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Bihar State Co-Opera... v. The State Of Bihar A...

Patna High Court
Aug 31, 1992
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Structured Summary of the Opinion (B.P. Singh, J.)

Factual and Procedural Background

The petitioner is Bihar State Co-operative Marketing Union Limited (Biscomaun). Biscomaun filed a writ application under Articles 226 and 227 of the Constitution of India seeking to quash the order of the Presiding Officer, Labour Court, Patna dated 18.11.1991. That order held that the termination of the services of respondent no. 3 was illegal and awarded reinstatement with full back wages.

Material factual chronology (as set out in the opinion): - Biscomaun is a co-operative society registered under the Bihar and Orissa Co-operative Societies Act. Its Managing Committee was superseded by the Government of Bihar on 30 July 1988 and an Administrator was appointed. - Respondent no. 3 applied for appointment on 7.12.1987 and was appointed on 28.12.1987 as Development Officer (Fertiliser) on an ad-hoc basis and put on probation for six months. He joined the next day. - After supersession and review of appointments, the Administrator found respondent no. 3's appointment irregular/illegal (post did not exist; appointment without advertisement/selection and on special consideration). The Administrator issued an order terminating respondent no. 3's services (order dated 17.10.88/8.11.88), stating one month's salary in lieu of notice was enclosed (demand draft mentioned). - Respondent no. 3 challenged the termination before the Presiding Officer, Labour Court, under section 26 of the Bihar Shops and Establishment Act, contending (i) no opportunity to show cause was given, (ii) the termination did not comply with section 26(1) (one month's notice or wages in lieu). - The Labour Court held that respondent no. 3 had become a regular employee after probation, that the Administrator's order was arbitrary (no hearing), that the appointment had been validly made by the competent authority, and found one month's pay had not been paid — hence ordered reinstatement with back wages. - Biscomaun challenged that Labour Court order by the present writ.

Legal Issues Presented

  1. Whether Biscomaun (a co-operative society registered under the Bihar and Orissa Co-operative Societies Act) is an instrumentality/agency of the State such that Articles 14 and 16 of the Constitution would apply to its appointments.
  2. Whether the appointment of respondent no. 3 was illegal because it contravened Biscomaun's staff Regulations (no advertisement, no selection committee, appointment as a special case to a non-existent post).
  3. Whether termination of respondent no. 3's services by the Administrator was arbitrary or without reasonable cause, taking into account the requirements of section 26(1) of the Bihar Shops and Establishment Act.
  4. Whether the rule of audi alteram partem (opportunity to be heard) applied before termination in the facts of this case.
  5. What relief is appropriate under section 26(5)(b) of the Bihar Shops and Establishment Act when an order of termination is found to be non-compliant with section 26(1) (specifically non-payment of one month's wages in lieu of notice), given that termination may otherwise have been for a reasonable cause.

Arguments of the Parties

Petitioner (Biscomaun)'s Arguments

  • The appointment of respondent no. 3 was illegal and therefore the Administrator was justified in terminating his services.
  • The appointment violated Articles 14 and 16 of the Constitution (submitted as an argument that it was in breach of equality and recruitment principles).
  • The appointment contravened Biscomaun's Staff Regulations (Section E) — no advertisement, no requisition to Employment Exchange, no prescribed selection committee, no written test/interview procedure as required — and was effectively a favour/compassionate appointment without entitlement.
  • The compassionate appointment provisions were misapplied because the father of respondent no. 3 had retired (after an extension) and was alive at the time of the appointment; compassionate appointment normally arises where the breadwinner dies in harness.

