of a statute to override the defects of wording but

the Court's ability to do so

is limited by the

recognised canons of inter­

pretation. The Court may, for example, prefer an alternative construe-

(I) Arthur Selwyn Miller, The Supreme Court, Myth and Reality,

p. 133.

(2) [1963) All E.R. 35 .

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194 SUPREME COURT REPORTS [1980j 2 S.C.R.

lion which is less well-fitted ·to the words but better fitted to the

intention of the Act. But here, for the reasons given by the learned

Judge, there

is no alternative construction; it is simply a case of

some­

thing being overlooked. The Court cannot legislate for a casl'(S

omissus. To do so would be to usurp the function of the Iegislatu~

, [s~ Magor & St. Mellons Rural District Council v. Newport Corpo~.

8

ration.(

1

)] Where the Statute's meaning is. clear and explicit, words

cannot be interpolated. Even where the meaning of the statute is clear

and sensible, either with or without the omitted word, interpolation

is improper, since the primary source of the legislative intent is in the

c

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E

F

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B

language of the statute [see

Crawford's "Constructioni of Statutes"

I 940 Edn., p. 269 extracted in S. Narayanaswami v. G. Panneer­

selvam. (

2

)]

Undoubtedly, the Court cannot put into the Act words

which 'are not expressed, and which cannot reasonably be implied on

any recognised principles of construction. That would be a work of

legislation, not of construction, and outside the province of the Court

[see

Kamalaranjan v. Secretary of

State(•).] Similarly, where the

words of the statute are clear it would· not be open to the Court in

order to obtain a desired result either to omit or add to the words of

the statute. This is not the function of the Court charged with a duty

of construction. This approach has, however, undergone a sea change

as expressed by Denning, L. J. in Seaford Court Estates Ltd. v.

Asher(') wherein he observed as under:

"When a defect appears a Judge cannot simply fold hi~

hands a'nd blame the draftman. He must set to work on the

constructive task of finding the intention of Parliament

....

and then he must supplement the written words so as to give

'force and life' to the intention of legislature

.... , A judge

should ask himself the question how, if the makers of the Act

had themselves come

across this ruck in the texture of it,

they would have straightened it out '? He must then do as

they would have done.

A judge must not alter the material

of which the Act

is woven, but he

C'an and should iron out

the creases."

(Approved in State of Bihar & Anr. v. Dr. Asis Kumar Mukherjee &

Ors.(°) where in he observgd as under :

(I) [1952] A.C. I 89.

(2) A.I. R. 1972 S.C. 2284 at 2290, para 2 J.

(3) A.LR. 1938 P. C. 281 · t 283.

(4)

[1949] 2 All E.R. 55 at 164.

(5) [1975] 2

S.C.R. 894 ,t 9)2.

. '

•

,

(

•

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Tyer, l.) 19 5

This long excursion has become important because, once , in a

while, social legislation which requires sharing of social philosophy bet­

ween the Parliament and the Judiciary; meets with its Waterloo in the

higher courts beoause the true role o~ interpretation shifts from Judge

to Judge.

We are clearly of the view that statutory construction

which

fulfils the mandate of the statute must find favour with the

Judges, except where the words.

and the context rebel against such

flexibility. , We would prefer to be liberal rather than lexical when

, reading the meaning of industrial legisfation which develops from day

to day

in the growing economy of India. The necessary conclusion ~~~from this discµssion is that the expression 'tribunal' includes, in the

statutory setting, an arbitrator

also.

Contempor11neous para-legislative

material may legitimately be consulted' when a word of wider import

and of marginal obscurity needs to t>e interpreted. So viewed, we are

not in a 'sound-proof system' and the I.L.0. recommendation accepted

by Indra· and the Objects and Reasons of the amending Act leave no

doubt about the sense, policy and purpose. Therefore Section llA

applies to the arbitrator in the present case and he has the power

to examine whether the punishment imposed in the instant case

is

excessive.

So has the High Court, if the Award suffers from a fnnda-,

mental flaw.

A study of the lengthy award discloses no mention of Section l lA,

• A>.

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D·

and presumably, the authority was unmindful of that provision while B­

rendering the verdict. In a limited sense, even prior to Section. 11A,

there

was jurisdiction

for a labour tribunal; including an arbitrator,

to go into the punitive aspect

of the Management's order. This Court

has, in a catena of

cases, held that a mala fide punishment is bad in

law and

when the punishment is grotesquely condign or perversely harsh or glaringly discriminatory, an easy inference of bad faith, un-p ·

fair labour practice or victimisation arises. The wider power to

examine

or prescribe the correct punishment belongs to tribunal/arb.­

trator even under

Sec. 11 in no enquiry (or a defective enquiry which

is bad, and, therefore, can be equated with a 'no enquiry' situation)

has been held by the Management. For, then, there is no extant order

of

guilt or punishment and the trib_unal determines it afresh. In such

G'

a virgin situation both culpability and quantification of punisliment are

within the jurisdiction of the tribunal/arbitrator. The present

is such

a case.

Volleys of rulings from both sides

were fired during arguments,

the target being the limited area of the tribunal's power

to overturn

e•

the quantum of punishment awarded by the Mamigement.. We do not

think it necessary to re-gurgitate all that has been said by

this Court

196

SUPREME COURT REPORTS [1980] 2 S.C.R.

I

& . upto now, since it is sufficient to bring out the correct law in the ligh~

of the leadiog citations. It is incontrovertible that where, as here, no

enquiry has been held by the Management, the entire subject is at

large and both guilt and punishment, in equal measure, may be

determined, without inhibition of jurisdiction, by the tribunal.

Lastly, as rightly urged by counsel for the Sabha, an arbitrator has

all the powers the terms of reference, to which both sides are party,

confer. Here, adinittedly, the reference is very widely worded and

includ~s the nature of the punishment. The law and the facts do not

call for further el'aboration and we ·hold that, in any view, the arbi­

trator had the :mthority to investigate into the propriety of the dlil. '--_ __..'II

charge and the veracity of the misconduct. Even if S. 1 lA is not

applicable, an Arbitrator under

s.

lOA is bound to act in the spirit of

H

the legislation under which he is to function. A commercial arbitra-

tor

who derives his jurisdiction .from the terms of reference will by

necessary iruplication, be bound to decide

•according to law and, when

one si>ys 'according to law', it only means existing law and the law

laid down bY, the Supreme Court beiog the law of the land, an Arbi-

trator under

s. lOA will have to decide keeping in view the spirit of S. llA [See Union of Jndill v. Bungo Steel Furniture Pvt. Ltd. (1967)]

1 S.C.R. 324]. The Jurisdictional hurdles being thus cleared, we

may handle the basic facts and the divergences between the Arbitrator

and the High Court before moulding the final relief.

Prefatory

to the discussion about the factum of misconduct and

its sequal,

we must remind ourselves that the strike was illegal, having

been launched when another industrial dispute

was pending adjudi­

cation.

Sec. 23(a) appears, at a verbal level, to convey such a• mean­

ing although the ambit of sub-clause

(a) may

have to he investigated

fully in some appropriate case in the light of its scheme and rationale.

It looks strange that the pendency of a reference on a tiny or obscure

industrial dispute--and

they often pend too long-should block strikes

on totally unconnected yet substantial and righteous demands. The

constitutional implications and proctical complications of such a veto

of a valuable right

to strike often leads not to industrial peace but to

seething unrest and lawless strikes. Bnt in the present case, both

before the arbitrator and the High Court, the parties have proceeded,

on the agreed footing that the strike was

illegal under Section 23 (a).

We do not reopen the issue at this late stage and assume the illegality

of the strike.

The Fatal Flaw

in the Award:

•

'

The Achilles heel of the arbitrator's award is where he makes, -

!IS a substitute for specific and individuated findings of guilt and

. ,

•

•

GUJARAT STEEL TUBES v. MA:l.DOOR SABHA (Krishna lyer, J.) 197

~ppropriate penalty vis-a-vis each workmen, a wholesale survey of

the march of events, from tension to breakdown, from fair settlement

to illegal and unjustified strike, from futility of negotjatiion to readi­

ness for arbitration, from offer of full re-employment

t9 partial taking

back on application by workmen in sack cloth and ashes, by picking

and choosing after a humble declaration

tha1l the strike has been

formally buried, from episodes of violence and paralysis of production

to· backstage manoeuvres to get the factory taken over as a 'sick

mill',

andi after a fnll glimpse of this

scenario, holds that the Sabha

was always in the wrong, and inevitably, the Management was surely

~-,.IJ<il!'.' onable AND, ergo, every employee must individually bear the

A

B

cross of misconduct and suffer dismilisal for the sins of the Sabha C

leadership-its secretary was not an employee of the mill-by some

sub-conscious doctrine of guilt by association

! Non Sequitur.

Each link in the chain of facts has been challenged by the

res­

pondents but let us assume them to be true, to. test the strength of

the legal fibre of the verdict.

(We may mention by way of aside,

)}

that the Company seems to be a well managed one.)

The caxdinal distinction in our punitive jurisprudence between a

commission of enquiry and a Court of Adjudication, between the

cumulative causes of a calamity and the

specific guilt of a particular

person,

is that

speaking generally, we have rejected, as a nation, the

thoory of community guilt and colle.:tive punishment and imstead

that no man shall be punished except for his own guilt. Its reflec-

tion

in the disciplinary jurisdiction is that no worker shall be dismissed

save

on proof of his

individual delinquency. Blanket attainder of

a bulk of citizens on any vicarions thoory for the gross sins of· some

only,

is easy to apply but obnoxious in principle.

'.Here, the arbitrator

has found the Sabha Leadership perverse, held that the strikers should

have reasonably reported for work and concluded that the Manage­

ment had, for survival, to make-do with new recruits. Therefore

what?

E

What, at Jong last, is the answer to the only pertinent question in G

a disciplinary proceeding viz. what is the specific misconduct against

the particular workmen who is to lose his job and what is his puni-

tive desert? Here you can't generalise any more than a . sesoons

judge can, by holding. a faction responsible for a massacre, sentence

every denizen of that factions village to death penalty. The legal

error is fundamental, aithough lay instinct may not be outraged. What H

did wrker A dP ? I)\d he join the s.trike or remain at home for

fear oX vengeance ag;linst blackleg:; in a para-violent s.itu<1,tion? Life

198 SUPREME COURT REPORTS [1980] 2 S.C.R.,

'

.A and limb are dearer than loyalty, to the common run of men, and

discretion

is the better part of valour. Surely, the

Sabha complained

ofManagement's.goondas and the latter sought police aid against the

......

unruly core of strikers. . In between, the ordinary rustic workmen

might not have desired to be branded blacklegs or become martyrs

and would not have reported for work.

If not being heroic in

'B

daring to break through the strike cordon-illegal though the strike

be--were misconduct, the conclusion would have been different. Not

reporting for work does not lead

to an irrebuttable presumption of

active participation in the strike. More

is needed to bring home the

mens rea and that burden is on the prosecntor, to. wit the

Manag<:-:.----.....,

ment. Huddling together the eventful history of deteriorating indus-

trial relations and perverse leadership of the Sabha is no charge

against a single worker whose job is at stake on dismissal What

did

he do ? Even when lawyers did go on strike in the higher Courts

or organize a boycott, legaJly or

illegaliy, even top law officers of

j}e Central Govt. did not attend court, argued Shri Tarknnde, and

if they did not boycott but merely did not attend, could workers

beneath the bread line

be made of sterner stuff. There is force in this

pragmatic approach. The strike being illegal

is a non-issue

at this

level. The focus

is on active participation. Mere absence,_

without

more, may not compel the conclusion of involvement.

Likewise, the further blot on the strike, of being unjustified, even

if true, cuts no

ice. Unjustified, let us assume; so what ? The real

question is, did the

individual worker, who was to pay the penalty,

actively involve himself in this unjustified misadventure ? Or did he

merely remain a quiescent non-worker

d.uring that explosive period?

