J.K. SYNTHETICS LTD. v. K.P. AGRAWAL AND ANR

Citation: [2007] 2 S.C.R. 60

Court: Supreme Court of India

Bench: B.P. SINGH, R.V. RAVEENDRAN

Case summary

J.K. SYNTHETICS LTD. v. K.P. AGRAWAL AND ANR.pdf

Judgment text

J. K. SYNTHETICS LTD. v. K. P. AGRAWAL AND ANR. FEBRUARY I, 2007 [B. P. SINGHANDR. V. RAVEENDRAN,JJ. ] Constitution ofIndia-Article 226-U. P. Industrial Disputes Act, 1947- -f Section 6(6)-Charges framed against delinquent employee for misconduct- Punishment of dismissal imposed by employer after inquiry-Labour Court imposing a lesser punishment of withholding two annual increments of the employee after finding that one of the charges was proved-Application for amendement of award by emp/1yee on the ground that the award is silent about granting back wages-Labour Court allowed the application-Writ Petition challenging the award and the amendment by the employer was 0 dismissed by High Court-Correctness of-Held, on facis, Labour Court had the power to amend ! he award-Awarding of back wages by Labour Court was not warranted when a charges of serious misconduct was proved- Labour Court cannot interfere with the punishment of dismissal without >-.

recording a finding that the punishment was disproportionate to the gravity of the charge-Hence, the punishment of dismissal upheld. Backwages-Sec. 1lA ofIndustrial Disputes Act, 1947-Article. 226 of Constitution of India-Principles stated-Difference between cases where termination/dismissal is held to be illegal and invalid and cases where court uphold the finding regarding misconduct, but only interferes with the quantum of punishment, for purposes of backwages. Appellant--employer issued charge-sheets to respondent-employee for various charges of misconduct Inquiry Officer held an inquiry and found all the charges proved against the employee. On the basis of the Inquiry Report, the employer imposed a punishment of dismissal on the employee. Labour Court, in its Award, held that the inquiry was not fair and proper; and found that only one of the charges was proved against the employee.

The Labour Court, however, held that the punishment ofdismissal was not warranted and therefore, imposed a lesser punishment of withholding the two annual increments since the employee was working for four years without any J. K. SYNTHETICS LTD. v. K. P. AGRAWAL 61 blemish. The employee filed an application under section 6(6) of the U. P. Industrial Disputes Act, 1947 seeking amendment of the Award on the ground that it was silent about reinstatement with continuity of service and back wages. The employer resisted the application contending that the Labour Court becamejimctus officio after publication of the award and hence, it could not amend the award; that the prayer amounted to seeking review of the award and there was no jurisdiction or power to grant such relief; and that the respondent was not entitled to back wages as the Labour Court held that misconduct was proved. The Labour Court allowed the application and held that the employee is entitled to full back wages.

The employer filed a Writ Petition challenging the award and the amendment before High Court. On the basis of the submission made by the employee that he was not reinstated despite the Award of the Labour Court not being stayed by the High Court, the High Court dismissed the Writ Petition of the employer holding that it had wilfully violated the lawful order and hence not entitled to equitable discretion under Article 226/227 of the Constitution of India. Hence the appeal by the employer. Allowing the appeal, the Court HELD: 1. 1. Under section 6(6) of the U. P. Industrial Disputes Act, 1947, Labour Court has power to amend the award, either on its own motion or on an application of any party to the dispute, ifthere is an arithmetical or clerical or typographical error in the order; and if the court had said something, which it did not intend to say, or omitted something, which it intended to say, by reason of any accidental slip/omission on the part of the court.

The power cannot be exercised where the matter involves rehearing on merits or reconsideration of questions of fact or law or consideration of fresh material or new arguments which were not advanced when the original order was made. p The power cannot be exercised to change the reasoning and conclusions. (Paras 4 & 8) (66-G; 69-F) 1. 2. On an application being made under Section 6(6) of the Act, the Labour Court recorded that it had accidentally omitted to answer the second part ofthe reference and rectified the omission by adding a paragraph. Labour Court had the power to amend the award. [Para 9) [69-H; 70-Aj Master Construction Co. (P) Ltd. v. State ofOrissa, (196613 SCR 99; Tulsipur Sugar Company Ltd. v. State ofU. P. , (1970) 1SCR35 and U. P. SRTC v. Imtiaz Hussain, (2006] 1 SCC 380, referred to. 1. 3.