Respondent no. 3's Arguments

  • The order terminating his services was illegal and did not comply with section 26(1) of the Bihar Shops and Establishment Act.
  • No opportunity to show cause was given before termination; the order was therefore arbitrary.
  • He had not been paid one month's salary in lieu of notice; what he received represented only arrears of salary.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Harender Narain Banker v. State of Bihar (1985 P.L.J.R 1078) Whether Bihar State Co-operative Marketing Union Ltd. (Biscomaun) is an instrumentality or agency of the State (i.e., whether it is "State" under Article 12 of the Constitution). The Court relied on this binding precedent to hold that Biscomaun is not an instrumentality or agency of the State; consequently Articles 14 and 16 do not apply to Biscomaun's actions when it was being managed by its Managing Committee.
A.I.R. 1991 (S.C.) 309 Authority for the proposition that, in State employment terminations, audi and enquiry evidence may be required (context: termination by the State). The Court observed that the Presiding Officer's reliance on this decision was misplaced here because that case concerned the State as employer; by contrast Biscomaun (a society) is not "State" for Article 12 purposes. Thus the case does not directly govern the instant facts.
1990 (4) SCC, p. 35 (citation in opinion) Support for the proposition that the audi alteram partem rule is not necessarily applicable where termination is for a reasonable cause under a statute that permits termination without enquiry except in cases of misconduct. The Court cited this authority to support its analysis that where termination is for a reasonable cause (and not on charge of misconduct), statutory provisions (here section 26 of the Bihar Shops and Establishment Act) determine whether a prior hearing is required; audi is not to be imported where the statute does not require it.

Court's Reasoning and Analysis

The Court proceeded in a stepwise analytical fashion:

  1. Status of Biscomaun and applicability of Articles 14/16: The Court treated the question as settled by a binding Division Bench decision (Harender Narain Banker). As Biscomaun is not "State" under Article 12 when run by its Managing Committee, Articles 14 and 16 do not apply to assess the validity of the original appointment. The consequence is that the constitutional equality/selection requirements invoked by petitioner do not directly govern Biscomaun's appointment procedures in that status.
  2. Effect of Administrator's status: After supersession and appointment of an Administrator (a Government servant exercising statutory authority), his actions are to be judged by the twin tests of fairness and reasonableness. Nevertheless, the Administrator acts on behalf of a Society which, by precedent, is not "State" and its actions must be evaluated in the context of applicable statutory provisions (here the Bihar Shops and Establishment Act).
  3. Legality of appointment under Biscomaun's Regulations: The Court accepted that Biscomaun was bound by its Staff Regulations (Section E). The prescribed recruitment procedure for direct appointments (advertisement, requisition to Employment Exchange, selection committee, tests/interviews and panel on merit) was not followed in respondent no. 3's appointment. On those facts the appointment was illegal in breach of internal regulations.
  4. Whether termination was justified as reasonable cause under section 26(1): Although the appointment was illegal, the Court held that termination of an illegal appointment can nonetheless be for a reasonable cause under section 26(1) of the Bihar Shops and Establishment Act. The Act distinguishes dismissal for misconduct (which requires an enquiry and evidence) from termination for reasonable cause (which requires notice or wages in lieu). Where termination is not on account of misconduct, the statute does not mandate a pre-termination hearing; therefore the audi rule is not to be imported if the statute does not require it. The Court cited an authority (1990 (4) SCC p.35) for this proposition and concluded that the Administrator's termination was bonafide and for reasonable cause.
  5. Compliance with section 26(1)'s pecuniary/notice requirement: Section 26(1) requires that an employee who has been continuously employed for six months must be given at least one month's notice or one month's wages in lieu of notice. The alleged payment (a demand draft said to be enclosed) had to be proved by petitioner. The Court analyzed the evidence: respondent admitted the amount he received represented arrears; petitioner produced a salary sheet showing Rs.232 (after deductions) and a witness (O.P.W.1) who stated a demand draft was sent, but petitioner failed to produce documentary or bank evidence of payment of one month's wages in lieu of notice. The Court found there was a complete lack of proof that the wages in lieu of notice had been paid. Consequently the statutory requirement of section 26(1) was not satisfied.
  6. Remedy and discretionary relief under section 26(5)(b): Because the termination was for a reasonable cause but the mandatory monetary/notice requirement under section 26(1) was not complied with, the Court concluded that reinstatement (as awarded by the Labour Court) may not be the only or appropriate remedy. Sub-section 5(b) of section 26 confers on the prescribed Authority power to order reinstatement or money compensation or both. Given respondent no. 3's short service (about ten months), the irregular nature of his appointment, and the bona fide termination for reasonable cause, the Court considered that a monetary compensation award might be fairer than reinstatement. The Court declined to determine the appropriate relief itself and remitted the matter to the prescribed Authority to exercise its discretion under section 26(5)(b) after considering all facts and circumstances.