Even if he was a passive

striker, that did .not visit him with the vice

of activism in running an unjustified strike. In the absence of proof of

being militant participant the punishment may differ.

To dismiss a

worker,

in an economy cursed by massive unemployment, is a

draconian measure as a last resort. Rulings of this Court have held

that the

degree of culpability and the quantnm of punishment turn

on the level of participation in the nnjustified strike. Regrettably, no

individualised enquiry has ·been made by the Arbitrator into this

significant component of delinquency. Did any dismissed worker

instigate, sabotage

or indulge in vandalism or violence?

The Management's necessity to move the

mill into production for

fear of

befu:tg branded a. 'sick unit' is understandable. Of course,

rH collective strike is economic pressure by cessation of work and not

exchange of pleasantries. It mean.< embarassing business. Such a

quandary cannot alter the law. Here the legal confusion is obvious.

•

J

•

l

-.1·_

I

;ARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 199

inquest into the Management's recruitment of fresh hands is be­

; made at this stage. The inquiry is into the personal turpitudes

particular workmen in propelling an illegal and unjusl1fied sl1ike and

e

proof of their separate part therein meriting dismissal;· The des­

.air of the Management cannot, by specious transformation of

logic,

oe converted into the despair of each of the 853 workmen .. Sympa­

thies shall not push one into fallacies.

We may now concretise this generalised criticism of the other~

wise well-covered award. The crowd of documents and . camping

• attitudes must have added to the strain on the Arbitrator.

"A voluminous record of documents and correspond­

ence has been produced before me by both sides. There

have· been allegations and counter allegations made by both

sides ·not only against each other but even against the Police,

the Department of Labour and persons in Authority. 'The

history has been sought to

be traced right

from the inception

of the Company in 1966

or 1967, by the Company to show

that their conduct has been always proper and above

reproach and

by Sabha to

establish that not only the Gujarat

Steel Tubes Ltd. · were not fair· to the employees but that

every action of theirs good or bad was ill-motivated, wasi

executed with some sinister ulterior motives."' ,

The Award set out the history of the Company, its vicissitudes, the

hills and. valleys, the lights and shadows, of industrial relations with

..... mob fury and lock-outs and allied episodes often ending in settlements

~nd pious pledges. Then the Arbitrator stressed Clause 6 of the

Agreement of December, 1971 which bespoke a no-strike zone for

five years. There was reference to the Management's promise to

implement the Wage Board recommendations. The Arbitrator was

upset that despite Clause 6, a strike was launched but was not dis-

•

turbed that despite the Wage Board. proposals, negotiations were be­

ing baulked and an interminable arbitral alternative was being offer­

ed by the Management. He exclaimed : "If such a settlement arriv­

' ed at was not respected and implemented the machinery provided

:_,...by Jaw would Jose all meaning and so also the sanctity of the word

of the Management

or the word. of the union. It is, therefore,

essen-·

tial to ascertain who was responsible for the breach of the ·agreement

'

so solemnly entered into. · · ·

Serious breach· by management is alleged and this is given as a

reason

or is made as

an excnse for getting rid of the obligations

A

B

c

D

E

F

G

H

---~-- -----,

'

200 SUPREME COURT REPORTS [1980] 2 S.l

A ;.nsing ~ut of the agreement which specifically could not be termin~

B·

c

D

E

F

G

H

ed for five years."

The narration continues and the following conclusion is reached '

"It is thus very clear that the company had fully dis­

charged its obligation under the agreement in respect of 64

discharged or dismissed workmen and the other workmen

and the allegation made by the Sabha of the company

having made a breach· thereof" is not correct."

l

We thus see, that at this stage, the arbitrator has merely made · __

a generalised approach as if a commission of inquiry were goiug· into

the conduct of the Management and the Sabha to discover who was

blameworthy in the imbroglio. The award then swiveled round to

a study of the case of the Sabha vis-a-vis the triple grievances, the

Sabha had:

"I shall first deal with the grievance regarding demands

for implementation of the recommendations of the Wage

Board".

The long and sterile correspondence was set out and the arbitrator

arrived at the conclusion that the insistence on reference to arbitra­

tion as against negotiation was justified on the part of the Manage­

=~: '

"I, therefore, have accepted the version of the Manage­

ment and disbelieved the motivated denial of the Sabha m

this respect."

The culmination of the protracted discussion on the atmosphere

and environment, rather than

on the actual

chMge against each

worker, was recorded

in the Award :

"I have exhaustively, perhaps more exhaustively than

even necessary, deah with the allegations made by the

Sabha that the Management had committed breach of agree­

ment by refusing to accede

to the demand of the

Sabha

for implementation of recommendations of the Wage Board ..

There appears

to be no doubt that the Management had

agreed

to implement the recommendation of the Wage

Board. There is also not the least doubt

· the . Manage­

ment was ready and willing

to

implement-the recommenda­

tions of the Wage Board it was because it was· prevented by

the Sabha from doing so." -

\"

•

'

ClUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.)201

An analysis of the Management's conduct in the matter of non- A

ilnplementation of the Wage Board recommendation was thereafter

made by the Arbitrator and he wound up thus :

"I am satisfied that the Company had not committed any

breach

of the settlement dated

4-·8-1972 at least so far as

implementation

of the recommendations

of the Wage Board

is concerned."

The question of bonus for the year 1971 was also considered and

dtsmissed and the Sabha 's case to that extent was negatived. Again,

-the~ _ for wages for the period of the lock-out was also negatived

with the observatiotls : c

"I fail to see how the Sabha can allege breach of the

agreement dated 4-8-1972

in view of the clear unequivocal

terms contained in clause 4

of that Agreement."

In this strain the Award continued and the refrain was the same

that the Sabha was in the wrong. The Award even went to the

exaggerated extent of morbidly holding that the workers were wearing

printed badges which, along with other circumstances, amounted to

a breach of the agreement !

nit·Award then moved on to the strike of January 27, 1973

because it led to the dismissal of all the workme n. Until this stage,

. the arbitrator was merely painting the background and, at any rate.

did not engage himse lf in isolating or identifying any worker or any

misconduc

t. He merely denounced the Sabha, which is neither here ~ nor there, in the matter of disciplinary proceedings against each

individual workman.

He missed the meat of the matter. The rele­

vant portion of the A ward based on generalisation proved this

error :

"I am concerned herein with the question whether the

discharge

or dismissal of the

400 work.men was legal and

proper or not ~nd what relief to grant to them.

Approached from

any point of view the action of the

Company appears to

me to be legal, proper and justified

·and the demands on behalf of these workmen must be reject­

ed.''

D

E

F

G

A condemnation of the Sabha and an approval of th~ Manage-H

ment's handling of the strike are miles away from the i ssue on

hand.

14-86SSCI/7!7

A

B

c

D

E

F

G

H

/

202 SUPREME COURT REPORTS (1980] 2 s.c.R.

We observe here also an unfortunate failure to separate and

scan the evidence with specific reference to charges aaainst individual

workman. On the contrary, all that we find in lhe award is an

autops.y of the strike by the Sabha and a study of its allegedly perverse

po

stures. A disciplinary inquiry resulting in

pun~hment of particu­

lar delinquents cannot but be illegal if the evidence is of mqss

misconduct by ungpecified strikers led by leaders who are perhaps

not

even workmen. We are constrained to state

that pointed consi­

deration of facts which make any of the 400 workmen guilty, is a

search in vain. The award being ex f acie blank from this v»tal angle,

the verdict must prima facie rank as void since vicarious guilt must

be brought home against the actively participatins membP)fe.ef ~

collectivity by positive testimony, not by hunch, 11uspiciori ··0~ · occult

intuition. The short position

is this. Is there a punishment of any

workman ?

If yes, has it been preceded by an enquiry ? If not,

does not

the

Management desire to prove the charge before the

tribunal ?

If yes, what is the evidence, against

whom, of what mis­

conduct ? If individuated proof be forthcoming and relates to an

illegal strike, the further probe is this : was the strike unjustlfied ? If

yes, was the accused worker an active partici pant therein ? If )'Ci,

what role. did he pfay and of what acts was he author? Then alone

the stage is s

et for a just punishment These

exerc1'es, es an assembly­

line process

are fundamental.

Generalisation of a Tiolent strike of a

vicious Union leadership, of strikers fanatically or foolishly or out of

fear, failing to report for work, are good background material. Beyond

that,

these must be identified by a rational process, the

workmen, the.ic

individual delirnquency and the ~ntence according to their sin. Sam

that, the dis missal is bad. Viewed from this persptctin, the Award

fails.

The Arbitrator comes to

grips with the core

qumtion of discharge

simpliciter versus diismissal as punishment but not with the identifica­

tion of delinquents and delinquency. After referring

to

Order 23 of

the Model Standing Orders he goes on to state the Jaw correctly · by

extracting observations from the Assam Oil Compan' case.

Another vital facet of indu

strial law is that when

Bo enquiry has

been held by

the Manageme nt before imposing a

puoilbment (or · the '

enquiry held is defective and bad)' the whole field of delinquency and

consequent penalty is at large for the tribunal. Several rulings support

this logic. We are const

rained to bold that a certain observation made

per incuriam by

lVJ.r. )ustice Vaidyalmgam, strongly Rlied on by Sri

A K. Sen, does not accurately represe nt the law, altho\lgh the learnei

<iUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 203

Judge had earlier stated the law and case-law correctly, if we may say

so with respect.

A selective study of the case-Jaw

is proper at this place. Before

we do this, a

few words on the basis of the right to strike and pro­

gressive legal thinking

Jed by constitutional guidelines is necessitous.

The right to unionise, the right

to strike as part of collective bargain-

~ ing and, subject to the legality and humanity of the situation, the right

r of the weaker group, viz., labour, to pre£Sure the stronger party, viz.,

capital, to negotiate and render justice, are processes recognised by

'---ir.dum1al jtirisprudence and supported by Social Justice. While society

itself, in its basic needs of existence, may not be held

to ransom in the

name of !he right to bargain and strikers must obey civilised norms

in

the battle and not be vulgar or violent hoodlums, Industry, represented

by intransigent Managements, may well be made to reel into reason by

the strike weapon and cannot then

squeal or wail and complain of ]06s

of profits or other ill-effects but must negotiate or got a reference made.

The broad basis is that workers are weaker although they are the

producers and their struggle to better their

Jot has the sanction of the

rule of law.

Unions and strikes are no more conspiracies than pro­

fessions and political parties are, and, being far weaker, need succour.

Part IV of the Constitution, read with Art. 19, sows the seeds of this

burgeoning jurisprudence. The Gandhian quote at the beginning of

this judgement sets the tone of economic equity in Industry. Of course,

adventurist, extremist, extraneously inspired and puerile strikes, absurd­

ly insane persistence and violent

or scorched

earth policies boomerang

and are anathema for the Jaw. Within these parameters the right to

strike is integral to collective bttrr;aining.

~·

Responsible trade unionism is an mstrument of concerted actio•

'and the IaiS$ez faire law that all strikes are ipso facto conspiracies, is

no longer current coin even in Adam Smith's English country. Lord

Chorley, in Modern Law Review, Vol. 28, 1965,

p. 451, is quoted as ~aying that law must be altered as a consequence of Rookes v. Barnard,

so as to remove the effects of deci<!ions of conspiracy and intimidation.

We goes on to state that Alkn Y. Flnod and Quinn v. Leathern taking

lite conspiratorial view must never be permitted ·10 be quoted in courts.

In contrast, reference was made to Willis on Constitutional Law, pp.

878-879, wherein the Supreme Court

of America reflects the impact 61' capitalistic development and the economic views of the judges and

tlte fact that the judges are members of a social order and a social

product and the decisions are due more

to the capitalistic system and tl!e world of ideas in which the judges Jive. Our Constitution is clear

A

B

c

D

E

F

G

H

204

SUPREME COURT REPORTS [£980] 2 s.c.tt

A in its mandate, what with Art. 39A superadded and we have to act in

tune with the values enshrined therein.