Where the power under Article 226 or section llA of the Industrial Disputes Act, 1947 is exercised by any Court to interfere with the punishment on the ground that it is excessive and the employee deserves a lesser punishment and a consequential direction is issued for reinstatement, the Court is not holding that the employer was in the wrong or that the dismissal was illegal and invalid. The Court is merely exercising its discretion to award a lesser punishment. Till such power is exercised, the dismissal is valid and in force. Where finding of misconduct is affirmed and only the punishment is interfered with, there is no automatic reinstatement; and if reinstatement is directed, it is not automatically with retrospective effect from the date of termination. Therefore, where reinstatement is a consequence of imposition of a lesser punishment neither back-wages nor continuity of service nor consequential benefits follow as a natural or necessary consequence ofsuch reinstatement.

In cases where the misconduct is held to be proved and reinstatement is itself a consequential benefit arising from imposition of a lesser punishment, award of back wages for the period when the employee has not worked, may amount to rewarding the delinquent employee and punishing the employer for taking action for the misconduct committed by the employee. That should be avoided. In this case, the Labour Court found that a c~arge against the employee in respect of a serious misconduct was proved. It, however, felt that the punishment of dismissal was not warranted and therefore, imposed a lesser punishment of withholding two annual increments. In such circumstances, award of back wages was neither automatic nor consequential. In fact, back wages was not warranted at all. [Paras 19, 21) [75-G-H; 76-A-E; G-H; 77-A] Hindustan Tin Works Pvt. Ltd. v. Employees ofHindustan Tin Works Pvt. Ltd. , [1979] 2 SCC 80; Surendra Kumar Verma v.

Central Government Industrial Tribunal-cum-Labour Court, New Delhi, [1981) 1 SCR 789; Mohan/al v. Bharat Electronics Ltd. , [1981) 3 SCC 225; UP. State Brassware Corpn. Ltd. v. Udai Narain Pandey, [2006) 1 SCC 479; Allahabad Jail Sansthan v. Daya Shankar Rai, [2005) 5 SCC 124; Kendriya Vidyalaya Sangathan v. S. C. Sharma, [2005) 2 SCC 363; General Manager, Haryana Roadways v. Rudhan Singh, [2005) 5 SCC 591; A. P. S. R. T. C. v. S. Narasa Goud, [2003) 2 sec 212; A. P. S. R. T. C. v. Abdul Kareem, (2005) 6 sec 36 and R. SR. T. C. v. Shyam Bihari Lal Gupta, [2005) 7 SCC 406, referred to. 1. 4. The· charge established against the employee was a serious one. The Labour Court did not record a finding that the punishment was harsh or disproportionately excessive. It interfered with the punishment only on the ground that the employee had worked for four years without giving room for any such complaint. It ignored the seriousness of the misconduct. That was not warranted.

In the absence of a finding that the punishment was shockingly disproportionate to the gravity of the charge established, the Labour Court should not interfere with the punishment. The punishment of dismissal did not call for interference. ! Para 271 [79-A-BJ Rama Kant Misra v. State ofU. P. , AIR (1982) SC 952; Hombe Gowda Educational Trust v. State ofKarnataka, (200611 SCC 430; Mahindra and Mahindra Ltd v. NB. Narawade, (2005) 3 SCC 134; Orissa Cement v. Adikand Sahu, (1960) 1 LLJ 518; New Shorrock Mills v. Mahesh Bhai T Rao, [1996) 6 SCC 590; U. P. SRTC v. Subhash Chandra Sharma, [2000) 3 SCC 324; Bharat Forge Co. Ltd. v. Uttam Manohar Nakate, [2005) 2 SCC 489; MP. Electricity Boardv. Jagdish Chandra Sharma, (2005) 3 SCC 401 and Regional Manager, Rajasthan State Road Corporation v. Ghanshyam Sharma, (2002) 1 LLJ, referred to. 2. The assumption by the High Court that there was lawful order or that there was wilful violation thereof is not sound.

Further, the employer was not given an opportunity to explain why the employee was not reinstated. The mere fact that the first respondent was not reinstated in pursuance of the award ofthe Labour Court result in dismissal of the Writ petition challenging the award. [Para 28) 179-E-F] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7657 of2004. From the Final Judgment and Order dated 28. 7. 2003 of the High Court ofJudicature at Allahabad in C. M. W. P. No. 10714/1983. Nikhil Nayyar and Anl 18. Coming back to back-wages, even if the court finds it necessary to award back-wages, the question will be whether back-wages should be awarded fully or only partially (and if so the percentage). That depends upon the facts and circumstances of each case.

Any income received by the employee during the relevant period on account of alternative employment or business is a relevant factor to be taken note of while awarding back-wages, in addition to the several factors mentioned in Rudhan Singh (supra) and Udai Narain Pandey (supra). Therefore, it is necessary for the employee to plead that he was not gainfully employed from the date ofhis termination. While an employee cannot be asked to prove the negative, he has to at least assert on oath that he was neither employed nor engaged in any gainful business or venture and that he did not have any income. Then the burden will shift to the employer. But there is, however, no obligation on the terminated employee to search for or secure alternative employment. Be that as it may. 19.

