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Smart Summary

Factual and Procedural Background

The Managing Director of New Taj Mahal Cafe (P) Ltd., Mangalore (the Petitioner), filed a writ petition under Article 227 of the Constitution of India seeking to quash an award dated 29 January 1965 made by the Labour Court at Hubli in favour of the 1st Respondent (seven workmen of the Café). The Government of Mysore referred the dispute to the Labour Court by Order No. PLM 237 LLD 64 dated 17 September 1964. The reference asked whether the seven named workmen were entitled to reinstatement with backwages and continuity of service with effect from 5 December 1963 or any other relief.

The Labour Court, on the evidence before it, found that the workmen's services had been illegally terminated on 5 December 1963 without any enquiry and that there had been victimisation by the Management. It directed reinstatement of all aggrieved workmen except one (Gummanna Gowda) with continuity of service from 5 December 1963 and awarded back wages from that date at half the agreed rate. The Management was directed to comply with the Award within 15 days of its publication in the Mysore Government Gazette (published 29 May 1965). The Petitioner challenged that Award in this writ petition.

Legal Issues Presented

  1. Whether the Labour Court's finding of victimisation was vitiated by an error apparent on the face of the record or unsupported by evidence.
  2. Whether the Labour Court exceeded its jurisdiction in ordering reinstatement of the workmen and in awarding back wages (at half the contracted rate), particularly where the Petitioner contended the workmen were temporary employees and only entitled to wages for reasonable notice.
  3. Whether the Labour Court had jurisdiction to entertain the dispute when, it was argued, the workmen should have availed themselves of remedies under Section 41(2) of the Madras Shops and Establishments Act, 1947 (i.e., by approaching the Labour Commissioner).

Arguments of the Parties

Petitioner's Arguments

  • The Award was vitiated by an error apparent on the face of the record because the Labour Court's finding of victimisation was not based on evidence; it rested only on the fact that the workmen were union members and that relations with Management were unhappy.
  • Reliance on authorities (Ananda Bazar Patrika; B.B. Coal Company v. Ram Probesh) to argue that victimisation findings must be supported by evidence and not be based merely on union membership.
  • The Labour Court exceeded jurisdiction in ordering reinstatement and awarding back wages where the workmen were employed on a temporary contractual basis and thus allegedly only entitled to wages for reasonable notice on expiry of contract.
  • The award of back wages (at half the agreed rate) was unjustified.
  • The workmen ought to have approached the Labour Commissioner under Section 41(2) of the Madras Shops and Establishments Act, 1947, and therefore the Labour Court lacked jurisdiction to adjudicate the dispute.

1st Respondent's (Workmen's) Arguments

  • The workmen denied that employment was merely temporary until December 1963; they contended their services were terminated as a result of their participation in a token strike on 23 November 1963, and that the termination on 5 December 1963 was without enquiry and constituted victimisation.
  • Reliance was placed on Express Newspapers (P) Ltd. v. Labour Court to submit that the High Court should not disturb the Labour Court's finding on victimisation except on the grounds of error apparent on the face of the record or no evidence at all to support it.
  • The workmen relied upon the evidence and circumstances (participation in strike; abrupt oral termination without enquiry, explanation, notice or notice pay) to support the Labour Court's findings of illegal termination and victimisation.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Ananda Bazar Patrika v. Their Employees Finding of victimisation must not be made casually or lightheartedly; it should be recorded only when evidence justifies it. The court acknowledged this principle and considered whether evidence existed to justify the Labour Court's finding of victimisation; it concluded there was supporting evidence and did not set the Award aside on this ground.
B.B. Coal Company v. Ram Probesh Finding of victimisation is untenable if based solely on union membership or office‑bearer status without supporting evidence. The court noted this authority but found the present matter distinguishable because the Labour Court's victimisation finding was supported by circumstances and evidence beyond mere union membership.
Express Newspapers (P) Ltd. v. Labour Court High Court should not disturb a Labour Court's finding on victimisation except for an error apparent on the face of the record or where there is no evidence to support it. The court applied this standard and, finding some evidence and circumstances supporting the Labour Court, declined to interfere with the victimisation finding.
Assam Oil Company v. Its Workers Normal rule in wrongful dismissal is reinstatement, although in some cases reinstatement may not be expedient. The court accepted the general proposition that reinstatement is the normal remedy for wrongful dismissal and applied it to uphold the Labour Court's reinstatement order, subject to discretion in exceptional cases (none shown here).
Provincial Transport Services v. State Industrial Court Industrial adjudication will set aside dismissal where it occurred without proper and fair enquiry, was mala fide, perverse, or amounted to unfair labour practice; employer nonetheless has opportunity to adduce evidence before the tribunal. The court relied on this amplified principle to support the Labour Court's power to order reinstatement where there was no proper enquiry and to justify the order in this case.
Tika Ram Ltd. v. Workman (Bishamber Dayal) Directions regarding subsistence allowance and back wages are discretionary for the Labour Court or Tribunal; appellate courts should not interfere unless discretion was exercised wrongly or without just grounds. The court applied this discretion principle and affirmed the Labour Court's award of back wages at half the agreed rate, finding no improper exercise of discretion.
Manager, United Commercial Bank v. Labour Commissioner Right of appeal under Section 41(2) of the Madras Act is available to an individual employee and is not taken away by the Industrial Disputes Act; Madras Act provides a direct remedy to aggrieved individual employees. The court held that this decision was not helpful to the Petitioner because Section 41(2) does not affect the State's power to refer industrial disputes to the Labour Court; the Madras Act's individual remedy does not bar reference of group disputes under the Industrial Disputes Act.