B

c

D

E

F

G

H

The beni•gn attitude towards strike being what we have outlined,

the further question arises whether in the light of the accepted finding

that the strike as such was ililegal and, further, was unjustified, all the

strikers should face the penalty of dismissal or whether individual cases

with special reference to active participation in the strike; should be

considered.

A rapid but relevant glance at the decided cases may

yield

dividends. In India General Navigation and Railway Cn .. Ltd. v.

Their Workmen, (supra) this court did observe that if a strike ls~

illegal, it cannot be called 'perfectly justified'. But, betweeu 'perfectly

justified' and 'unjustified' the neighbourhood is distant. More illegali-

ty of the strike does not per se spell unjustifiability. For, in Crompton

. Greaves Ltd. v. Workmen (supra) thi~ Court held that even if a

strike

be

illegal, it cannot be castigated as unjustified, unless the reasons

for it are entirely perverse or

unreasonable-an aspect which has to

be decided on the facts and circumstances of each case. In that deci­

sion, this Court awarded wages during the strike period because the

Management failed to prove that the workmen resorted to force and

violence. Even in

India General Navigation and Railway Co. Ltd.

· (supra) where the strike was illegal and affected a

public utility service,

this Court observed that "the only question of practical importance

which may arise in the case of

an illegal strike,

would be the kind or

quantum of punishment, and that, of course, has to be modulated in

accordance with

the facts and circumstances of each case ..... There

may be reasons for distinguishing the case of those who may have

acted as mete dumb-driven cattle from those who have taken an

active part in fomenting the trouble and instigating workmen to join

such a strike or have taken

recou.rse to violence." The court after -

holding that the strike was illegal "and that it was not even justified"

made a pregnant observation :

"To determine the question of punishment, a clear dis­

tinction has to

be made between those workmen who are · only joined in such a strike, but also took part in obstruct­

ing the loyal workmen from carrying on their work, or took

part in violent demonstrations,

or

acteC. in defiance of law

and order, on the one hand, and those workmen who were

more or less silent participators in such a strike, on the

other hand.

It is not in the interest of the industry that

there should

be a wholesale dismissal of all the workmen who

merely participated in such a strike.

It is certainly not in the

•

'(;UJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 205

interest of the ·Workmen themselves. . An Industrial Tribunal,

·therefore, has to consider the question of punishment, keep­

ing in

view the overriding consideration of the full and effi­

cient working of the Industry as a whole. The punishment of dismissal or termination of services, has, therefore, to be

imposed on sucli workmen as had not only patricipated in

the illegal strike, but had fomented it, and had been guilty

·of violence or doing acts detrimental to the maintenance of

law and order in the locality where work had to be carried

r! .on."

~ After noticing 'the distinction between peaceful strikers and violent

. -1 strikers, Sinha, J., .in that case, observed "it must be clearly under­

stood by those who take part in an illegal strike that thereby they

make themselves liable to be dealt with by their employers, There

may be reasons for distinguishing the case of those who may have

acted

as mere dumb driven catlle from those who

have taken an active

part in fomenting the trouble and instigating workmen to join such a

strike, or have taken recourse

to

violence." The same lice of dicho­

tomy is kept up :

,.

,_ __ __.

'

"Both the types of workmen may have been equally

guilty df participation in the illegal strike,

but it is manifest

that both are not liable to the same kind of

punishment."

Significantly, the Court stressed the need for individual charge­

sheet being delivered

to individual workmen so that the degree of

misconduct of each and the punitive deserts

of each may be separa­

tely considered. We may as well refer to a few more rulings since

considerable argument was expended on this point.

This Court in

M/s. Burn & Co. Ltd. v.

Their Workmen &

Ors.(') clearly laid down that mere participation in the strike would

not justify ,,the suspension or dismissal of workmen particularly where

no clear distinction can be made between those persons and the very

large number of workmen who had

been taken back

into service

although they had participated

in the strike. After referring to the

ratio iu

M/s. Burn & Co. Ltd. case, this Court in Bata Shoe Co.

(P) Ltd. v. D. N. Ganguly & Ors.(') observed that there i~ no doubt

that if an employer makes an unreasonable discrimination in the

matter of taking back employees there may in certain circumstances

1Je reason for the industrial tribunal to interfere; but the circwnstances

(I) A.l.R. 1959 S.C. 529.

~2) [1961] 3 S.C.R. 308.

T

A.

B

c

D

E

F

G

B

A

B

206 SUPREME COURT REPORTS [1980] 2 S;C.R.

of each case have to be examined before the tribunal can inter­

fere with the order of the employer in a properly held managerial

inquiry on the ground of discrimination. The Court then pro­

ceeded to determine the facts placed before it Sri Sen specifi­

cally pointed out that in the Bala Shoe Co.'s ca.se this Court distin­

guished the decision in

India General Navigation & Railway Ca

Ltd.'s

and observed that the decision in that case was on the facts

placei:I before the Court. In fact, Bata Shoe Co.'s case does not lay

Jown any distinct proposition about the treatment to be meted out to ,

participants in strike and actually it is a decision on its own facts. J~

In The Swadeshi Industries Ltd. v. Its Workmen(!), the Manage­

ment, after holding that the strike was illegal, terminated the servic­

es of 230 workmen without framing any chargesheet or holding any

enquiry. It was contended that the strike was not legal. The Court

observed that collective bargaining for securing improvement on

matters like basic pay, dearness allowance, bonus, provident fund and

gratuity leave and holidays was the primary object of a trade union

and when demands like these were put forward and thereafter a strike

was resorted to

in an attempt to induce the company to agree to the

demands

or at least

to open negotiations the strike must prima facie

be considered jn~tified. As the order of termination was found to be

illegal it

was held that reinstatement with back wages must follow as

a

matter of course, not necessarily because new hands had not been

inducted.

c

D

E

In I. M. H. Press, Delhi v. Additional Industrial Tribunal Delhi & Ors.,(') this Court was called upon to examine the ratio in Moder

Mills(') case and lndi.2 General Navigation & Railway Co. Ltd.

F case and this Court in terms affirmed the ratio in India General Navi­

gation

& Railway

Co. Ltd. case observing that mere taking part in an

illegal strike without anything further would not justify the dismissal

of all the workmen taking part in the strike.

In

Indian Iron & Steel Co. Ltd. & Anr. v. Their Workmen('),.

G this Court observed that the management of a concern has power to·

direct its own internal administration and discipline but the power

is not unlimited and when a dispute ari·ses, Industrial Tribunals­

. have been given the power to see whether the termination of service

(!) ]U.R. 1960 S.C. 1258.

B (2) A.I.R. 1961 s.c. 1162.

(3) A.l.R. 1958 S.C. 311.

(4)

[1958] S.c,R. 667 at 685.

·•

' .

~-~\

.,

GUJARAT STP.EL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 207

-< of a workman is ju•tified and to give appropriate relief. It may be

noticed that the decision is prior to · introduction of . s. 1 lA. It

would thus appear that the important effect of. omission to hold an

enquicy was merely this that the tribunal .would have to consider

not only whether there was a prima fade 'case but would decide for

ii.elf on the oYidence adduced whether the charge• have been made

out. A defective enquiry in this connection stood on the. ·Same

footing as no enquiry and in either case the tribunal would have .

/ jurisdiction

to

::;o into the entire matter and.· the employ~r would

have

to satisfy the tribunal that on tho facts the order of dismissal

f

eir discharge was proper. (see Workmen of Motipur Sugar Factory

(Pvt.) Ltd. v. Motipur Sugar Factory('), and Provincial Transport

Service v. State Industrial Court) (

2

). Once, . therefore, it was held

that the enquicy was not proper, it wao irrelevant whether the workman

withdrew from the enquiry or participated in it, the decision had

to be on appraisal of evidence, and if it was found that the enquiry

_was not proper the whole case was open before the labour court to

decide for it.elf whether the charge of misconduct wao proved and

what punishment •hould be awarded (see Imperial Tabacco Company

of India Ltd. v. Its Workmen) (

3

}. '

As again•t the above propositions, Sri Sen relied upon the obser-

' vations of this Court in Oriental Textile Finishing Mills, Amritsar

v. Labour Court, Jullundur & Ors.('). We fail to see how it runs

counter

to the

e.tablished principle. The Court, in fact, held that

even where the •trike is illegal, before any action was taken with a

r

view to punishing the strikers a domestic enquicy must be held .

._..... Even though the Standing Orders prescribing enquicy before punish­

ment did not provide for any such cnquicy the Court held that .

nonetheless a domestic enquicy should have been held in order to

entitle the management to dispense with the servi<ce of the workmen

•

on the ground of misconduct, viz., participation in the illegal strike. ·

After so saying, the Court agreed with the view of the Court in

Indian General Navigation & .Railway Co. Ltd. case and reaffirmed

the principle that

mere taking part

in an illegal strike without any-

. thing further would not necessarily justify the dismissal of all the

workers

taking part in the strike and that

if the employer, before

' • dismissing a workman, gave him sufficient opportunity of explain­

ing his conduct and no question of mala /ides or victimisation arose,

(I) [1965J3 $.CR. 588 at 597.

(2) [1963) 3 5.C.R 650.

(3) A.I.R. 1962 S.C. 1348.

(4) [1972] 1 S.C.R. 490.

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208 SUPREME COURT. REPORTS [1980] 2 S.C.Jt.

it was not for the tribunal in adjudicating the propriety of such dis­

missal

to look into the sufficiency or otherwise of the evidence led

before the enquiry officer or insist ou the same degree of proof as ·was required in a court of law, as if it were sitting in appeal over

the decision of the employer .

Another aspect of this case emphasised that it could not be

dogmatised as a matter of law that an overt act such as intimidation

·or instigation or violence was necessary in order to justify termination

of service for participating in an illegal strike. On the facts of that case,

even though ij was found that no dome~tic enquiry was held, reinstate~

ment was refused on the grotind that misconduct was made out. ·

Sri Sen, of course, relied on this judgment to show that where

a strike was resorted

to and the workers were called upon to join

service within the stipulated time,

on their failure it was open to

the company to employ new hands. This is reading more into the

D ruling than is warranted.

We cannot agree that

,mere failure to report for duty, when

a strike is on, necessarily means

misconduct Many a workman,

as a matter of prudence, may not take the risk of facing the

· mili­

tant workmen

or the Management's hirelings for

fear, especially

E when there is evidence in the case from the Sabha that the Manage­

ment had hired goondas and from the Management that the strik­

ing vanguard was violent. It is also possible, in the absence of

evidence to the contrary, that several workmen might not be posted

with the Management's notice

of recall or the terms on which they

~

were being recalled. In this view, we are not able to uphold the -J

F . conclusion of the arbitrator that the punishment of dismissal was

appropriate for the entire mass of workmen whose only

guilt, as

proved

was nothing more than passive participation in the ·illegal

and unjustified strike by not reporting for duty. ·The verdict is

inevitable that

the discharge is wrongful.

·

G _ The only comment we reluctantly make about . the otherwise

thorough award of the Arbitrator is that omnibus rhetoric about the

obnoxious behavi<Jur of a class may not make-do for hard proof of '41 -

specific acts of particular persons where a punitive jurisdiction is

exercised.