Holding and Implications

Holding (core ruling): Writ application allowed in part: the matter is remitted to the Presiding Officer, Labour Court-cum-Authority under the Bihar Shops and Establishment Act to reconsider and determine the appropriate relief under section 26(5)(b), because while the termination was for a reasonable cause the statutory requirement of section 26(1) (payment of one month's wages in lieu of notice) was not proved to have been complied with.

Implications and consequences: - The Court rejected the petitioner's contention that Articles 14 and 16 applied, relying on precedent that Biscomaun (as managed by its Managing Committee) is not "State" under Article 12; however, actions of the Administrator must meet standards of fairness and reasonableness because he is a Government servant exercising statutory powers. - The appointment of respondent no. 3 was found to have breached Biscomaun's Staff Regulations and thus to have been irregular/illegal; this illegality justified termination as a reasonable cause under section 26(1). - Nonetheless, the petitioner failed to discharge the burden of proving compliance with the statutory requirement of giving one month's notice or one month's wages in lieu; that non-compliance rendered the termination defective in the statutory sense. - The Labour Court's order of reinstatement with full back wages is not simply affirmed; the matter is remitted so that the prescribed Authority may decide whether reinstatement, monetary compensation, or both are appropriate under section 26(5)(b). The High Court expressly declined to prescribe a particular relief (it "wished to express no opinion" on the precise compensation), leaving calculation and award to the Authority. - The writ is allowed to the extent indicated (i.e., remittal and reconsideration), and there is no order as to costs.

Note: This summary is confined to the content and findings expressly contained in the provided opinion and does not add or infer facts or holdings beyond that text.

Show all summary ...

B.P Singh, J.:— The petitioner, Bihar State Co-operative Marketing Union Limited (herein after referral to as ‘the Biscomaun’) has preferred this application under Articles 226 and 227 of the Constitution of India for quashing the order of the Presiding Officer, Labour Court, Patna, dated 18.11.1991 holding that the order terminating the services of respondent no. 3 was illegal, and that respondent no. 3 is entitled to reinstatement with full back wages. The aforesaid Presiding Officer, Labour Court is the prescribed authority under the Bihar Shops and Establishment Act.

2. The facts of the case are that Biscomaun is a Co-operative Society registered under the Bihar and Orissa Co-operative Societies Act. It was being managed by a Managing Committee till it was superseded by the Government of Bihar on 30th July 1988. The Government appointed an Administrator vesting in him all the powers of the Board of Directors. The affairs of Biscomaun had reached a stage when the Government of Bihar had no option but to supersede the Managing Committee of the Society and to appoint an Administrator. The Administrator so appointed observed large scale irregularities in the management of the Society, and he came across cases of irregular/invalid appointments made by the then Managing Committee which involved Biscomaun into heavy financial liability. Respondent no. 3 herein applied on 7.12.1987 for appointment as Development Officer/Range Officer. The application (Annexure-1) discloses that he based his claim for appointment on the ground that his father had rendered 40 years of service to Biscomaum, and that he being a son of a retired employee, had a preferential claim for appointment. The Chairman of the Society on 7.12.87 itself endorsed the application to the Managing Director. On 12.12.1987 the Advisor, Rehabilitation, Biscomaun, recommended for appointment of respondent no. 3 as a special case having regard to the service rendered by his father. On the recommendation of the Advisor, the Managing Director put up a note on 27.12.87 to the Chairman recommending the appointment of respondent no. 3 as a special case. He suggested that respondent no. 3 may be initially designated as Development Officer (Fertiliser), and may be appointed on probation for six months. The initial appointment cold be made purely on adhoc temporary basis in order to avoid complications, specially in view of the rehabilitation programme initiated by the Reserve Bank of India. Thereafter on 28.12.1987 respondent no. 3 was appointed as Development Officer, Fertiliser, on a purely ad-hoc basis and was put on probation for a period of six months. The letter of appointment (Annexure-2) was signed by the Managing Director. On the very next day respondent no. 3 submitted his joining report which was accepted. On 30th July, 1988, the Managing Committee of Biscomaun was superseded, and the Government of Bihar appointed an Administrator. All appointments made after 1st July, 1985 were reviewed, and it was then detected that respondent no. 3 had been appointed to the post of Development Officer, Fertiliser, which post did not exist. It was also found that his application had been dealt with in a special manner, and without by advertisement or notice, he had been appointed. There was no policy to appoint sons of retired employees on compassionate grounds, because appointment could be made on compassionate ground only where the bread earner of the family died in harness. A report was submitted by the Special Officer (Administration) to the Administrator of Biscomaun, and agreeing with the report, the Administrator by his order dated 11.10.1988 decided to terminate the services of respondent no. 3, as the same had been made illegally. An order was issued on 17.10.88/8.11.88 terminating the services of respondent no. 3 on the ground that his appointment was illegal and irregular. The order also mentions that he shall get one month's salary in lieu of one month's notice. The aforesaid order has been annexed as Annexure-4. The endorsement mentions the fact that a demand draft for Rs. 1904,60, bearing no. 0500241 dated 1.11.1988, being one month's salary, was enclosed therewith. Respondent no. 3 challenged the order (Annexure-4) terminating his services in an application filed before the Presiding Officer Labour Court-cum-Authority under the Bihar Shops and Establishment Act. In the application filed under section 26 of the Act respondent no. 3 contended that the order terminating his services was illegal and did not comply with the requirements of section 26(1) of the Bihar Shops and Establishment Act. It is the case of respondent no. 3 that before terminating his employment no opportunity was given to him to show cause. The order was, therefore, arbitrary. It was further his case that he had not been paid one month's salary in lieu of notice as mandatorily required by section 26(1) of the Act.

