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Smart Summary

Structured Summary of Opinion: Ravani, J.

Factual and Procedural Background

The petitioner is the Gujarat State Road Transport Corporation (GSRTC). The respondent is a workman who had been serving as a conductor for about eleven years. On March 3, 1988, while working as conductor on the Bhuj–Nakhatrana road in Kutch District, it was alleged that he did not issue tickets to four passengers (two tickets were wrongly punched and two passengers were not issued tickets). A departmental inquiry found him guilty, and at the conclusion of that inquiry he was dismissed from service; his discharge is dated August 29, 1989.

The respondent-workman raised an industrial dispute which was referred to the Labour Court, Rajkot. By award dated April 13, 1992, the Labour Court held that dismissal was not justified and directed reinstatement of the workman to his original post with continuity of service but without back wages.

The Corporation (petitioner) challenged the legality and validity of that award in this Court, contending that the Labour Court, having found misconduct proved, ought to have imposed some punishment under Section 11-A of the Industrial Disputes Act, 1947, and that withholding the entire back wages was not a sufficient or appropriate punishment. The petitioner relied upon an earlier Division Bench judgment of this Court in Special Civil Application No. 8386 of 1992 (with SCA No. 8707 of 1992) decided on December 22, 1992.

At the outset the Court recorded the procedural position that no order adverse to the respondent-workman was being passed and therefore it was unnecessary to serve notice of rule upon him; the matter was ordered to be heard the same day.

Legal Issues Presented

  1. Whether the Labour Court, when it sets aside an order of dismissal and directs reinstatement under Section 11-A of the Industrial Disputes Act, is bound to impose some punishment in addition to or instead of withholding back wages.
  2. Whether withholding back wages by the Labour Court can validly operate as a term or condition of reinstatement and constitute a permissible exercise of discretion under Section 11-A.
  3. Whether the Labour Court's decision to reinstate the workman with continuity of service but without back wages in the facts of this case was perverse, unreasonable, or otherwise liable to be interfered with under Article 227 of the Constitution.

Arguments of the Parties

Petitioner (Gujarat State Road Transport Corporation)

  • The Labour Court found the misconduct against the workman proved but imposed no punishment; the Corporation contended that some punishment should have been imposed under Section 11-A of the Industrial Disputes Act, 1947.
  • The Corporation submitted that withholding of the entire back wages is not a punishment and therefore the Labour Court ought to have imposed a disciplinary penalty provided under the service rules.
  • Reliance was placed on a Division Bench judgment of this Court in SCA No. 8386 of 1992 (with SCA No. 8707 of 1992), decided December 22, 1992, where the Court observed that withholding back wages was not an order of punishment and ordered the imposition of stoppage of three increments without cumulative effect in that case.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Division Bench, Special Civil Application No. 8386 of 1992 (with SCA No. 8707 of 1992) — (Dec. 22, 1992) The Court observed that, although misconduct was proved and dismissal disproportionate, withholding back wages is not an order of punishment and the Labour Court should have passed some order of punishment under the service rules; the Court imposed stoppage of three increments without cumulative effect in that case. The petitioner relied on these observations to seek an equivalent punishment in the present case. This Court distinguished that decision, holding that the observations were made in the factual background of that case and do not lay down a universal rule that punishment must always be imposed under Section 11-A.
Baldev Singh v. Presiding Officer, Labour Court, Patiala, 1984 (4) SCC 519 The Supreme Court upheld a Tribunal award setting aside dismissal and directing reinstatement without back wages (and treating the interregnum as leave or leave without pay), holding the order to be in conformity with Section 11-A and within Tribunal's jurisdiction. This Court cited the decision to show that an order directing reinstatement without back wages is within the powers conferred by Section 11-A and is not a usurpation of jurisdiction or inherently illegal.
Roma Kant Misra v. State of Uttar Pradesh, 1983 (3) SCC 346 The Supreme Court emphasized that punishment must be commensurate with the gravity of the misconduct and that Section 11-A enables the Labour Court to substitute its measure of punishment when it is satisfied that discharge or dismissal was not justified. This Court relied on the decision for the proposition that Section 11-A was enacted to enable courts/tribunals to adjust punishment in place of managerial decision, thereby supporting the view that the Labour Court exercises a fact-sensitive discretion when deciding terms of reinstatement.