H What, then, is the normal rule in the. case. of wrongful dismissal

when the workmen claim reinstatement with full

back wages? The

High Court has held the discharge wrongful and directed restoration

'

•

.GUJARAT STEEL TUBES v. MAZPoOR SABHA (Krishna Iyer, !.) 2 09

with an equitable amount of back wages. The following rulings of A

this Court, ot al, deal with this subject :

The recent case of

Hindustan Tin Works v. Its Employees(') sets

out the rule on reinstatement and back

wages when the order of

thii Court, et al, deal with this subject :

"It is no more open to debate that in the field of

industrial jurisprudence a declaration can be given that

the termination

of service is bad and the workman

conti­

nues to be in service. The spectre of common law doctr-

ine that contract

of personal service cannot be specifically

enforced or the doctrine of mitigation of damages does

not haunt this branch of

law. The relief of reinstatement

with continuity

of service can

be granted where termina-

tion of service

is found to be invalid. It would mean that

the employer bas taken away illegally the right to work

of the

workman contrary to the relevant law or in breach

of

con­

tract and simultaneously deprived the workman of his

·earnilllgs. If thus the employer is found to be in the. wrong

as a result of which the workman is directed to be

reinstated, the employer could not shirk

his responsibility

of paying the

wages which the workmen has been depriv-

ed

of by the illegal or invalid action of the employer.

Speaking realistically, where termination of service is

.questioned as invalid or illegal and the workman has to

go through the gamut of litigation, his capacity to sustain

himself throughout the protracted litigation

is itself such an

awesome factor that

he may not survive to see the day

when law's proverbial delay has become stupefying. If

after such a protracted time and energy consuming litiga­

tion during which period the workman just sustains him-

self, ultimately he is to be told that though he will be rein­

stated, he will be denied the back wages which would be

due to him, the workman would

be subjected to a sort of

penalty for no fault of his and it is wholly undeserved.

Ordinarily therefore, a workman whose service has been

illegally terminated would he entitled to

full back wages

except to the extent he was gainfully employed during the

enforced idleness. That

is the

normal rule. Any other

view would be a premium on the unwarranted litigative acti-

vity ·of the employer. If the employer terminates the 1!

1

se_rvice illegally and the termination is motivated as in this

(!) A.!.R. 1979 S.C. 75 at 77-78.

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210 SUPREME COURT REPORTS (1980] 2 S.C.R.

.~' case, viz., to resist the workmen's demand for revision of

wages, the termination may well amount to unfair labour

practice. In such circumstances reinstatement being the

normal rule it should be followed with

full back wages.

Articles 41 and 43 of the Constitution would assist us in.

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reaching a just conclusion in this respect ........... .

In the very nature of things there cannot be a strait-jacket

formula for awarding relief

of back wages. All relevant

considerations

will enter the verdict. More or less, it would

be a motion addressed to the discretion

of the TribunaL

Full back

wages would be th.e normal rule and the party

objecting to it must establish the circumstances necessitat­

ing departure. At that stage the Tribunal will exercise its

discretion keeping in

view all the relevant

circumstances."

Dealing with the complex of considerations bearing on payment

of back

wages the new perspective e.merging from Art. 43A cannot

be missed,

as explained in Hindustan Tin Works, Labour is no more

a mere factor in production but a partner in Industry, conceptually

speaking, and less than full back wages is a sacrifice by those who

can best afford and cannot be demanded by those, who least sacrifice

their large 'wages' though can best afford,

if financial

constraint is

the ground urged by tho latter (Management) as inability to pay

full back pay to the former. The morality of law and the constitu­

tional mutation implied in Art. 43A bring about a new equation in

industrial relations. Anyway, in t:he Hindustan Tin Works" teas•,

75 per cent of the past wages was directed to be paid. Travelling

over the same ground by going through every precedent

is superero­gl!tory and we hold the rule is' simple that the discretion 'to de11y

F reinstatement or pare down the quantum of back wages is absent

save for exceptional reasons.

G

It must be added howeVer that particular circumstances of each

case may induce the court to modify the direction in regard to the

quantum of back wages payable as happened in the India General

Navigation and Railway Co. Ltd. vs. Their Workmen (Supra). We

may, therefore, ·have to consider, when finally moulding the relief,

what, in this case,

we should do regarding reinstatement and back

wages.

A Sum-up

B We may now crystallise our conclusions in the light of the Jong

discussion. The basic assumption we

make is that the strike wiis.

not only illegal but also unjustified. On the latter part, a contrary

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna [yer, !.) 211 •

view cannot be ruled out in the circumstances present but we do not

remvestigate the issue since the

High Court has proceeded on what

both sides have taken for granted. The

Management, in our view,

did punish its 853 workmen when it disch:irged them for reasons of

misconduct set out in separate bnt integrated proceedings, even

though, with legal

finesse,

the formal order was phrased in harmless

verbalism. But

fine words butter no parsnips, and law, in its intelli-l gent honesty, mu~t be blunt and when it sees a spade, must call it

L a spade. The action taken under the general law or the standing

r orders, was illegal in the ab.sence of individualised chargesheets, pro­

~per bearing and personalised punishment, if found guilty. None of

these steps having been taken, the discharge orders were still born.

But the Management could,

as in this case it did, offer to make out

the delinquency of the employees and the arbitrator had,

:n such cases,

the

full jurisdiction to adjudge de novo both guilt and punish­

ment.

We hold that sec. l lA does take in an

arbitrator too, and,

in this

.case, the arbitral reference, apart from sec. l lA, is plenary in scope.

In the second chapter of our sum-up, the first thing we decide

is that Art. 226, however restrictive in practice,

is a power wide

enough, in all conscience, to be a friend in need when the summons

comes in a crisis from a victim

of injustice; and, more importantly,

this extraordinary reserve power

is unsheathed to grant final relief

without necessary recourse to a remand, What the tribunal may,

in its discretion, do,

the High Court too, under Art. 226, can, if

facts compel,

do. Secondly, we hold that the Award suffers from a ~ fundamental flaw that it equates an ill,gal and unjustified strike with

brazen misconduct by every workman without 'o much as identifi­

f cation of the charge against each, the part of each, the punishment

/ for each, after adverting to the gravemen

of his misconduct meriting , dismissal. Passive participation in a strike which is both illegal and

unjustified does not

ipso facto invite dismissal or punitive discharge.

There must be active individual

excess such as master-minding the

unjustified aspects

of the strike, e.g., violence, sabotage or other re­

prehensible role. Absent

such gravamen in the accusation, the

ex­

treme e9onomic penalty of discharge is wrong. An indicator of the

· ~ absence of such grievous guilt is that the Management, after stating

in strong terms all the

sins of the workmen, took back over

400 of

!Item as they trickled. back slowly and beyond the time set, with

continuity of service, suggestive

of the dubiety of the inflated

accusa­

tions and awareness of the minor role of the mass of workmen in

the lingering strike. Furthermore, even though

all sanctions short of

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y 212 SUPREME COURT REPORTS [1980] 2 S.C.R.

punitive discharge may be employed by a Management, in our

current conditions of massive unemployment, low

wages and high

cost of living, dismissal

of several hundreds, with disastrous impact

on numerous families,

is of such sensitive social concern that, save

in exceptional situations, the law

will inhibit such a lethal step for

the peace of the Industry, the welfare of the workmen and the

broader justice that transcends transcient disputes. The human

dimensions have decisional relevance.

We hold the discharge orders,

though approved by the Atbitrator, invalid.

·~

The last part of our conclusions relates to the relief which must

be fashioned with an

eye on mutual equities. We cannot ignore

a___...­

few raw realities since law is not dogmatics but pragmatics, without

temporising on principle. The Management's limitations

in absorb-

ing all the large number of discharged employees all at once when,

steel, the raw material,

is scarce, is a problem. Likewise, their

inability to pay huge sums by way of back

wages or otherwise, with-

out crippling the progress of the industry, cannot be overlooked

but cannot be

overplayed after Hindustan Tin Works. Another

factor which cannot be wished away is the presence of over a couple

of hundred workmen, with varying lengths of service,

who may have

to be sacked if the old workmen are to be brought back.

It is a

problem of humanist justice. Lastly, the rugged fact of life must

not be missed that some of the workmen during the long years of

desperate litigation, might have sought jobs elsewhere and most of

them perhaps have, for sheer survival, made at least a starving wage

during the prolonged idle interval. This factor too

is a weak con­

sideration, tested by the reasoning

in Hindustan Tin Works. More­

over, rationalisation of re-absorption of the removed workmen re-

_J

quires attention to the classification of permanent workmen and

their casual counterparts. Every proposal must be bottomed on the

basic economic fact that the beneficiaries are from the many below

the destitution line. This Court has, in a very different context

though, has drawn attention to the Gandhian guideline :

"Whenever you are in doubt. . , . apply the following test,

Recall the face of the. poorest and the weakest man whom

you may have seen, and ask yourself, if the step you con-

template

is going to be of any use of him." ·

It is apt here.

JI This perspective informs our decision. What did the High Court

do regarding reinstatement and should we modify and why ? If the

discharge

is bad, reinstatement is the rule. In India General Navi-

GUJARAT STEEL. TUBES v. MAZDOOR SABHA (Krish11a Iyer, !.) 213

gation, Punjab National Bank and Swadeshi Industries, et al, resto-A.

ration, despite large numbers, was directed. But most rules have

exceptions wrought by the pressure of life and

Oriental was relied

on to contend that reinstatement must be denied. There is force in

the High Court's reasoning to distinguish

Oriental, as we hinted

earlier

and we quote :

l

'There were only 22 workmen involved in that case. The

management had

made genuine and persistent

efforts to

persuade

the concerned workmen to call of the strike and

join work. Those efforts were made at three different stages,

namely, (1) immediately after the workers went

on the

lightening strike and before chargesheets

were issued,

(2) after

the charges were dropped and individual notices

were sent to the workmen asking them to resume work

by

specified dates and (3) after the orders of termination were

served and conciliation proceedings were commenced pur­

suant to the demand notice. But this is not all. Even

the Labour Officer and Labour Inspector had tried to per­

suade the concerned workmen to joint duty before the

.:barge-sheet came to be issued. As against these repeated

bona fide attempts on the part of the management and an

O\Itside agency to persuade the erring workmen, they not only

did not resume work but 'also failed

td acknowledge or

send a reply to the individual notices served upon them

requesting them to resume work and they appear to have

made it a condition precedent to their joining duty that the

suspended workmen should also be taken

· back. Even

under such circumstances, the management did not straight-

away terminate their services hut gave individual notices

requiring the concerned workmen to show cause why their

names should not

he struck off and asked them to suhmlt

their reply by a certain date. Even those notices were not

replied.

It is only thereafter that the services of the con-

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cerned workmen came to be terminated. It is against this G

• background that the Supreme Court held that there was

,,A "a persistent and obdurate refusal by the workmen to joint

duty" notwithstanding the fact that "the management has

done everything possible to persuade them and give them

opportunities to

come back to

work" and that they had

without any sufficient cause refused to

do so which con- B

stituted

"misconduct" so as to 'justify the termination of

their services". ~r,

214 SUPREME COURT REPORTS [1980] 2 S.C.R.

. A " .... If the workmen had been approached individually,

not only those amongst them

who were unwilling to join

strike but were prevented from joining work would have

taken courage to resume duty but even those amongst them

who were undecided could also have been

won

over. That

apart, those notices, as their contents disclose, were hardly

persuasive efforts. They were a mixture of ultimatums,

threats, complaints and indictment of the workmen and the

Sabha. Was it, therefore,

a genuine effort on the part of

a keenly desirous employer to offer an olive branch

? In

Oriental, orders of termination were passed only after giving

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individual notices to the concerned workmen to showcause

why their names should not be struck off. Besides, those

notic~ were given after charges formally served upon each

workmen earlier were dropped and persuasive efforts made

in the meantime had failed. None of. those steps was taken

herein. All that happened

was that in one of the notices

meant for mass consumption and circulation, such intima­

tion

\vas given."

Even so, during the several years of the pendency of the dispute,

surely some workmen would have secured employment

·elsewhere

as was conceded by counsel at a certain stage, and it is not equitable

to recall them merely to vindicate the law especially when new work­

men already in precarious service may have to be evicted to ac­

commodate them· In the course of the debate at the Bar we gained

the impression that somewhere around a hundred workmen are likely

to be alternatively employed. Hopefully, there is no hazard in this

IUCSS.