But the cases referred to above, where back-wages were awarded, related to termination/retrenchment which were held to be illegal and invalid for non-compliance with statutory requirements or related to cases where the court found that the termination was motivated or amounted to victimization. The decisions relating to back wages payable on illegal retrenchment or termination may have no application to the case like the present one, where the termination (dismissal or removal or compulsory retirement) is by way of punishment for misconduct in a departmental inquiry, and the court confirms the finding regarding misconduct, but only interferes with the punishment being of the view that it is excessive, and awards a lesser punishment, resulting in the reinstatement of employee.

Where the power under Article 226 or section IIA of the Industrial Disputes Act {or any other similar provision) is exercised by any Court to interfere with the punishment on the ground that it is excessive and the employee deserves a lesser punishment, and a consequential direction is issued for reinstatement, the court is not holding that the employer was in the wrong or that the dismissal was illegal and f- invalid. The court is merely exercising its discretion to award a lesser punishment. Till such power is exercised, the dismissal is valid and in force. When the punishment is reduced by a court as being excessive, there can be either a direction for reinstatement or a direction for a nominal lump sum compensation.

And if reinstatement is directed, it can be effective either prospectively from the date of such substitution of punishment (in which event, there is no continuity of service) or retrospectively, from the date on which the penalty of termination was imposed (in which event, there can be a consequential direction relating to continuity of service). What requires to be noted in cases where finding of misconduct is affirmed and only the punishment is interfered with (as contrasted from cases where termination is held to be illegal or void) is that there is no automatic reinstatement; and if reinstatement is directed, it is not automatically~ ith retrospective effect from the date of termination. Therefore, where reinstatement is a consequence of imposition of a lesser punishment, neither back-wages nor continuity of service nor consequential benefits, follow as a natural or necessary .. consequence of such reinstatement.

In cases where the misconduct is held 0 to be proved, and reinstatement is itself a consequential benefit arising from imposition of a lesser punishment, award of back wages for the period when the employee has not worked, may amount to rewarding the delinquent employee and punishing the employer for taking action for the misconduct committed by the employee. That should be avoided. Similarly, in such cases, even where continuity of service is directed, it should only be for purposes of pensionary/retirement benefits, and not for other benefits like increments, promotions etc. 20. But there are two exceptions. The first is where the court sets aside the termination as a consequence of employee being exonerated or being found not guilty of the misconduct.

Second is where the court reaches a conclusion that the inquiry was held in respect of a frivolous issue or petty misconduct, as a camouflage to get rid of the employee or victimize him, and the disproportionately excessive punishment is a result of such scheme or intention. In such cases, the principles relating to back-wages etc. will be the same as those applied in the cases of an illegal termination. 21. In this case, the Labour Court found that a charge against the employee in respect of a serious misconduct was proved. It, however, felt that the punishment of dismi5sal was not warranted and therefore, imposed a lesser punishment of withholding the two annual increments. In such circumstances, award ofback wages was neither automatic nor consequential. ; -f- . l. K. SYNTHETICS LTD. v. K. P. AGRAWAL[RAVEENDRAN, J. ) 77 In fact, back wages was not warranted at all. Re : Question (iii) 22.

This takes us to the next question as to whether the Labour Court was justified at all in interfering with the punishment of dismissal. The Labour Court held that one serious charge was proved, another charge was not proved and in regard to the third charge gave 'benefit of doubt' to the employee. The Labour Court also relied on the decisions of this Court in Rama Kant Misra v. State ofU. P. , AIR (1982) SC 952, wherein it was held that the punishment of dismissal was excessive where the employee was found to have uttered indecent words and used abusive language and substituted it by the lesser punishment of stoppage of two annual increments. The said decision depended on its special facts and may not apply to this case. The recent trend in regard to scope of interference with punishment in matters involving discipline at the workplace has been different. We may refer to some of the recent decisions. 23. In Hombe Gowda Educational Trust v.

State ofKarnataka, [2006] I SCC 430, this Court stressed the need to give importance to discipline at the workplace. This Court observed : "This Court has come a long way from its earlier viewpoints. The recent trend in the decisions of this Court seek to strike a balance between the earlier approach to the industrial relation wherein only the interest of the workmen was sought to be protected with the avowed object of fast industrial growth of the country. In several decisions of this Court it has been noticed how discipline at the workplace/industrial undertakings received a set back. In view of the change in economic policy of the country, it may not now be proper to allow the employees to break the discipline with impunity. " 24. In Mahindra and Mahindra Ltd. v. N. B. Narawade, [2005] 3 SCC 134, this Court considered a case where a workman used abusive and filthy language against his superior officer, in the presence of his subordinates.

