C. Mohana Krishna Naidu v. The National Bank Of India Ltd. By Its Manager, Madras.

The plaintiff appeals from the judgment and decree of the City Civil Judge Madras, dated 28th February, 1956, in O.S No. 1222 of 1954 on his file. The plaintiff was employed as a clerk in the defendant bank. On 29th June, 1951 the plaintiff was served with an order that his services were terminated with immediate effect. He had been in the service of the bank from 1939 and was in the matter of removal from service, entitled to the protection granted by S. 41 of the Madras Shops and Establishments Act, 1947. S. 41 is in these terms:

“(1) No employer shall dispense with the services of a person employed continuously for a period of not less than six months, except for a reasonable cause and without giving such person at least one month's notice or wages in lieu of such notice, provided, however that such notice shall not be necessary where the services of such person are dispensed with on a charge or misconduct supported by satisfactory evidence recorded at an enquiry held for the purpose.

(2) The person employed shall have a right to appeal to such authority and within such time as may be prescribed either on the ground that there was no reasonable cause for dispensing with his services or on the ground that he had not been guilty of misconduct as held by the employer.

(3) The decision of the appellate authority shall be final and binding on both the employer and the person employed.”

From the order terminating his services, the plaintiff appealed to the Additional Commissioner for Workmen's Compensation, the authority prescribed by the Government in that behalf under S. 41(2) of the Act. The Additional Commissioner for Workmen's Compensation, after hearing both parties, passed art older on 22nd October, 1951, setting aside the order of the defendant dated 29th June 1951. On receiving the appellate order, the plaintiff presented himself in the office of the defendant bank on 5th November, 1951, and said that he was reporting himself for duty. The bank told him by letter dated 5th November, 1951 that he had been advised on 29th June, 1951, that his services had been terminated with immediate effect and that the bank still did not require his services. The plaintiff went and filed a complaint before the Presidency Magistrate (C.C No. 10298 of 1951) against the defendant of an offence punishable under S. 45 of the Madras Shops and Establishments Act. S. 45(1) is in these terms:

“Any employer who contravenes any of the provisions of Ss. 7, 9 to 11, 13 to 23, 25, 26, 29 to 41 and 47 shall be punishable, for a first offence, with fine which may extend to Rs. 25, and for a second or subsequent offence, with fine which may extend to Rs 250.”

In relation to S. 41, S. 45(1) may be thus rendered:

“Any employer who dispenses with the services of a person employed under him otherwise than in accordance with the provisions of S. 41, shall be punishable. ..”

On that complaint, summons was served on the defendant bank. The Manager appeared and pleaded guilty. He was fined Rs. 20 by the Fifth Presidency Magistrate by judgment dated 5th. January, 1952.

The plaintiff applied to the All India Industrial Tribunal (Bank Disputes), Bombay, praying that the defendant bank be directed to take the plaintiff into its services in pursuance of the order of the Additional Commissioner for Workmen's Compensation. The Industrial Tribunal does not appear to have pasted any orders on the plaintiff's application.

The plaintiff filed a writ petition in this Court W.P No. 538 of 1952, praying that the defendant bank be directed to reinstate him in service. This Court (Govinda Menon J.) held in Mohanakrishniah Naidu v. National Bank of India(1), following the observations of Lord Goddard, Lord Chief Justice in Rex v. The National Arbitration Tribunal ex parte Horatio Gowther & Co. Ltd.,(2), that the Court could not compel a private employer to employ a workman against the employer's will. Govinda Menon J. added:

“The punishment for contravening an order under S. 41 of the Act is the imposition of a fine as contemplated in S. 45. In these circumstances, it seems to me that no writ of mandamus can be issued and that this petition must be dismissed. This does mean that the petitioner's ordinary common law remedy to file a suit for damages for wrongful non-reinstatement is in any way interfered with or barred.”

With these observations, the learned Judge dismissed the plaintiff's petition for a writ. That order was pronounced on 24th September, 1953.

The plaintiff instituted the suit which has given rise to this appeal, in the City Civil Court, praying for a declaration that he continued to be in the service of the defendant's bank and for a decree directing the bank to pay the plaintiff his salary from 29th June, 1951 upto 1st March 1954 aggregating to Rs. 6871-10-0. In the alternative, the plaintiff prayed for a direction to the defendant bank to pay the plaintiff damages from 29th June, 1951 to 1st March, 1954 for wrongful non-reinstatement As damages, the plaintiff claimed the same sum that he claimed as arrears of salary, namely, Rs. 6871-10-0. The learned City Civil Judge held that the plaintiff was not entitled to arrears of salary but was entitled to damages for wrongful dismissal. The learned Judge granted the plaintiff damages estimated at a month's salary. Aggrieved by that judgment, the plaintiff prefers this appeal.