Another, facet of the relief turns on the demand for full back

wages. Certainly, the normal rule, on reinstatement, is full back

wages since thei order of termination is non est. [see Lad's case(

1

) and

Panitole Tea Estate's case(')]. Even so, the industrial oourt may well

•lice off a part if the workmen are not wholly blameless or the

strike is

illegal and unjustified. To what extent wages for the long

interregnum should be paid is, therefore, a variable dependent on a

complex of circumstances. [See for e.g. 1967 (15) F.L.R. 395 paras

·~

3 and 4].

We are mindful of the submission of Sri Tarkunde, urged in the

connected appeal by the Sabha, that where no enquiry has preceded

(1) G.T. Ladv. Chemicals and Fibres India Ltd., [197911 S.C.C. 590.

(2) Management of Panitole Tea Estaie v. Workmen [1971] 3 S.C.R. 774.

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 215

a punitive discharge and the tribunal, for the first time, upholds the

punishment this Court has in

D. C. Roy v. The presiding

Officer,

Madhya Pradesh Industrial Court, Indore & Ors.(') taken the view

that full wages must be paid until the date of the award. There

cannot be any relation back of' the date of dismissal to when the

Management passed the

void order.

Kalyani(

2

)

was cited to support the view of relation back

of the Award to the date of the employer's termination orders. We

do not agree that the ratio of Kalyani corroborates the proposition

propounded. Jurisprudentially,

approval is not creative but confir-

11.1atory and therefore relates back. A void dismissal is just void

and does not exist. If the Tribunal, for the first time, passes an

order recording a finding of misconduct and thus breaU1es life into the

dead shall of the Management's order, predating of the nativity does

llot a~ise. The reference to Sasa Musa in Kalyani enlightens this

position. The latter case of

D. C. Roy v. The

Presiding Officer,

Madhya Pradesh Industrial Court, Indore & Ors. (supra) specifically

r~fers to Kalyani's case and Sasa Musa's case and holds that where

the Management discharges a workmen by an order which

is void for

want of an enquiry

or for blatant violation of rules of natural justice,

the relation-back doctrine cannot be invoked. The jurisprudential

difference between a void order, which

by a subsequent judicial resus­

citation comes into being de novo, and an order, which may suffer

from some defects but is not still born or void and all that is needed

in the law to make it good is a subsequent approval by a tribunal

!'1Ilch is granted, cannot be obfuscated.

We agree that the law stated in D. C. Roy (supra) is correct but

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llOIW that the termination orders are being set aside, the problem F

does not present itself directly. Even the other alternative submission

oi. Sri Tarkunde that if the plea of the Management that the order is

a discharge simpliciter were to be accepted, the result is a retrenchment •

within the meaning of s. 2( oo) which, in this case, is in violation

al_ s. 25F and therefore bad, is not a point urged earlier. We are

dillposed to stand by the view that discharge, even where it is not G

occasioned by a surplus of hands,

will be retrenchment, having regard to the breadth of the definition and its annotation in 1977 1 SCR

586. But the milieu "in which the order was passed in February

1973

is not fully available, viewed from this new angle. So we decline to go into that contention. H

(1) [1976] 3 S.C.R. 801.

,(2) (1963]1L.L.J.679.

216 SUPREME COURT REPORTS [1980) 2 S.C.R.

.t. Final Relief

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We are concerned with 400 workmen, some of whom have been

claimed by death

or other irreversible causes-casualties of litigative

longevity

! are 370 workmen are left behind, of whom 239 are admit-

1

tedly permanent. We have already stated that 100, out of them,

are probably fixed up elsewhere. So, we exclude them and direct

that the remaining 139 alone will be reinstated. A list of the afore­

said 100 workmen will be furnished to the Management by the Sabha

within two weeks from today. That shall be accepted as correct and

final.

While reinstatement

is refused for these

100 workmen, when __,.

shall they be deemed to have ceased to be in service for drawal of

te1minal benefits? Their discharge orders having been quashed,

they remain in service until today. We concluded the arguments

on

August 3, 1979 and on the eve of the closure of counsel's submissions

certain inconclusive settlement proposals were discussed.

We,

there-

fore, consider August 3, 1979 as a pivotal point in the calender with

reference to which the final relief may be moulded. We direct that

the 100 workmen for whom reinstatement is being refused will be

treated as in service until August

3, 1979 on which date they will be

deemed to have been retrenched. We direct this

<itep with a view

to pragmatise the situation in working out the equities. These 100

will draw all terminal benefits plus 75 per cent of the back wages.

This scaling down of back pay

is consistent with the assumption

that somewhere in the past they had secured alternative employment.

The long years and the large sum paybale also persuade us

to make

this minor cut.

Of course, in addition, they will be entitled to re­

trenchment benefits under s. 25F of the Act, and one month's notice

pay.

The remaining 139

will be awarded 50 per cent of the back wages

since

we are restoring them. The High Court has adopted this

measure and so

we do not depart from it. The case of the hundred

stands

on a slightly different footing, because some compensation

in lieu of refusal

of reinstatement is due to them and that also has

entered our reckoning

while fixing 75 per cent for them. The com­

putation of the wages will be such as they would have drawn had

I

they continued in service and on that the cut directed will be --.J

applied.

We have disposed of the case of the permanent workmen except

to clarify that in their case ·continuity of service will be maintained

and accrual of benefits on that footing reckoned.

The next category

relates

to casual employees, 131

in number of whom 57 have loss

(

I

GUJAltAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 217

than nine months' service. The policy of the Act draws a distinction A

between those with service of 240 days and more und others with

less. The casuals with less than nine months service are 57 in

number and

we do not think that this fugitive service should qualify

for

reinstatement especially when we find a number of intermediate

recruits, with longer though untenable service, have to be baled out.

We decline reinstatement of these 57 hands. The other 74 must be I

reinstated although notionally but wrongly they are shown as casual.

Jn the 'life' sense, all mortals are casuals but in the legal sense,

, those with a record of 240 days on the rolls, are a class who have

.... ~ rights under industrial law. We direct the 74 long-te,rm casuals

y aforesaid to be reinstated but not the 57 short-term ones. To this

extent, we vary the High Court's order.

c

\_. ~e adopt the directive of the High Court regarding the back

£11' wages to both categories of casuals except that for th.e lesser class

{ of 57 casuals,

a fiat sum of

1000/-more will be paid as a token

. COl1Jpensation in lien of re-instatement. The reinstated casuals (74

of them) will be put back as casuals but will be confirmed within

six months from the date of rejoining since it is meaningless to keep

them as casual labourers when they are, by sheer length of service,

on tl1e regular rolls.

Two

issues remain When are the workmen to be retaken and

what

is to happen in the meanwhile ? How is the amount payable

by the Management to be discharged and on what

term' ? Many

). years have flowed by, thanks to the long-drawn-out litigation.

D

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_/'-Further delay in putting back the workers will be unfair. But the

Management pleads that steel shortage cuts into the llcsh of the fac­

tory's expansion, without which additi2nal intake of worker; is beyond

their budget unless considerable time for reabsorption were given.

But the lot of the workmen is unspeakable while the overall assets ·

and outlook of the Company are commendable enough to bear an

increased

wage bill. Divas cannot complain when Lazarus asks for

more

crumbs. Eve!JI if a slight slant be made in favour of the Manage-

F

1 ment, the direction to them to take back, in order of seniority, the first

, _.: 70 out o.f the 139 permanent workmen on or before December 31,

1979 and the rest on

or

before March 31, 1980 is the least that is just.

Until those dates the workmen will be paid 2/3(d of their wages

as nD1t> due. Of course, if any workmen fails to report for work

within 15

days of service ofwritten

notice to him, with siniultaneous

copy to the Sabha, he will not be eligible for any more reinstatement

or wages.

15-lf68SCl.(19

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(

218, SUPREME COURT REPORTS [1980] 2 S.C.ll.

, The back wages run into a larg~ sum but a good part has been

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paid under the stay order of this Court. We make it clear that the

payments made

will be given credit and the balance if paid as direct­

ed below and within the

\ime specified will not carry interest. If

default is made, the sums in default will carry 10 per cent interest.

The

figures of amounts due will be worked out by both sides and

· put into Court in 10 days from now. Half the amount determined

by the Court, after perusing both statements, will be paid directly

to

l

the workmen or deposited with the Industrial Tribunal who will

givi:

notice and make disbursements, on or before 31-3-1980 and the other ~ ·

half on or before 30-9-1980. , / '1

The conclusions may be capsulated for easier consumption.

1. Out of 370 .workmen directed to be reinstated by the High

Court, 239 are permanent.

It is assumed that

100 have found.

alternative employment and are not interested any more

in

re-·

·instatement and they are to be excluded from the direction of

reinstatement. The Company must, therefore, reinstate 139 per­

manent workmen and the list of 100 workmen who are not to

be reinstated would be supplied by the Sabha within two weeks from

the date of this judgment. The discharge order in respect of 100

workmen herein-before mentioned would be set aside and they ·ru:e

deemed to be in service till August 3, 1979, when they will be

retrenched and they

will be paid retrenchment compensation as pro-

vided in

s. 25F plus one month's pay in lieu of notice, the compen-

sation to be worked

out' on the basis of the wages that will be ad~

missible under the recommendations of the Engineering Wage Board /

as applicable to the Company. This amount will be paid in lien of ~

reinstatement and they will also be paid 75 per cent of the back

wages.

2. The remaining 139 permanent employees would be paid

50

per cent of the back wages as directed by the High Court.

· 3. 70 out of 139 permanent workmen directed to be reinstated

should be provided actual employment on or before December 31,

1979, and the re.st on or before March 31, 1980. During this period

and till the actual reinstatement each one of these 139 workmen

should be· paid 2/3 of the monthly wages from August 9, f979,

when the hearing in this case concluded. 50 per cent of the amount

that becomes payable to each workmen under the directions hereinc

above given will be paid on or before March 31, 1980, and ·the

balance on or before September 30, 1980, and till then the amount

will carry interest at the rate of 10 per cent.

I

\.4_.., •

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 219

4. In respect of casual workmen whose service was less than 9

months on the date of dismisswl it would not be proper to grant

reinstatement. They are 57 in number. The remaining casual workmen

74 in number shall be reinstated. In case of 57 casual workmen

to

whom reinstatement is refused, the direction of the High Court is ~onfirmed with the further addition that each one will be paid

Rs.. 1,000 /-over and above the amount payable under the direction

· of the High Court and this would be in lieu of reinstatement. Casual

workmen 74 in number and having service of more than 9 months on

the

date. of dismissal will be treated as confirmed within

six months

~ of the date of their rejoining and they will be offered reinstatement

'1y March 31, 1980, and the High Court's direction for back wages

in tb.eir respect is confirmed.

With. these modifications, we. dismiss both the appeals. The

Management-app'ellant

will pay the costs of the Sabha-respondent,

advocates

fee being fixed at Rs.

5,000/-.

An Afterword

This litigation, involving many workmen living precariously on

post-wages amidst agonising inflation and a Management whose young

budget, what with steel scarcity, may well be shaken by the burden

of arrears, points t<? the chronic pathology of our Justice System­

the intractable and escalating backl<?g in the Forensic Assembly

Line that

slowly spins Injustice out of Justice and effectually wears

down

or keeps out the weaker sector of Indian life. This trauma is

felt more poignantly in Labour litigation and the legislature fails

functionally if it dawdles to radicalise, streamline and simplify the

conflict resolution procedures

so as to be credibly

avaifable to the

common people

who make up the lower bracket of the nation. The

stakes are large, the peril

is grave, the evils are worse than the pro­

gnostics. of Prof. Laurence Tribe (of the Harvard Law School) :

"If court backlogs grow at their present rate, our children

may not

be able to bring a lawsuit to a concluslon within

their

lifetime. Legal claims might then be willed on,

gereration to generation like hillbilly feuds; and the burdens

of pressing them

would be contracted

like a hereditary

disease."