Court's Reasoning and Analysis

The court undertook a stepwise review of the Petitioner’s contentions against the findings and reasoning of the Labour Court and the evidence before it:

  1. Victimisation finding: The court examined whether the Labour Court's finding of victimisation was vitiated by any error apparent on the face of the record or altogether devoid of supporting evidence. Relying on the standard that such findings must be supported by evidence, the court reviewed the facts: the seven workmen participated in a strike on 23 November 1963; on 5 December 1963 they were orally informed that their services were terminated without any enquiry, without being informed of reasons, and without notice or wages in lieu of notice. The court concluded that there was some evidence and circumstances supporting the Labour Court's finding and that no error apparent was pointed out to it warranting interference.
  2. Reinstatement and status of employment: Addressing the Petitioner's argument that the workmen were temporary and thus not entitled to reinstatement or back wages, the court relied on the Labour Court's factual finding—based in part on the Petitioner's own evidence—that the services were up to the end of December 1963 and that abrupt termination on 5 December without notice or enquiry was illegal. The court restated the general principle that wrongful dismissal normally attracts reinstatement, while acknowledging that in certain cases reinstatement may not be expedient; it invoked precedents that allow industrial tribunals to set aside dismissals made without proper enquiry or where action was mala fide or amounted to unfair labour practice. The Petitioner had not shown any ground disentitling the workmen to reinstatement.
  3. Back wages and discretion: The court observed that the Labour Court's award of back wages (at half the agreed rate) falls within the discretionary power of the Labour Court or Tribunal. Applying the principle in Tika Ram Ltd. v. Workman, the court held that it would not interfere with the exercise of discretion unless shown to be wrongly exercised; no such misexercise was demonstrated.
  4. Jurisdiction / Section 41(2) Madras Act: The court considered the submission that workmen should have resorted to the Labour Commissioner under Section 41(2) of the Madras Shops and Establishments Act and that the Labour Court lacked jurisdiction. The court analysed Section 41 and noted it provides notice requirements and an individual right of appeal to the Labour Commissioner. However, the court held that Section 41 does not oust the jurisdiction of the Labour Court to adjudicate disputes referred under the Industrial Disputes Act; the Madras Act provides a cheap individual remedy but does not prevent State reference of collective or union-backed disputes to the Labour Court. The cited Madras High Court decision was found not to assist the Petitioner on this point.

Holding and Implications

Petition dismissed; the Award of the Labour Court is confirmed.

Implications and direct effects:

  • The Labour Court's award that found the termination of the workmen's services illegal, ordered reinstatement (for all except one workman named in the Award), continuity of service from 5 December 1963, and back wages from that date at half the agreed rate is upheld.
  • The Petitioner’s challenge on grounds of error apparent, lack of evidence for victimisation, excess of jurisdiction in ordering reinstatement and back wages, and the contention that Section 41(2) ousted the Labour Court's jurisdiction, were all rejected.
  • The petition is dismissed with costs (advocate's fee Rs. 100) as awarded by the court.
  • No broader or novel legal principle was announced by this decision beyond applying existing authorities and established principles; the decision's immediate effect is to require the Management to comply with the Labour Court's Award as confirmed by this writ court.

    M/S. New Taj Mahal Cafe (P) Ltd., Mangalore v. The Workmen Of New Taj Mahal Cafe (P) Ltd., Mangalore

    Order of the Court was made by Tukol, J.:—

    The Managing Director of the New Taj Mahal Cafe (P) Ltd., Mangalore, has filed this Writ Petition under Article 227 of the Constitution of India for a Writ of Certiorari quashing the award made in favour of the 1st Respondent (Workmen of the Cafe) by the Labour Court at Hubli on January 29, 1965.