The main question for decision in this appeal relates to the effect of an order passed by the appellate authority under S. 41(2) of the Madras Shops and Establishments Act setting aside the order passed by an employer dispensing with the services of an employee who is entitled to the protection of S. 41(1) of the Act. The respondent's learned Counsel contends that the only consequence of a contravention of S. 41(1) is liability to punishment under S. 45 and that, otherwise, the rights and obligations of the parties are governed by common law. Under common law unaffected by the statute, an employer has subject to the terms of the contract between the parties, the right to dispense with the services of an employee on giving him reasonable notice or wages or salary in lieu of notice. Reasonable notice has been held to be a month's notice or three months' notice according to the nature of the employment. On that common law right, restraints are imposed by S. 41(1) of the Madras Shops and Establishments Act. Under the Act dismissal is not permissible except for reasonable cause or for misconduct. Where the services are terminated for reasonable cause as for example, when the post which the employee is occupying has to be abolished in the interests of the efficient working of the institution and the employee is not qualified to be offered any other post borne on the establishment of the employer, the employee's services may be dispensed with if he is given a month's notice or a month's wages. If the employee is guilty of misconduct and if such misconduct be established by satisfactory evidence adduced in the presence of the employee, his services may be dispensed with immediately, he not being entitled either to notice or wages in lieu of notice. Except for reasonable cause or for misconduct, the employer cannot dismiss the employee provided he has been employed for not less than six months, by merely giving him notice or salary in lieu of notice. S. 45 enacts that, where the employer dispenses with the services of an employee otherwise than in accordence with S. 41, the employer shall be punishable with fine. The respondent's learned Advocate contends that, in case the employer dispenses with the services of his employee otherwise than in accordence with S. 41, the employer's only liability, so far as the obligation laid on him by S. 41 is concerned, is the liability to prosecution under S. 45 and the employee's only right is the right which he has under the common law to sue the employer for damages for wrongful dismissal. The employee would not, even where the employer's order is set aside under S. 41(2), be entitled to claim, urges the learned Counsel for the respondent, that the employee continues in the services of the employer and is entitled to salary on that basis. In support of that proposition, the respondent's learned Counsel relies on Pasmore v. Oswaldtwistle Urban District Council. The facts in that case were these: Under S. 15 of the Public Health Act of 1875, it was the duty of the local authority to make such sewers as might be necessary for effectually draining their district. A rate-payer who considered that the local authority had not made arrangements for having the premises in his occupation effectively drained brought an action for mandamus against the authority. The Public Health Act had a section which said that for neglect of duty in that matter by the local authority, a complaint might be made to the local Government Board. That particular rate payer had not made a complaint to the local Government Board, but resorted to the civil Court for remedy. It was held that the remedy for his grievance was that provided by the Act, namely, a complaint to the local Government Board, and that the action for a writ of mandamus was not maintainable. That decision would be appropriate if, in this case, the employee, namely, the plaintiff had resorted to the civil Court for relief against the order terminating his services made by the employer in June 1951 without preferring an appeal to the authority prescribed under S. 41(2) of the Act, For an order of removal from service not justifiable under S. 41(1), the remedy of appeal is provided. That remedy is in substitution of the ordinary remedy of a suit in a civil Court in regard to an order for wrongful dismissal. But where that remedy has been availed of and the order has been set aside, the relief that the plaintiff seeks, namely, compensation for the period of non-employment could not be obtained by him by prosecuting the bank under S. 45 of the Act. Where the remedy provided by the statute does not provide for the grant of the relief that the plaintiff seeks, the provision of that remedy does not bar the jurisdiction of civil Courts to grant the plaintiff the relief he seeks. I am unable therefore to hold that the principle of the ruling in Pasmore v. Oswaldtwistle Urban District Council, bars the plaintiff's suit for a declaration that he continues to be in the service of the defendant and to a decree for salary on that basis. The same observations apply to the decision in Wake v. Mayor etc., of Sheffield.

Respondent's learned Counsel contends next that the relief of grant of salary for the period subsequent to 29th June 1951 could be granted to the plaintiff only on the basis that the order dispensing with the services was void or was a nullity and that no such order could in law be ever regarded as void or as a nullity. In support of that proposition, learned Counsel relies on Barber v. Manchesters Regional Hospital Board(3). The facts in that case were these: The services of a medical practitioner borne on the establishment of the National Health Service were terminated by the Regional Hospital Board. The rules relating to the termination of the services of a medical practitioner in his situation required that, if he sent a full statement of the facts to the Minister, he should place the case before a professional committee for advice and that the Board's decision to terminate the medical practitioner's service could not be carried into effect until the Minister had passed orders on the advice of the professional committee. In that case, the practitioner sent a statement of the facts to the Minister. The Minister, took no action as required by the rules. The Regional Hospital Board prevented the practitioner from continuing to work as a member of the establishment. He then brought an action claiming salary due to him on the basis that he continued to be borne on the establishment of the National Health Service. It was held that the order terminating his services could not be regarded as void or as a nullity, but, since it was given effect to, should be regarded as wrongful termination of his services entitling him to damages. I agree with the appellant's learned Counsel that that decision would be applicable if in this case there had not been an order by the appellate authority setting aside the order passed by the employer terminating the services of the plaintiff. There was no order or act in Barber's case, which set aside the order passed by the Regional Hospital Board terminating the services of the medical practitioner. Here the effect of the order of the appellate authority in setting aside the order of the employer was to cause the order to cease to be in existence. That in fact has been expressly so decided in Tata Iron and Steel Co., Ltd.,(4). There is, further authority in this Court for the proposition that where an order passed by an employer under S. 41(1) is set aside by the appellate authority under S. 41(2), the employee may regard himself as continuing in service and may claim salary on that basis [Please see Balasundara Mudaliar v. Ellappa Mudaliar(5), and Dhandapani v. Salem Co-operative Wholesale Stores(6).]