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Law may be gnilty of

pouble injustice when it is too late and too

costly

for it holds out remedial hopes which peter out into

~our ff

dupes and bleeds the anaemic litigant of his little cash only to ':antalise

1-im into a system equal in form but unequal in fact. The price of

220 SUPREME COURT REPORTS, [ 1'9ROJ 2 s.C.ll.

A this promise of unreality may be the search by tile lowly for the

reality of revolutionary alternatives. Compelled lJy the crisis in the

Justice System, we sound this sombre judicial irote:

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We direct payments and reinstatements as spelt out earlier, within

the speciftcated time, and, hopefully, leave tl\e case with the thought

that, given better rapport between the partners in production, the

galvanic Gujarat Steel Tubes Ltd., will forge ahead as a paradigm

for the rest.

KosHAL, J.-I have had the advantage of going

thrnugh the judg­

ment of

my learned brother Iyer, J., but after giving the same

my

most serious consideration I regret that I find myself unalile to endorse

it as I hold a different opinion in relation to three important findings

anived at by him, namely,

(a) that the discharge

of workmen amounted' really to

their dismissal because the

motivation for it was

their alleged misconduct.

(b) that an arbitrator would

faIT

within the . ambit of

the term "Tribunal" as used hr suli'-sectfon (2) of

section l

lA of the Industrial

Disputes Act ·(herein­

after called the 194 7 Act), arrd

(c) that the High Court acted within the four corners

or its jurisdiction under article 227 of the Constitu­

tion of India while interfereing with tile finding of

the arbitrator that the workmen were correctly

punished with dismissal

if the orders of discharge could be construed as such.

I am therefore appending this note which may lie· read in conti­

nuation of that judgment.

2. The parties are admittedly governed by

tl're' Industrial Employ­

ment (Standing Orders Act, 1946 (hereafter referred to as the

G "S.O. Act" section 15(2) of which empowers the appropriate Qo­

verrunent to make rules. inter alia setting out model standing orders . I_

for the purposes of that· Act. The· expression 'standing orders' is ~

defined iu section 2(g) of the S.O. Act to mean rules relating to the

matters set out in the schedule thereto,

items 8 and 9 _of which

H

run thus :

· ."8. Termination of employment, and the notice there-.

for to be given by the emplover and workmen ..

.

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GUJARAT STEEL TUBES v. MAZOOOR SABHA (Kasha!, J.) 221

"9. Suspension or dismissal for misconduct and acts or

omissiens \Vhich'fcmstitute misconduct."

The appropriate Government (in this case the Government of

Gujarat) has prescribed Model Standing Orders (M.S.Os. for short)

under section 15(2) of the S.0. Act. The relevant part of M.S.0. 23

is extracted below :

'.'23. ('1') · Subject to the provisions of the Industrial

disputes AGt; 1947,' the employment of a permanent work­

man employed on .. rates other than the monthly rates of

wages may he terminated . by giving him fourteen days'

notice or by payment of thirteen days' wages (including

all admissible allowances)

in lieu of notice.

"(2') ....................................

"(3) .................... '. , ............ .

" ( 4) The employment of a permanent workman em­

ployed on the monthly rates of wages may be terminated

·by giving him one month's notice or on payment of one

month's wages (including all admissible allowances) in lieu

of notice.

"(4-A) The reasons for the' termination of service of a

permanent workman shall be recorded in writing and com­

municated to 'him, 'if be so desires, at the time of disch~rge,

unless such communi,ation, in the opinion of the Manager,

is likely directly or indirectly to lay any person open to

civil or criminal procedings at the instance of the work­

man.

"(5)

"(6)

·"(7)

All Classes of workmen other than those 'appointed

on a permanent basis may leave their service or their

service may b{l terminated without or pay in lieu of

notice : Provided

that services of a temporary workman

shall not

be terminated as

a punishment unless he has been

given an opportunity of explaining the charges of misconduct

alleged against

him in the manner prescribed in

Standing

Order 25.

"(8) ... ······· .•. •.·• .......................... .

·~(9)

" ..... -· .................... ' ........ .

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222 SUPREME COURT REPORTS {.1980] 2 &C.R.

A M.S.O. 24 enumerates 25 kinds of actS or omissions on the part

B

of a workman which amount to miSconduct. Clause8 (a) and (b) of

the M.S.O. describe two of such acts thus :

"(a) wilful insubordination or disobedience, whether or

not iill combination with another, of any lawful and

reasonable order of a superior;

(b) going on illegal strike

or abetting, inciting, instigating

or acting

in

furtherance thereof;" · . · ·

M.S.O .. 25 lays down the manner in which a workman guilty ot~

misconduct may be dealt with. It states :

c~T "25. (1) A workman guilty of misconduct may be -

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(a) .................................... .

(b) ...................................... .

(c)

(d)

(e)

(f)

(g)

"(2)

discharged under Order 23;

dismissed without notice.

" ( 3) No order of dismis~l under sub-clause (g)

of clause (1) shall be made except after holding

an inquiry

against the workman concerned in respect of the alleged

misconduct in the manner set forth in clause (

4).

"( 4) A workman against whom an inquiry has been held

shall be gitven a charge-sheet clearly setting forth the cir­

cumstances appearing against him and reqniring explanation.

He shall be given an opportunity to answer the charge and

permitted to be defended by a workman working in the

same department

as himself. Except for reasons to be

recorded in writing by the officer holdillg the inquiry, the

workman shall be permitted to produce

wi~nesses in his

defence and cross-examine any witnesses on whose evidence

the charge rests. · A coilcise summary of the evidence led

on either side and the workman's plea shall be recorded .

. '.'(5) ... ' .. ' ............... ' .... ' ' .. " ...... "

Clauses (3) and ( 4) of M.S.0. 25 speak of an inquiry only in

the case of an order falling under sub-clause (g) of clause (1) of

•

I

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Kmhul, J.) 223

that M.S.O. It is thus quite clear (and this is not disputed) that

the only sub-clause

of clause (1) of

M.S.0. 25 to which the provi­

sions! of clauses (3) and (4) of that M.S.O. would be attracted is

sub-clause (g) and that if ari order of discharge falls under M.S.O. 23

an inquiry under clauses (3) and ( 4) of M.S.O. 25 would not be a

· • prerequisite thereto even though such an order is mentioned in sub­

clause

(f) of clause (1) of that

M.S.0. And that is why it has been

vehemently

urged on behalf of the

workmen who were discharged

en masse and who were not taken back by the Management that the

orders of discharge made in relation to

them amount really to orders

of dismissal and are bad in

law by reason of the fact that no inquiry

of the type above

mentioned was held before they were passed.

3. Under M.S.Os. 23 and 25 the Management has the power ·

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, to effect termination of the. services of an employee by having re-

, 'couise to either of them. In action . taken under M:S.O. 23 no

element of punishinent · is involved and . tl)e dj~charge is , a discharge

simpliciter;

and that is why no opportunity to the concerned employee

· D

to

show cause against the termination is provided for. Dismissal, however, which .an emp!Oyer may order, is, in its very nature, a

punisbment, the infiictiorr of which therefore has been made subject

to the· result of an inquiry (having the semblance of a trial in a

criminal proceeding) . Exercise

of ea.ch of the two powers has the

effect of the termination of the

services of the concerned employee E

but must. be regarded, because of the manner in

which each has been

dealt with

by the

M.S.Os., as separate and distinct from the other.

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4. It was vehemently argued on behalf of the workmen that

.mice it was proved that tlie order of discharge of a workman was

passed by reason of a misconduct attributed to him by the manage­

ment, . the order cannot but amount to an order of dismissal. But

this argiiment, to my mind, is 'wholly without substance, and th~t

for: two reasons. For one thing, clause (1) of M.S.O. 25 specifically

$!ales in sub-clause (f) that a workman guiliy of misconduct may

be discharged under M.S.O. 23. This clearly means that when the

employer is satisfied that a workman has been guilty of misconduct,

he may (apart from visiting the. workman with any of the punish­

ments

specified in

sub-clauses (a), (b), (c), (d) and (e) of

clause (1) of M.S.0. 25) either pass against him an order of dis­

charge for which no inquiry· preced~nt as provided for in clauses ( 3)

and ·( 4) ol M.S.O. 25 would be necessary, or, may dismiss him

after holding such an inquiry.

Which of the two kinds of

order tlie

employer shall pass is left entirely to his own discretion.

H

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224 SUPREME COURT REPORTS [1980] 2 s.c.R.

in t~~ i~:;~e 0~h~~~h:f e:J~~~;~e~an~~~ ~:~ ~~~a~: !t di~mis~~ )( ,

order of termination of services of an employee is in reality inte~d

to punish an employee and not merely to get rid of him because he

is considered useless, inconvenient or troublesome, the order, even •

though specified to be an order of discharge, would be deemed to be .

an order of dismissal covered by sub-clause (g) of clause

(1) of

M.S.O. 25. On the other hand if no such intention is made out, the

•

order would remain one of discharge simpliciter even though it h11s

been passe. d for the ~ole reason that a misconduct is imputed to the em-~

ployee. That is how, in my opinion, M.S.O>. 23 and 25 have to

be interpreted. The argument that onoe an alleged misconduct is

shown

to .have been the

moti!ve for the passage of an order of dis-

charge, the same would immediately aud without more, amount

to

an order of dismissal, is not warranted by the language used in M.S.O. 25 which specifically gives to the employer the power to

get rid of "a workman guilty of misconduct" by passing an <;>rder of

his diseharge under M.S.O. 23.

5. Secondly, the reasons for the termination of service of a

permanent workman under M.S.O. 23 have to be recorded i!Il writing

and communicated to him,

if he so desires, under clause 4-A) there­

of.

Such reasons must obviously consist of an opinion derogatory

to the workman in relation to the performance of his duties; and

1Vhether such reasons consist of negligence, work-~hirking or of

serious overt acts like theft

or embezzlement, they would in any

case amount to

misconduct for which he may be punished under

M.S.O. 25. It is difficult to conceive of a case in which such

reasons would not amount . to misconduct. The result is thitt

M.S.0. 23 would be •endered otiose if termination of service there­

under for misconduct could be regarded as a dismissal and such a

result strikes ;tt the very root of accepted canons of interpretation.

If it was open to the Court to "lift the veil"· and to hold an order

of discharge to amount to a dismissal merely because the motive

behind it was a misconduct attributed to the employee, the services

of no employee could be terminated without holding against him an

inquiry such as is contemplated by clauses (3) and (4) of

M.S.O. 25.

6. The interpretation placed by me on M.S.Os. 23 and 25 finds

ample support in Bombay Corporation v. Malvankar(') of which the

I

(I) [1978] 3 S.C.R. 1000.

•

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•

I

GUJARAT STEEL TUBES v. MAWOOR SABHA (Koshal, /.) 225 ..

facts are on alll fours with those in the present case. Miss P. S.

MalvaBkar, respondent No. l in that case, was a clerk in the employ­

ment or the Bombay Electric Supply and Transport Undertakinll

which was being run by the Bo,mbay Corporation. Her services were

terminated on the grounc! that her record of service was unsatisfac­

tory.

It was however stated

.in the order of termination of her

service8 that she would be paid one month's wages in lieu of notice

and would also be eligible for all the benefits as might be admissible

under the Standing Orders and Service Regnlations of the Under-

/ taking. Those Standing Orders correspond to the standing orders

,. -~-with which we are here concerned. Thereuuder, two powers were

t conferred on the empoyer, one being a power to impose punishment

for misconduct following a disciplinary inquiry under clause (2) of

Standing Order 21 read with Standing Order 23 and the other one

to terminate the service

of the employee by one calendar month's

written notice or pay in lieu thereof under

Standing Order 26. The

question arose as to which power had been exercised by the employer

in the case of Miss Malvankar and J as want Singh, J., delivering the

judgment of the .Court on behalf

of himself and Bhagwati, J., was

answering that question when

he made the observations reproduced

from his decision. by

my learned brother Iyer, J. This Court was

then clearly of the opinion

that~-

(a)

_)~

the power to terminate the services by an order of

di&charge simpliciter .is distinct from and indepen­

dent of the power to punish for misconduct and the

Standing Orders cannot be construed

so as to render

either of these

j:>Owers ineffective; and

. '

reasons , for termination have to be communicated to

··"

" •

(b)

the employee and those reasons cannot be arbitrary,

capricious or irrelevant bnt that

would not mean

that the order of termination becomes punitive in

character just because good reasons are

its basis .