Court's Reasoning and Analysis

The Court proceeded in a stepwise analytical fashion:

  1. Preliminary/Procedural: The Court observed that because no order adverse to the respondent-workman would be passed, service of rule upon him was unnecessary and the matter could be heard the same day.
  2. Examination of Petitioner's Grievance: The petitioner challenged the Labour Court's award on the ground that though misconduct was proved the Labour Court did not impose any punishment and merely withheld back wages; the petitioner argued that withholding back wages was not a punishment and that the Labour Court ought to have imposed some punishment under Section 11-A.
  3. Analysis of the Division Bench Precedent: The Court reviewed the Division Bench decision relied upon by the petitioner and noted that the earlier Court had observed that withholding back wages is not an order of punishment and in that case had imposed stoppage of three increments. However, this Court held that those observations were made in the factual background of that particular case and do not constitute a universal legal proposition that a Labour Court or Tribunal is bound to impose punishment whenever it sets aside dismissal and orders reinstatement.
  4. Interpretation of Section 11-A: The Court reproduced Section 11-A and emphasized its pre-condition — satisfaction by the Labour Court/Tribunal that dismissal was not justified. Once satisfied, the Labour Court may set aside dismissal and direct reinstatement "on such terms and conditions, if any, as it thinks fit" or "give such other relief ... including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require." The Court read these phrases as conferring discretion on the Labour Court to frame terms and conditions (which may include non-payment of back wages) and to decide whether or not to impose a lesser punishment.
  5. Application to Instant Facts: The Labour Court had determined that reinstatement should be ordered without back wages. This Court held that whether to award back wages is a term and condition of reinstatement and may be determined by the Labour Court in its discretion, having regard to facts, circumstances and the particularities of each case. The Court observed that in some cases the consequences of departmental inquiry and prolonged litigation might be considered adequate sanction and justify reinstatement without back wages.
  6. Reliance on Supreme Court Authority: The Court cited Baldev Singh and Roma Kant Misra to reinforce that Section 11-A confers power on judicial authorities to substitute or adjust punishment and that reinstatement without back wages has previously been held by the Supreme Court to be within the competence of a tribunal under Section 11-A.
  7. Conclusion on Interference: The Court concluded that the Labour Court's decision to reinstate the workman without back wages could not be characterized as an exercise of discretion that was perverse or unreasonable so as to warrant interference under Article 227 of the Constitution. Therefore, there was no substance in the petition.

Holding and Implications

Holding: The High Court rejected the petition and discharged the rule. The core ruling is emphasized as follows:

DISMISSED / Rule discharged.

Immediate consequence: The Labour Court's award dated April 13, 1992, directing reinstatement of the respondent-workman to his original post with continuity of service but without back wages stands unimpaired by this Court.

Broader implications drawn by the Court (as stated in the opinion): The decision clarifies that Section 11-A vests discretion in Labour Courts and Tribunals to direct reinstatement "on such terms and conditions" and to award lesser punishment in lieu of dismissal as circumstances require. The Court explicitly held that an earlier Division Bench's observations in a different factual setting do not constitute a binding, universal rule obliging the Labour Court to impose a disciplinary punishment in every case where dismissal is set aside; the decision whether to impose punishment (and what punishment) depends on facts, surrounding circumstances, and the discretion of the adjudicating authority.

The opinion records that, on the facts before it, the direction to reinstate without back wages was not arbitrary, perverse or otherwise warranting interference under Article 227 and therefore no relief was granted to the petitioner.

    Gujarat State Road Transport Corporation v. Danaji Sukaji Kodiyar

    JUDGMENT Ravani, J.

    1. Rule.

    Since no order adverse to the respondent-Workman is being passed it is not necessary to serve notice of rule upon him. In facts of the case the matter is ordered to be heard today.

    2. The petitioner-Gujarat State Road Transport Corporation has challenged the legality and validity of the award dated April 13, 1992 passed by the Labour Court, Rajkot, by which the respondent-workman has been ordered to be reinstated on his original post of conductor with continuity of service, but without back wages. The grievance of the petitioner-Corporation is that the Labour Court has imposed no punishment on the respondent-Workman though he has been found guilty. It is submitted that withholding of entire back wages is no punishment and some punishment must have been imposed upon him by the Labour Court while exercising powers under Section 11-A of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the Act')

    3. The respondent-workman was serving as conductor for a period of about eleven years when he was discharged from service on August 29, 1989. It was alleged against him that on March 3, 1988 he was working as conductor of Bhuj-Nakhatrana Road in Kutch District. At that time his bus was checked and it was found that he had not issued tickets to four passengers who had boarded the bus from Loria. It was also found that two tickets were wrongly punched and other two passengers were also not issued tickets. On these allegations departmental inquiry was held and it was found that he was guilty of the misconduct alleged against him. At the conclusion of the departmental inquiry he was ordered to be dismissed from service.