I do not consider that the decisions in Balasundara Mudaliar v. Ellappa Mudaliar, and Dhandapani v. Salem Co-operative Wholesale Stores, compel the Court in every case in which an order has been set aside by the appellate authority under S. 41(2) of the Act to hold that the employee continues in service not with standing that the employer declines to reinstate him. It will be open to the employee in such a case to treat himself as continuing in service or he may regard the order terminating his services as an order of wrongful dismissal and may claim damages for wrongful dismissal. In the former case, that is, where he regards himself as continuing in service, he would be disabling himself from seeking employment elsewhere. In the latter case, namely, where he regards the order as an order of wrongful dismissal from service, he would be free to claim damages for wrongful dismissal and seek employment elsewhere. It would, in my opinion, be competent for the Court in a proper case to hold that, notwithstanding that the employee has not declared his intention to treat the order terminating his services as an order of wrongful dismissal, he would be entitled to relief only on the basis of damages for wrongful dismissal and not on the basis of salary for continuance in service. Where the employee's conduct subsequent to the termination of his services is such as to disentitle him to regard himself as continuing in service, it would be unjust to the employer to pass a decree against him for salary on the basis of continuance in service. In this case, the evidence adduced in the lower Court shows that shortly after 5th November, 1951, when the employer declined to take the employee back into its service, the employee filed a complaint against the employer under S. 45(1) of the Act. On that complaint, the Bank's manager appeared, pleaded guilty and was fined. The point whether the plaintiff's conduct in prosecuting the defendant bank under S. 45(1) for contravention of S. 41 did not disentitle the plaintiff from seeking relief on the basis that he continued in service had not been taken by the respondent. But the point arises on the proved facts and I have heard the appellant's learned Counsel's arguments on the question whether the plaintiff was disentitled, by his conduct in getting the defendant convicted of an offence under S. 45(1) from seeking relief on the basis that the plaintiff continued in the service of the defendant. The appellant's learned Counsel has referred me to the language of the complaint preferred by the plaintiff and says that the complaint was in essence a complaint for disobedience on the part of the defendant of the order passed by the appellate authority on 22nd October, 1951 and cannot be regarded as a complaint relating to the order passed in June 1951. With a view to enable me to pronounce judgment on that point and so as to bring into the record the complaint on whose language reliance is placed by the appellant's learned Counsel, I am marking the copy of the complaint and of the judgment of the Magistrate produced by the respondent's learned Counsel as additional evidence in this appeal. There was nothing in the order passed by the appellate authority which called for obedience. The appellate authority set aside the order of the defendant bank on the ground that the order constituted a contravention of the provisions of S. 41(1) of the Act. S. 45(1) of the Act provides for punishment for such contravention, that is, for the termination of the services of an employee otherwise than in accordance with the provisions of S. 41. An employee who prosecutes his employer for an offence under S. 45(1) necessarily complains of his (employee's) services being dispensed with otherwise than in accordance with S. 41(1). After getting the employer convicted of dispensing with the services of the employee in contravention of the statute, the employee is not free to claim relief on the basis that his services have not been dispensed with, that the order dispensing with his services should, in view of the order of the appellate authority, be deemed to be null and void and that the employee should be deemed to continue in the service of the employer. I find that the interests of justice require in this case that relief should be granted to the plaintiff not on the basis that he continues in the service of the employer (the defendant) but on the basis that he has been wrongfully dismissed from service. The lower Court's view that the plaintiff is entitled only to damages for wrongful dismissal and not to arrears of salary, was correct, though not for the reasons stated by it.

The next question relates to the measure of damages. The damages granted by the lower Court are grievously inadequate. The defendant, who declined wilfully to admit the plaintiff to the defendant's services notwithstanding that the appellate authority had set aside the defendant's order, was guilty of wilfull wrong doing for which the damages to be awarded should be exemplary. I award the plaintiff salary for nine months as damages in the place of salary for one month awarded by the lower Court. The appeal is allowed to that extent. There will be a decree for damages accordingly. The defendant will further pay the plaintiff full costs in both the Courts and pay the court-fee due to the Government in both Courts.

V.C.S