The Court further remarked that if the misconduct of the employee

, constituted the foundation for terminating his service then it might be

• ... liable to be regarded as punitive but this proposition was doubted

'• inasmuch as "even in such case it may be argned that the manage­

ment has not punished the employee but has merely terminated . his

service nnder Standing ·Order 26".

'

7. So all that re.mains to be determined in this connection is as

to when would misconduct be the 'foundation' of an order of dis-

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226 SUPREME COURT REPORTS [1980] 2 S.C.R.

,

charge. Merely because it is the reason which weighed with

the employer in effecting the termination

·of services would not

make

the order of such tennination as one founded on misconduct, for,

such a proposition would run counter to the plain meaning of clause

(1) of M.S.O. 25. For an order to be 'founded' on misconduct, it

must, in my opinion, be intended to have been passed by way of

punishment, that is, it must be intended to chastise or cause pain in

body or mind or harm or loss in reputation or money to the cori-

•

cerned worker. If such .an intention cannot be spelled out of the

oprevailing circumstances, the order of discharge or. the reasons· for~

which it was ostensibly passed, it cannot be regarded as an orde;

of dismissal. Sach would be the ci"lse when the employer orders dis-·

charge in the interests of the factory or of the general body of

workers themselves.· That this is what was re311y meant by the

judicial precedents which use the word 'foundation' in con~on

with the present controversy finds support from a number of decisiona

of this Court. In The Chart~red Bank, Bombay v. The Chartered

Blink Employees' Union(') thk Court held that if the termination bf

seITice is a colourable exercise of the power vested ill the manage-

ment or is a result of victimization or unfair labour practice, the

Industrial Tribunal will have jurisdiction to intervene and set aside

such termination. Applying this pri11ciple to the facts of the case

before it, thi~ Court ruled :

"We are satisfied that the management has passed the

order of tennination simpliciter and the order doe\'! not

amount to one of dismissal as and by way of punishment''

(emphasis supplied) .

This case

was followed in The Tata

Oil Mills Co., Ltd., v. Work­

men(") where Gajendragadkar, C.J., who delivered the judgment of

the Court, stated the law thus : ·

"The true legal position about the Industrial Courts'

jurisdiction and authority in dealing with cases of this kind

is no longer in doubt. It is true that in several cases,

contract of employment or provisions in Standing Orders

authorise an industrial employer to terminate the service of

his employees after giving notice for one month

on paying

salary for one month in lieu of notice,

and normally, an

·employer may, in a proper case, be entitled to ·exercise the

said power. But where ~n order of discharge passed by an

(1) [1960] 3 S.C.R. 441.

(2)

[1964] 2 S.C.R. 125

J.

'

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Kosf:al, J.) 227

•

emloyer gives rise to an industrial dispute, the form of the

order by which the employees' services are terminated,

would not be decisive; industrial adjudication · would be

entitled to examine the substance of the matter and decide

whether the termination

is in fact discharge simpliciter or

it amounts to

di5missal which has put on the cloak of a

discharge simpliciter.

If the Industrial Court is satisfied that

the order of discharge is

punitive, that it is mala fide, or

that it amounts to victimization or unfai<r labour practice,

it is competent to the Industrial Court to set aside the

order an.d in a proper case, direct the reinstatement of the

employee.

In some cases,

~he termination of the employee's

services may appear to the Industrial Court to be caprici­

ous or so unreasonably severe that an inference may legiti­

mately and reasonably be drawn that in terminating the

services, the employer was not acting

bona fide. The

test'

always has to· be whether the act of the employer is bona-.

fide or not. If the act is mala fide, or appears to be a

colourable exercise of the powers conferred on the employer

either by the terms of the contract ·or by the standing

orders, then notwithstanding the form of the order, indus­

trial adjudication would examine the substance and would

direct reinstatement in a

fit case ..

".

The same test was laid down for determinil)g whether an order of

dischargy could be construed as one ordering dismissal in The Tata

Engineering and Locomotive Co., Ltd., v. S. C. Prasad(') by Shelat

and Bhargava, JJ. :

"No doubt, the fact that the order was couched in the

language of a discharge simpliciter iG not conclusive .. Where

rnch an order gives rise to an industrial dispute its form

is not decisive and the tribunal which adjudicates that. dis­

pute can, of course, examine the substance of the matter

and decide whether the termination

is in fact discharge

simpliciter

or dismissal though the language of the order is

one of simple termination of service. If it is satisfied that

the order is punitive or

mala fide or is made to victimise the

workmen or amounts to unfair labour practice, it is

CDmpe­

tent to set it aside. The test is whether the act of

. the employer is bona fide. If it js not, and is a colourable

(!) [1967] 3 s.c.c. 372.

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228 SUPl\EME COURT REPORTS [1980] 2 S.C.R.

exercise of the power nuder the contract of service or stand­

ing orders, the Tribunal can discard it and in a proper

case direct reinstatement."

The Chartered Bank, Bomba>' v. The Chartered Bank Employees'

Union (supra) was followed by this Court in Workmen of Sudder

' Office, Cinnamore v. Management(I) and therein stress was laid on

the employer's right to terminate the services of a workman by an

order of discharge simpliciter uniter the terms of the contract where

there

was no lack of bona {ides, unfair labour practice or victimiza-

tion.

'-/

So the real criterion which formed the touchstone of a test to

determine whether an order of temiination of services is an order

of discharge simpliciter or amounts to dismissal

is the real nature of

the order, that

is, the intention

with which it was passed. H the

intention

was to punish, that is, to chastise, the

on:ler may be

.regarded

as an order of dismissal; and for judging the intention, the

question of

mala

{ides (which is the same thing as a colourable exer­

cise

of power)

becomes all-important. If no ma/a {ides can be

attributed to the management, the order of discharge must be regarded

as one having been caused under M.S.O. 23 even though the reason

for its passage is serious misconduct.

8. It is in light of the conclusion just above arrived at that the

discharge of the workmen

in the instant case has to be judged. The

question

of intention or mala {ides is really one of fact (of which

the arbitrator was, in

my opinion, the sole judge, unless his finding on

the

point was vitiated by perversity in which case alone it was liable

to be reviewed by the High Court). The discussion of the €\vidence

by the arbitrator in his award is not only full and logical but, in my

opinion, also eminently just. At all material times the Management

was out to placate the Sabha (and therefore, the workmen) and gave

to it a

Jong rope throughout. The attitude of the

Sabha on the other

hancl was one of intransigence and obduracy. According to the

settlement of the 4th of August, 1972, it was not open to the work­

men to resort to a strike till the. expiry of a period of

five years; nor

could the Management declare a lock out till then. Any disputes

I

arising between the parties, according to the terms arrived at, were

~

to be sorted out through negotiations or, failing that, by recourse to

arl;litrati'Cln. A dispute was raised by the Sabha soon thereafter over

the implementation of the recommendations of the Central Engineer-

ing Wage Board (hereinafter called the Board), the payment of.bonus

(I) (1970) II L.L.J. 620.

r

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Koshd, J.) 229

for t1le year 1971 and wages for an earlier lock out. In paragraph &

7.47 of its award the Board had made the following recommenda­

tions :

·'7.47. After considering the problem in its entirety, we

agreed to divide the industry into five regions or areas as

under and in doing so, we have also considered the prevail-a:

.iµig wage levels at different places and the cost of living at

important centres in these places.

''1. Bombay City and Greater Bombay including Thana

Ambarnath & Kalyan Industrial Areas.

.. ~2. Calcutta, Greater Calcutta, Howrah Industrial ar91,

Jamshedpur Industrial area, Durgapur, Asansol and

Ranchi industrial areas.

"3. Madras industrial area, Bangalore industrial area,

Hyderabad industrial area, Poonit-Chinchwad indus-

c

trial area, Delhi industrial area and Ahmedabad. D•

•

"4. Coimbatore; Nagpur, Bhopal, Kanpur, Baroda and

Faridabad industrioal areas.

"5. The rest of the country."

This classification was made for tbe purpose of granting 'area allow­

ance' which varied witb the category in which the area of the situa­

tion

of a factory fell.

No allowance was to be paid to the factories

falling in category 5 and on tbe basis of the phraseology used by the

Board the Management contended that Ahmedabad industrial area

-(in which its facliory was 'situated) fell within that category. This

F··

inteqiretat.ion of the categorisation made by the Board was not~

acceplable to .the Sabha who claimed that. the factory was covered by

cate[#Jry 3; and this was an issu~ qn which the Sabha was' not

prepared to climb down. Similarly, the Sabha was adamant on the

question of bonus fur the year 1971 which it claimed at 16 per cent'

over and above 8.33 per cent allowed by statute with the plea that

bonllS at that rate had been paid in the earlier year. This being Jhe

position and negotiations between the parties held at two ll!eetings

, convened on 14-12-1972 and 20-1-1973 having ended in a fiasco,

the Management offered to have the disputes resolved by arbitration

bnt

that again was a course not acceptable to the

Sabha which, how­

ever, accused the Management of flouting the settlement dated the

4th of August, 1972,

by not coming to the negotiating table. The

attitude adopted by the

Sabha was, to say the least, most unreason-

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230

SUPREME WURT REPORTS [1980] 2 s.c.R. ~

able. It could not have its own way in taking certain matters . as

final and non-negotiable. Nor can it be said that stand taken· by

the .management

was unreasonable. Paragraph 7.47 of the award of-the Board categorized various factories with reference to the areas

which were either described by the names

of the cities in which

they were situated or by the names of certain industrial areas.

Ahmedabad was mentioned as such and so

was Calcutta while the

other areas were mentioned as such and such industrial areas.

It

was thus a very reasonable plea put forward on behalf of the

Manage­

ment tl1at only Ahmedabad city and not Ahmedabad .industrial area

was included in category 3 and that that industrial area fell within)­

category 5. On the other hand, the Sabha interpreted the wo.¢

'Ahmedabad' occurring in category 3 to include 'Ahmedabad iutlus­

trial area (in which lay the factory in question) and demanded area

allowance for its workers on that score. · The reasonableness of the

plea

of the Management

is obvious and it was the attitude of the

Sabha which lacked reason in that on the failure of the negotiations

they spurned the offer of the Management for arbitration on the

question of interpretation of the categorisation. It• can also not be

said that the objection regarding payment of bonus 'raised by the

Management was not a reasonable one. The argument that the stand

of the Management that· the negotiatiQns between them and the

Sabha on the questions of interpretation of the Board's award and

bonus having

f.ailed as there was no meeting ground on either

of·

them, they could be referred to arbitration, lacked reason, is wholly·

unacceptable. The attitude of the Sabha in insisting on negotiations

being held only on the basi~ of certain propositions formulated by it

amounted really to a refusal to negoliate. the points in dispute and

the Management was therefore not left with any alternative except

to suggest an arbitration as envisaged in the settlement dated the 4th

of August, 1972.