3. By the impugned order the Authority held that the petitioner was initially appointed for a period of six months on probation. Since he was appointed on 28.12.1987, on completion of that period he became a regular employee of Biscomaun. He therefore, accepted the case of respondent no. 3 that after successfully completing the period of probation he became a regular employee of Biscomaun. The order of termination was issued on 8.11.1988 much after he had become a regular employee of Biscomaun. He further held that the order passed by no. 3 Administrator was arbitrary, because no opportunity was given to respondent no. 3 of being heard in the matter before the order was passed. He further held that the appointment, when made, was legal since it was made by the authority competent to make the appointment. He also recorded a finding of fact that one month's pay in lieu of notice had not been paid to respondent no. 3, and hence the provisions of section 26 of the Act were not complied with. The order was, mere-fore, illegal. Having held that the order terminating his services was illegal, the Authority further held that the respondent no. 3 was entitled to reinstatement in service with full back wages.

4. It was contended before us on behalf of Biscomaun that the appointment of respondent no. 3 being illegal, the Administrator was fully justified in terminating the services of respondent no. 3. This was sought to be supported on two grounds. It was firstly contended that the appointment had been made in breach of the principle enshrined in Articles 14 and 16 of the Constitution of India, it was secondly contended that the appointment was made in contravention of the staff Regulations framed by Biscomaun. It was submitted that the appointment was given to respondent no. 3 more as favour. The mere fact that the father of respondent no. 3 was a retired employee of Biscomaun, did not confer upon respondent no. 3 a right of being appointed on that ground alone, it was submitted that in fact the rules only provide for appointment on compassionate ground in cases where an employee dies in harness. In the instant case the father of respondent no. 3 had retired from service after availing the benefit of three years extension of service. He was living on the date on which the respondent no. 3 was appointed. The appointment was, therefore, made on extraneous consideration. It was also contended that respondent no. 3 was appointed as a special case. The post did not exist, and in any event the post was neither advertised nor were names called for from the Employment Exchange, nor was any competitive test held. Respondent no. 3 approached the Chairman of Biscomaun and managed to get an appointment. It was, therefore, contended that the appointment was illegal being in breach of the principles enshrined in Articles 14 and 16 of the Constitution of India.