    2. The facts leading to the present Writ Petition are not in dispute. The Government of Mysore, by their Order No. PLM 237 LLD 64, dated 17th September 1964 referred to the Labour Court at Hubli for adjudication, the dispute between the Petitioner and the seven workmen. The point referred to for adjudication was whether the seven workmen named therein were entitled to reinstatement with backwages and continuity of service with effect from 5th December 1963 or any other relief? On the evidence adduced by the parties, the Labour Court came to the conclusion that the services of the Workmen had been illegally terminated from December 5, 1963 without any enquiry, that there had been victimisation by the Management and that all the aggrieved workmen except one Gummanna Gowda were entitled to reinstatement in their former posts with continuity of service from December 5, 1963 and back wages from the same date at half the agreed rate. The Management was directed to comply with the terms of the Award within 15 days from the date of its publication in the Mysore Government Gazette. The Award was published in the Gazette on May 29, 1965.

    3. The case of the Petitioner before the Labour Court was that the workmen had been employed on a temporary basis till December 1963 and that the Management terminated their services on the expiry of the contractual period. The 1st respondent denied this fact and contended that the services of the seven workmen had been terminated as they had participated in a token strike on 23rd November 1963 as a protest against the oppressive and unfair labour practices adopted by the Management.

    4. Both the parties adduced oral and documentary evidence before the Labour Court in support of their respective contentions. On a careful survey of the entire evidence, the Court came to the conclusion that the Management failed to establish that the services of the seven workmen were terminated with the expiry of the period of their appointment. It also came to the conclusion that the seven workmen along with some others had participated in a strike on November 23, 1963 and that the abrupt termination of their services on December 5, 1963 without enquiry was in the nature of punishment offending all principles of natural justice. Incidentally the court also held that the requirements of Section 41 of the Madras shops and Establishments Act, 1947 had not been followed in the case and that even on that ground termination of the services of the 5 workmen mentioned in paragraph 29 of the Award was illegal.

    5. The first contention raised on behalf of the Petitioner by Mr. U.L Narayana Rao is that the Award was vitiated by an error apparent on the face of the record as the finding of victimisation recorded by the Court was not based on any evidence. As pointed out by the Supreme Court in Ananda Bazar Patrika v. Their Employess(1), the finding as to victimisation should not be made either in a casual manner or lightheartedly but should be recorded only when there is evidence to justify it. The argument of the learned counsel for the Petitioner is that the Labour Court has based its findings on the alleged victimisation solely on the ground that the seven workmen were members of the Union and that their relationship with the Management was not happy. If that were the sole ground, such a finding would be untenable in law in view of the decision in B.B Coal Company v. Ram Probesh(2). On a scrutiny of evidence in that case, the Supreme Court came to the conclusion that there was practically no evidence in support of the finding of the Tribunal as regard victimisation except that the workmen concerned were Office-bearers of the Union. As against these decisions Mr. Swethadri, appearing for the 1st Respondent has placed reliance on the decision of the Supreme Court in Express Newspapers (P) Ltd. v. Labour Court(3) in which it has been laid down that it would not be open to the High Court to disturb the Labour Court's finding on the question of victimisation except on the ground of error apparent on the face of the record or on the ground that there was no evidence at all to support it.

    6. In the present case, we are unable to hold that the finding of the Labour Court suffers from any of the infirmities. The learned Advocate for the Petitioner has not been able to point out to us any error apparent on the face of the records. The finding seems to have been based on evidence and the circumstances disclosed by the evidence. The seven workmen participated in the strike on November 23, 1963 along with some others. When they went to work on December 5, 1963 they were orally informed, without any enquiry, that their services had been terminated. They were neither appraised of any reason for the abrupt termination nor given any notice or wages in lieu of notice terminating their services from any subsequent date. It is not for this court to consider whether the evidence was sufficient or insufficient since there is some evidence and there are some circumstances which support the finding of the Labour Court. We are therefore unable to interfere with this finding. We incidentally note that this finding on victimisation is not of much importance as the termination of the services of the workmen is prima facie illegal as could be seen from the reasons that follow.

    7. The second contention advanced by the learned Advocate for the Petitioner is that the order of reinstatement was bad in law and that the Labour Court exceeded its jurisdiction in passing that order along with the direction for payment of back wages at half the contracted rate. It was submitted that the seven workmen having been employed on a temporary basis, the workmen would be entitled to neither reinstatement nor to the back wages, but only to wages for the period of reasonable notice. No authority has been cited in support of this proposition. According to the finding of the Labour Court as deduced from the evidence of the Petitioner himself the services of the workmen were up to the end of December 1963. Abrupt termination of their services on December 5, 1963, without prior notice or enquiry is certainly illegal. If that were so, the workmen would be deemed to have continued in service and would be entitled to continue in service until their services are terminated either according to the terms of the contract, if any, or according to the provisions of law or the standing orders governing the conditions of services of the workmen concerned. While an employee has a right to expect security of tenure of his services, the employer has also a right to exercise option of terminating his services, pursuance of the terms of the contract or the provisions of law. “There is no doubt that the normal rule is that in cases of wrongful dismissal, the dismissed employee is entitled to reinstatement; but there can be cases where it would not be expedient to follow this normal rule and to direct reinstatement”. (Vide Assam Oil Company v. Its Workers. This proposition has been further amplified by the Supreme Court in Provincial Transport Services v. State Industrial Court as follows:

    “In dealing with industrial disputes under the Industrial Disputes Act and other similar legislation, Industrial Tribunals, Labour Courts, Appellate Tribunals and finally this Court have by a series of decisions laid down the law that even though under contract law, pure and simple, an employee may be liable to dismissal, without anything more, industrial adjudication would set aside the order of dismissal and direct reinstatement of the workmen where dismissal was made without proper and fair enquiry by the management or where even if such enquiry had been held the decision of the Enquiring Officer was perverse or the action of the management was mala fide or amounted to unfair labour practice or victimisation, subject to this that even where no enquiry had been held or the enquiry had not been properly held the employer would have an opportunity of establishing its case for the dismissal of the workman by adducing evidence before an Industrial Tribunal …………………”.

    (Underlining is ours)

    The Petitioner has not established any ground which disentitled the workmen in this case to the order of reinstatement passed by the Labour Court in their favour.

    8. Mr. Narayana Rao further submitted that the order for payment of back wages at half the agreed rate from the date of dismissal till the date of reinstatement was not justified. We see no force in this contention. On the facts of this case, the award for reinstatement of the workmen is lawful and is accordingly confirmed by us. In that view, it cannot be said that the Labour Court had no jurisdiction to award back wages. It has been held by the Supreme Court in Tika Ram Ltd. v. Workman (Bishamber Dayal) that the direction in regard to the payment of subsistence allowance and back wages is a matter of discretion on the part of the Labour Court or Tribunal. Such direction cannot be interfered with by this Court unless it is shown to its satisfaction that the discretion had been exercised wrongly or without just grounds.

    9. The last contention raised by Mr. Narayana Rao learned Advocate for the Petitioner is that the workmen ought to have approached the Labour Commissioner under Section 41(2) of the Madras Shops and Establishments Act, 1947 and that the Labour Court had no jurisdiction to entertain the dispute. We see no substance in this contention. It is not disputed that the dispute between the Petitioner and the workmen is an Industrial Dispute falling within the scope of Section 10 of the Industrial Disputes Act, 1947. It appears from paragraph 8 of the Award that the learned Advocate for the Petitioner made a faint attempt to contend before the Labour Court that the dispute referred to that Court for adjudication was not an Industrial Dispute and he subsequently conceded that the dispute referred to was an Industrial Dispute. In our opinion the concession was rightly made.

    10. Section 41 of the Madras shops and Establishments Act, 1947 provides for notice prior to the termination of the services and for the right of appeal to the aggrieved workman. It reads:

    “41(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 of misconduct support by satisfactory evidence recorded at an inquiry held for the purpose.

    (2) The person employed shall have a right to appeal to such authority and within such time as may be prescribeed 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.

    It is obvious that according to the provisions of this Section, the employer could not have dispensed with the services of the workers without giving each of them at least a month's notice or wages in lieu of such notice. Since it is not the case of the Petitioner that the services of the workmen were dispensed with on a charge of misconduct supported by enquiry, the question of dispensing with such notice does not arise. The Section confers a right on an aggrieved workman to approach the Labour Commissioner (who is the prescribed authority) in appeal. It gives a remedy to an individual employee against the improper termination of his services. That Section does not affect the jurisdiction of the Labour Court where a dispute between the Employer and the workmen is referred to the Labour Court under the Industrial Disputes Act, 1947. Reliance was placed for the Petitioner on the decision of the Madras High Court in Manager United Commercial Bank v. Labour Commissioner. That decision is of no assistance to the Petitioner in this case. What is laid down therein is that the right of appeal given to the individual employee against the order of his employer dispensing with his services under Section 41(2) of the Act is not taken away by the provisions of the Industrial Disputes Act or the Industrial Disputes (Banking and Insurance Companies) Act, 1949. The Madras Act provides a cheap remedy for an aggrieved workmen to approach directly the Labour Commissioner. It has no reference to a joint claim made by a number of workmen or a group of workmen against the Management. It does not however debar the State Government from making a reference of an Industrial Dispute to the Labour Court, where the aggrieved party is a Union of Workmen or a workman backed up by the Union of which he is a member.

    11. These are the only points submitted for our consideration. We see no merit in any of them and accordingly dismiss the petition with costs. Advocate's fee Rs. 100.

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