9. Later developments reveal a similar state of affairs in so far

as the attitude of the Sabha is concerned. Over and over again ·it

was asked not to precipitate a strike and to act within the terms· of

the settlement but the advice foll on deaf ears. Even after the strike

which, it

is admitted pn all hands, was illegal and certainly not

en­

visaged, by the settlement of the 4th of August, 1972, the Manage-'4

mcnt continued to make requests to the Sabha to send back 'the

workers, but again no heed was paid to those requests. On the ot'her

hand, the Sabha began making suggestions to the Government to

take over the factory. Ultimately, when the Management wa~ faced,

to adopt means to rehabilitate the factory by reports to fresh

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Koshal, J.) l 231

'l'ecroitment, they had no optron except to terminate the services of

its workmen. Each one of the orders of termination of services

which were actually passed, was on the face of it wholly innocuous

inasmuch as

it did not stigmatise in any manner whatsoever the con­cerned workman. The Management had however to record reasons.

for the discharge in pursuance of the provisions of clause ( 4A) of

M.S.0. 25 and those reasons.did charge each worker with misconduct

.inasmuch as he had taken part in the illegal strike and had refusedr

to resume duty inspite of repeated demands made By the Management

in that behalf. All ,the same, the Management made it clear that

"'\. inspite of such misconduct it had no intention of punishing the

\·workers who were given not only the benefit of an order of discharge

' ·simpliciter but also the option to come back to work within a speci-

1fied period in which case they would be reinstated with full benefits.

An intention not to punish could not be expressed in clearer terms

. ·and is _further made out from the fact that more than 400 workers

·who ·resumed duty were reinstated without break in service. In

passing the orders of discharge, therefore, the Management did

;nothing more than act under M.S.O. 23 and its acfam cannot be

regarded as amounting to dismissal in the case of any of the workers.

They ·had the right to choose between ·a discharge simpliciter and a

-dismissal and, in the interests of the factory and the members of the

Sabha and perhaps

on compassionate grounds also, they chose the

former

in unequivocal terms. The intention to punish being absent,

the

finding of the High Court that the order of discharge amounted

to one of dismissal cannot

be sustained.

·

10. I ·now turn to the interpretation of sub-section (2) of sec-

-. tion llA of the 1947 1\ct. It is a well settled canon of interpretation

of statutes that the language used by the legislature must be regarded

as. the only source of its intention unless such language is ambi­

:guous, in which situation the preamble to the Act the Statement

· of Obj~ts of and Reasons for bringing it on thei Statute book and

the purpose underlying the legislation may be taken into' consi­

-deration for ascertaining such intention. That the purpose of

the legislation is to fulfil a socio'-economic need, or the ~xpress _

·object underlying. it, does not come into the picture till an ambiguity

~ is detected in the language and the court must steer clear t>f, the

· temptat~n to piould the written word according to its own concept

of what should have been enacted. That is how I propose to approach

the exercise in hand.

11.

For the sake of

convenien~ of reference I may set out the

'Provisions of clauses (aa) and (r) u"'f section 2, of sub-sections (1)

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E

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D

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232

SUPREME COURT REPORTS [1980} 2 S.C.lt.

I

l A and (2) and the opening clause of sub-section (3) of section 11, and

B

c

J)

E

F

!

f

B

of the whole of section llA of the 1947 Act:

"2. (aa) 'arbitrator' includes an umpire;"

"2. (r) 'Tribunal' means an Industrial Tribunal consti­

tuted under section 7 A and includes an Indus­

trial Tribunal constituted before the 10th of

March, 1957, under this Act;"

"11. (1) Subject to any rules that may be made in this

behalf, an arbitrator, a Board, Court, Labour Court, Tribu­

nal or National Tribunal shall follow such procedure as the

arbitrator

or other authority concerned may think fit.

"(2) A conciliation officer or a member of a Board, or

Court or the presiding officer of a Labour Court, Tribooal

or National Tribunal may for the purpose of inquiry into

any existing or apprehended industrial dispute, after giving

reasonable notice, enter the premises occupied by any esta­

blishment to which the dispute relates.

" ( 3) Every Board, Court, Labour Court, Tribunal and

National Tribunal shall have the same powers as are vested

in a Civil Court under the Code of CM! Procedure, l 90S,

when trying a suit, in respect of the following matters,

namely:-........ "

"11A. Where an industrial dispute; relating to the dis­

charge or dismissal of a workman has been referred to a

Labour Court, Tribunal or National Tribunal for adjudica­

tion and, in the course of the adjudication proceedings, the

Labour Court, Tribunal or National Tribunal, as the case

may be,

is satisfied that

the order of discharge or dismissal

was not justified, it may, by its award, set aside the order

of discharge or dismissal and direct reinstatement of the

workman on such terms and conditions,

if any, as it thinks

fit, or give such other relief to the workman including the

award of any lesser punishment

in lieu of discharge or

dis­

missal as the circumstances of the case may require :

Provided that in any proceeding under this section the

Labour Court, Tribunal or National Tribunal, as the case

may

be, shall rely only on the materials on record and shall

not take any fresh evidence in relation to the

matter."

Section 2 of the Act specifically lays down that unless there is

anything repugnant in the subject or context, the expressions defined

[

I

r

,.. GUJARAT STEEL TUBES v. MAZDOOR SABHA (Koshal. J.) 233

. therein would have the meanings attributed to them. Throughout the

Act therefore, while 'arbitrator' would include an umpire, a 'Tribunal'

, would not include an arbitrator but would mean only an Industrial

Tribunal constituted under

the Act, unless the context makes it

nee~

sary to give the word a different connotation. In sub-section (1) 0£

section 11, it is conceded, the word 'Tribunal' has been used in

accordance with the definition appearing

in clause (r) of section 2 because an arbitrator is separately mentioned in that sub-section. In

sub-sections (2) and 3) of that section a Board, a Labour Court, a

Tribunal and a National Tribunal have been invested with certain:

powers. Would a Tribunal as contemplated by sub-sections (2) and

"""(3) then include an arbitrator? My reply to the question is an

emphatic 'no'. It is well settled that if a term or expression is used

in a particular piece of legislation in one sense. at one place, the same

sense will pervade the entire legislation wherever the te~m is used

unless an intention to the contrary is expressed, Here the word

'Tribunal' has been used in three sub-sections of the same section and

no reason at all is fathomable

for the proposition that it means one

thing in sub-section (1) and something different in sub-sections (2)

and (3).

It may also be mentioned here that in all the three

sub­

sections the word 'Tribunal' has a capital 'T' which is also part of the

expression 'Tribunal'

as occurring in clause (r) of section 2 and

thu~

connotes a proper noun rather than the generic WQrd 'tribunal' a•

embracing all institutions adjudicating upon rights of contendina

partieio. A third and perhaps a clinching reason for this interpreta­

tion

is available in the

nse of the expression "National Tribunal" alon11

with the word "Tribunal" in all the three sub-sections which militate~

"-. against the argument th_at ~e _word "Tribunal" as used in sub-s_ectioos

· ( 2) and ( 3) means an institution of that type. If the word "Tnbunal"

as used in sub-sections (2) and (3) means such an institution, then

the use of the expression "National Tribunal" would be redundant

and redundancy is not one of the qualities easily attributable to a legi5-

lative product. In that case, in fact, other words used in the two

sob-sections last mentioned, namely, 'Court' and 'Labour Court' wOllld

also become redundant. In this view of the matter, the word.

"Tribunal" as used in all the first three sub-sections of section 11:

. must be held to have been used in the sense of the definition occurring

...... in clause (r) of section 2.

12. Section llA is just the next succeeding section and therein -

3

,

part of the a~gement adopted is the same as in sub-sections (2)

and (3) of section

11 so that powers are conferred by it

on a "Labour

16-S68SCl~79

A'

B

c

D

E

F

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H

234 SUPREME COURT REPORTS [1980] 2 S.C.lt.

A Court, Tribunal or National Tribunal" which iirriingement is repeated

in the section thrice over. That the word "Tribunal" as ,used in

section 1

lA has the

samei meaning as it carries in the three sub-secti~

Qf section 11 is obvoius and I need not repeat the reasons in tlnd

behali; for, they are practically the same as have been set out by mo

in relation to section 11.

B

13. In my opinion the l'allguage employed ib. section llA suJieni

from no ambiguity whatever and is capable only o~ one meaning, i.e.,

that the word 'Tribunal' occurring therein is

used

in the sense of thtj

definition given in clause (r) of section 2. It iSI thus not permiSsiblei

'

'

•

c

for this Court to take the Statement of Objects and Reasons or the ~

purpose underlying the enactmen~ into consideration while interpreting

section 1 lA.

D

E

G

I may mention here however that a perusal

of the Statement od!

Objects and Reasons forming the backgro1.md to the enactment of

section llA leads me to the same conclusion. In that Statement ai

reference was specifically made to tribunals as well as arbitrators in,

terms of the recommendations of the International Labour Ocganiza­

tion. But inspite of that the word 'arbitrator' is conspicuqus by its

absence from the section. What is the reason fo~ the omission? Was

it consciously and deliberately made or was it due to carelessness ~

the part of the draftsmen and a consequent failure on the part of tho

legislature ? In my ,opinion the Court would step beyond the field

of interpretation and enter upon the area of legislation if it resorts to

guess work thowever intelligently the same may be carried out) and

attributes the omission to the latter cause in a situation like this which

po6tulates that the pointed attention of the legislature was drawn to

the desirability of clothing an arbitrator with the same powers as were

sought to be conferred on certain courts and tribunals by section

llA

and it did not accept the recommendation. I

would hold, in the

circumstances, that the omission was deliberately made.

It follows that the powers given to a Tribunal under section 1 lA

are not exercisable by an arbitrator who. therefore, cannot interfere

with the punishment (awarded by the employer) in case he

finds

misconduct proved.

. 1

14. The last point op which I differ with the finding of my -.t_ •

learned brother relates to the exercise by the High Court of its powers

under article 227 of the Constitution of India. As pointed out by

H

him the High Court, while discharging its functions as

envisaged by

that a.rticle, does not sit as a court of appeal over the award of tho

arbitrator but exercises limited jurisdiction which extends oaly to

!/ GUJARAT STEEL TUBES v. MAZDOOR SABHA (Ko;hal, J.) 235

seeing that the arbitrator has functioned within the scope of his leg~

r

authority. This proposition finds full support from Nagendra Nath

Bora and Another v. The Commissioner of Hills Division an~ AppeizlS,

Assam and Others('), P.H. Kalyani v. M/s. Air France, Calcutta('),

State

of Andhra

Pradesh v. S. Sree Rama Rao('") and Navinchandra

Shakerchand Shah v. Manager, Ahmedabad Cooperative Department

Stores Ltd.(4), all of which have ben discussed at length by him and

require no further consideration at my hands. In this view of the

matter it

was not open to the High Court to revise the punishment

(if the

cjisclrarge is regarded as such) meted out by the Managemenl

~ to the delinquent workinen and left in tact by the arbitrator wh~

authority in doing so has not been shown to have been exercised

beyond the

limits of his jurisdiction:

15. I need not go into the other aspects

qf the case. In view

of

my findings

-

(a) that the orders oi discharge of the workmen could

not be regarded as orders

of their dismissal and were,

on the other hand, orders of dischllrge simpliciter nroperly passed under M.S.0. 23;

( b) that the arbitrator could not exercise the powers

conferred on a Tribunal under section

llA of the

1947 Act and could not therefqre interfere with the

punishment

awarded by the Management to the

workmen (even

if the discharge could be regarded

a punishment), and

( c) that

in any case the High Court exceeded the limits

of its jurisdiction in interfering with the said

punish­

ment purporting to act in the exercise of its powers

under article 227 of

the Constitution

qf India,

the judgment of the High Court must be reversed and the order of the

arbitrator restored. The three appeals ~ decided accordingly, the

parties being left to bear their own costs throughout.

ORDER

The appeals are dismissed substantially with such modifications as

are indicated

in the decretal part of the judgment of the majority.

V.D.K.

(1) (1958]

S.C.R. 1240.

(2) (1964] 2 S.C.R. l~

(3) (1964] 3 S.C.R. 25.

(4) (1978) 19 G.L.R. !08.

Appeals dismissed.

B

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