He was terminated after conducting an inquiry. Labour Court found the punishment to be excessive and in exercise of power under section 11A of the ID Act, -< imposed a lesser punishment. This Court held that the misconduct cannot be termed to be an indiscipline calling for lesser punishment than termination. A similar view was taken in Orissa Cement v. Adikand Sahu, (1960) 1 LLJ 518 and New Shorrock Mills v. Mahesh Bhai T Rao, [1996] 6 SCC 590]. +- 25. In U. P. SRTC v. Subhash Chandra Sharma, [2000] 3 SCC 324, this Court held that the punishment of removal, for abusing and threatening another employee, was not shockingly disproportionate to the gravity of the offence. In that case also, only one among three charges was established and the Labour Court had interfered with the punishment, which was upheld by the High Court.

Reversing such decision, this Court held : "The Labour Court, while upholding the third charge against the respondent nevertheless interfered with the order of the appellant removing the respondent, from the service. The charge against the respondent was that he, in drunken state, along with a conductor went to the Assistant Cashier in the cash room of the appellant and demanded money from the Assistant Cashier. When the Assistant Cashier refused, the respondent abused him and threatened to assault him. It was certainly a serious charge of misconduct against the respondent. In such circumstances, the Labour Court was not justified in interfering with the order of removal of respondent from the service when the charge against him stood proved. Rather we find that the discretion exercised by the Labour Court in the circumstances of the present case was capricious and arbitrary and certainly not justified.

It could not be said that the punishment awarded to the respondent was in any way "shockingly disproportionate" to the nature of the charge found proved against him. In our opinion, the High Court failed to exercise its jurisdiction under Article 226 of the Constitution and did not correct the erroneous order of the Labour Court which, if allowed to stand, would certainly result in miscarriage of justice. " 26. In Bharat Forge Co. Ltd. , v. Uttam Manohar Nakate, [2005] 2 SCC 489, M. P. Electricity Board v. Jagdish Chandra Sharma, [2005] 3 SCC 401, and Regional Manager, Rajasthan State Road Corporation v. Ghanshayam Sharma, (2002) I LLJ 234, this Court held that power under section IIA of ID Act (or under similar provisions) cannot be used to interfere with the quantum of punishment, on irrational or extraneous factors, or on compassionate grounds.

This Court also observed that though section 11A gives the jurisdiction and power to the labour court to interfere with the quantum of punishment, the discretion has to be used judiciously and not capriciously. This Court observed that harsh punishment wholly disproportionate the charge should be the criterion for interference. 27. In this case, we have already found that the charge established ( --f, JK SYNTHETICS LTD. v. K. P. AGRAWAL (RAVEENDRAN, J. ] 79 against the employee was a serious one. The Labour Court did not record a ~finding that the punishment was harsh or disproportionately excessive. It interfered with the punishment only on the ground that the employee had worked for four years without giving room for any such complaint. It ignored the seriousness of the misconduct. That was not warranted.

The consistent view of this Court is that in the absence of a finding that the punishment was shockingly disproportionate to the gravity of the charge established, the Labour Court should not interfere with the punishment. We, therefore, hold that the punishment of dismissal did not call for interference. Re : Question (iv) 28. It is true that when the employer challenged the award of the labour court and sought stay of the award, the High Court only stayed the order dated 29. 6. 1983 in regard to the back-wages but did not stay the award dated 08. 3. 1983 directing reinstatement; and that ifhe had been reinstated in 1983, he would have served till 31. 3. 1991 when he attained the age ofsuperannuation. The learned counsel for the employee made a submission before the High Court at the final hearing that in spite of the award directing reinstatement not being stayed, he was not reinstated.

On the said submission, the High Court held that the employer had wilfully violated the lawful order and was -"' not entitled to exercise of equitable discretion under Article 226/227. Firstly, the assumption that there was a lawful order or that there was wilful violation thereof is not sound. Further, the employer was not given an opportunity to explain why the employee was not reinstated. In fact, the contention of employer is that the first respondent did not report back to service, even though it was ready to reinstate him subject to final decision. Be that as it may. The mere fact that the first respondent was not reinstated in pursuance .. ofthe award ofthe Labour Court cannot result in dismissal of the writ petition t challenging the award. Conclusion : 29. In view of the above, we allow this appeal, set aside the order dated 28. 7. 2003 ofthe High Court as also the award dated 8. 3. 1983 (as modified on 29. 6.

1983) ofthe Labour Court and uphold the punishment of dismissal imposed upon the first Respondent. Parties to bear their respective costs. ~ B. S. Appeal allowed.