    4. The respondent-workman raised industrial dispute which was referred to the Labour Court, Rajkot. The Labour Court held that having regard to the past service record of the workman and having regard to the facts and circumstances of the case the punishment of dismissal from service imposed upon the respondent - workman was not justified. Therefore the Labour Court, as per its award dated April 13, 1992, directed that the respondent - workman he reinstated ins service on his original post with continuity of service, but without back wages.

    5. The petitioner-Corporation has felt aggrieved by the award inasmuch as the Labour Court has imposed no punishment upon the workman. It is submitted that when the Labour Court found that the misconduct alleged against the workman was proved, some punishment must have been imposed by the Labour Court while exercising powers under Section 11-A of the Act. In support of this submission reliance is placed on Division bench judgment of this Court in Special Civil Application No. 8386 of 1992 (with Special Civil Application No. 8707 of 1992) decided on December 22, 1992. In that case the workman - Conductor was charged with misconduct of not issuing tickets to twelve passengers. At the conclusion of the departmental inquiry he was ordered to be dismissed from service. In reference before the Labour Court the Labour Court found that the misconduct alleged against the workman was proved, but in the opinion of the Labour Court the punishment of dismissal from service was not justified. Therefore the Labour Court directed that the workman be reinstated in service with continuity of service, but without back wages. Against this award the Corporation filed Special Civil Application No. 8386 of 1992 and the respondent-workman also filed Special Civil application No. 8707 of 1992 before this High Court. The Corporation prayed for some punishment to be imposed, while the workman prayed for award of back wages. This Court rejected the petition filed by the workman. While considering the contention of the Corporation that some punishment should have been imposed, this Court has made observations as follows :

    "Having carefully gone through the award, we find that the Labour Court was right in coming to the conclusion that the misconduct was proved. However, this was the first act of misconduct on the part of the Conductor and, therefore, the punishment of dismissal has been rightly found to be disproportionate. The Labour Court was justified in interfering with the order of punishment. But withholding of the back wages is not an order of punishment and, the fore, the Labour Court ought to have passed some order of punishment provided under the service rules. As that has not been done, the petition filed by the Corporation will have to be allowed to that extent"
    .

    After making the aforesaid observations the Court directed that punishment of stoppage of three increments without cumulative effect be imposed upon the workman. Relying on the aforesaid observations and the judgment of this Court it is submitted that in this case also punishment of stoppage of three increments without cumulative effect be imposed upon the workman.

    6. The decision of this Court referred to hereinabove does not lay down any principle that while exercising powers under Section 11-A of the Act the Labour Court or the Tribunal is bound to impose some punishment. What punishment should be imposed is ordinarily a question to be decided on the basis of facts and circumstances of each case and particularly the individual circumstances of the ground, his socio-economic back ground, his service record and the surrounding circumstances in which he might have been compelled to commit the misconduct are some of the factors which are required to be taken into consideration while deciding the question of punishment. These factors would naturally vary from case to case and from individual to individual. Depending upon the facts and circumstances of the case this Court thought it imposed some punishment provided under the service rules. Division Bench of this Court has not interpreted the provisions of Section 11-A of the Act and has not considered the question as to whether the Labour Court or the Tribunal is bound to impose punishment whenever it considers that the order of discharge or dismissal from service was not justified and reinstatement was required to be ordered. It is true that this Court has observed that withholding of the Labour Court ought to have passed some vice rules. But these observations are required to be read in the back ground of the required to be confined to the fact and circumstances of the case because this Court did not consider the width and amplitude of the power of the Labour Court and that of the Tribunal under Section 11-A of the Act and in fact this Court has not considered the provisions of Section 11-A of the Act. Therefore the aforesaid observations made by this Court in the back ground of the facts of that case cannot be read as universal proposition of law laid down by this Court. This is the only correct way of reading the judgment of this Court.

    7. Section 11-A of the Act reads as follows :-

    "11-A Powers of Labour Courts, Tribunals and National Tribunals to give appropriate relief in case of discharge or dismissal of workmen :

    Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication 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 dismissal 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."

    The pre-condition for exercise of powers under Section 11-A is that there should be satisfaction by the Labour Court or the Tribunal that the order of discharge or dismissal was not justified. Once such satisfaction is arrived at, the Labour Court or the Tribunal may 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 reliefs to the workman, including award of any lessers punishment in lieu of discharge or dismissal as the circumstances of the case may require". The phrase "on such terms and conditions, if any, as it thinks fit" gives clear indication of the powers of the Labour Court or the Tribunal. While directing reinstatement of the workmen the Labour Court may impose any terms or conditions. Such term or condition, may be one that the workman be not paid his back wages. The section also empowers the Labour Court to impose lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require. However, again it may be noted that it is left to the discretion of the Labour Court or the Tribunal. The Labour Court or Tribunal may not impose lesser punishment in lieu of discharge or dismissal. In the circumstances of the case the Labour Court may think it proper that the agonies of the departmental inquiry and the prolonged, litigation before the Court may be sufficient punishment to the workman and may think that the workmen be directed to be reinstated without imposition of a condition as regards back wages. Whether to award back wages or not would be a term and a condition of reinstatement. This may be taken into consideration by the Labour Court. In the instant case the Labour Court has found that the workman was not required to be reinstated with back wages. Therefore, it is directed that the workman be reinstated without back wages. On this score it cannot be said that the Labour Court has exercised its discretion under Section 11-A in perverse or unreasonable manner so as to call for interference in exercise of the powers under Art. 227 of the Constitution of India.

    8. Here reference may be made to a decision of the Supreme Court in the case of Baldev Singh v. Presiding Officer, Labour Court, Patiala, reported in 1984 (4) SCC 519. Therein a driver of the Punjab Roadways was charged for causing damage to the Punjab Roadways to the extent of Rs. 22.50 by taking the bus of which he was the driver through some other route. In the departmental inquiry he was held guilty of the charge and his services were ordered to be terminated. On reference, the Labour Court was satisfied that the inquiry held against him was just and fair but the punishment awarded was harsh and not in consonance with the nature of the charges levelled against him. Therefore the Labour Court directed that the dismissal be set aside, and the workman be reinstated with continuity of service, but without back wages. The period of forced idleness was ordered to be treated as leave of the kind due and in case no leave was due as leave without pay. The matter was carried upto the Supreme Court. In para 9 of the reported decision the Supreme Court has observed that the order setting aside the dismissal and the direction to reinstate the workman without back wages and to treat the period of absence as leave of the kind due and in case no leave was due the same be treated as leave without pay was just and proper. After referring to this punishment the Supreme Court has observed as follows :

    "This award of the Tribunal is in conformity with the provision of section 11-A of the said Act. There is no lack of jurisdiction or want of jurisdiction in making the order in question and it cannot be said that the order is contrary to the provision of Section 11-A of the said Act which vests the labour Tribunal to whom a dispute has been referred with jurisdiction to pass appropriate orders which the Tribunal will think proper and expedient in the facts and circumstances of the case. We do not find any infirmity far less any illegality in the above order of the Tribunal."

    9. Again, reference may be made of another decision of the Supreme Court in the case of Roma Kant Misra v. State of Uttar Pradesh, reported in 1983 (3) SCC 346. In that case the workman who was an office-bearer of the worker's union and had put in fourteen years'; of service was charged for misconduct for disorderly behaviour or conduct likely to cause breach of peace threatening an employee within the premises and conduct prejudicial to good order and discipline. On departmental inquiry he was held guilty and was ordered to be dismissed from service. In the reference the Labour Court held that the termination of service of the workman was legal and proper. The High Court rejected the petition under Art. 227 of the Constitution of India. In special Leave Petition before the Supreme Court, the Supreme Court has made observations in paras 6 and 7 of the reported decision as follows :

    "The punishment must be for misconduct to some extent misconduct is a civil crime which is visited with civil and pecuniary consequences. In this case it has resulted in dismissal from service. In order to avoid the charge of vindictiveness, justice, equity and fair play demand that punishment must always be commensurate with the gravity of the offence charged. In the development of Industrial Relation norms we have moved far from the days when quantum of punishment was considered a managerial function with the Courts having no power to substitute their own decision in place of that of the management. More often the Courts found that while the misconduct is proved the punishment was disproportionately heavy. As the situation then stood. courts remained powerless and had to be passive suffers incapable to curing the injustice. Parliament stepped in and enacted Section 11-A of the Industrial Disputes Act"
    .

    After reproducing Section 11-A of the Act, the Supreme Court has further observed :

    "It is now crystal clear that the Labour Court has the jurisdiction and power to substitute its measures of punishment in place of the managerial wisdom once it is satisfied that the order of discharge or dismissal was not justified in the facts and circumstances of the case"
    .

    10. In above view of the settled legal position it cannot be said that the Labour Court or the Tribunal has no jurisdiction to give direction as regards reinstatement of the workman without back wages. The direction not to pay back wages would be a term and or condition on which reinstatement is directed. Having regard to the facts and circumstances of the case this direction cannot be said to be in any way unjust, arbitrary or perverse so as to call for interference in exercise of the powers under Art. 227 of the Constitution of India. There is no substance in the petition. Hence rejected. Rule discharged.

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    Gujarat State Road Transport Corporation v. Danaji Sukaji Kodiyar
    (Feb 12, 1993)