5. It is difficult to uphold the contention so urged on behalf of the petitioner. The question of invoking Articles 14 and 16 of the Constitution of India will arise only if it is held that Biscomaun is ‘State’ within the meaning of Article 12 of the Constitution of India. So far as this Court is concerned, the question is not res integra, and is concluded by a binding precedent of this Court in the case of Harender Narain Banker v. State of Bihar (1985 P.L.J.R 1078). In that case the question squarely arose for consideration by the Court whether the Bihar State Co-operative Marketing Union Ltd., a society registered under the Bihar and Orissa Co-operative Societies Act, 1935 is in essence, an instrumentality or agency of the State and, consequently, amenable to the writ jurisdiction of the High Court. After exhaustive consideration of the case law on the subject a Division Bench of this Court held that Biscomaun is in no way an instrumentality or agency of the State. It is a Co-operative Society registered under the Bihar and Orissa Co-operative Societies Act, 1935, and it followed inevitably that it was not amenable to writ jurisdiction under Article 226 of the Constitution of India.

6. In view of the aforesaid decision of this Court the first limb of the argument must be rejected, since the question of applicability of Articles 14 and 16 of the Constitution will not apply in the instant case. At the time when the appointment was made, Biscomaun was a registered Co-operative Society being managed by its Managing Committee consisting of Board of Directors, Managing Director and the Chairman and was, therefore, not State within the meaning of Article 12 of the Constitution of India. Its action, therefore, could not be tested on the touchstone of Art-tiles 14 and 16 of the Constitution of India. No doubt, after appointment of an Administrator, the actions of the Administrator can be said to be the actions of the State and his actions must pass the test of fairness and reasonableness.

7. The second limb of the argument is that since the appointment was made contrary to the staff Regulations, the appointment must be held to be illegal. A reference is made to Section E of the Staff Regulations of Biscomaun, and under the heading ‘Appointment’ Regulation (b) provides as hereunder.

“(b) In case of direct appointment, the Union shall invite applications through advertisement in newspapers and shall send requisition to the Employment Exchange for sending names of suitable and qualified persons. The selection shall be made by a Cemmittee consisting of not less than three persons. The Registrar, Co-operative Societies, Bihar, shall be requested to be a member of the Committee or to depute a representative in case of appointment to the post of First and Second Grades. The Committee shall hold written test and interview in case of appointment to the Second and third grades, while appointment to the Fourth grade may be made after interview. In case of appointment to Grade-I the Board shall decide the mode of selection. As a result of written test and/or interview a panel shall be prepared strictly on merit. The Union shall require the candidates to file applications, with such particulars as may be prescribed in the application form, which shall include names of two persons of high status and integrity, not being relatives of the candidate, to whom a reference could be made regarding the candidate's character and antecedents.”

8. It cannot be disputed that Biscomaun is bound by its Regulations and, therefore, recruitment by direct appointment should have been made only after applications were invited through newspapers and after requiring the Employment Exchange to send names of suitable and qualified persons. The selection was to be made in the manner prescribed by the Regulation. In the instant case the procedure prescribed by the Regulation was not followed when respondent no. 3 was appointed. The evidence of respondent no. 3 also supports this conclusion. Therefore, there can be no difficulty in holding that the appointment was illegal, being in breach of the Regulation. That, however, does not bring the dispute to an end, because if an illegal appointment was sought to be terminated, the Illegal nature of the appointment only provided a justification for the action so that it could be said that in terms of section 26 of the Bihar Shops and Establishment Act, the action of the employer terminating the employment was based on reasonable cause. The action could not be characterized as arbitrary or without any reasonable cause.

9. In coming to the conclusion that the termination of employment of respondent no. 3 was not for a reasonable cause, the prescribed Authority attached considerable importance to the fact that the principles of natural justice had not been complied with by affording respondent no. 3 an opportunity of being heard before his services were terminated. As observed earlier, Biscomaun is not “State” within the meaning of Article 12 of the Constitution of India. However, it is equally well-settled that an Administrator appointed under the Bihar and Orissa Co-operative Societies Act, who is a Government servant and exercises statutory authority must act fairly and reasonably. His actions have to be judged in the same manner as State action, but it must not be forgotten that he still acts on behalf of a Society which is not “State”. The twin tests of reasonableness and fairness must, therefore, be applied having regard to the provisions of the statute which are applicable-to the case. Even if the action of the Administrator can be assailed in a writ petition before this Court, in judging the reasonableness and fairness of his action, one cannot disregard the statute, namely, the Bihar Shops and Establishment Act particularly section 26 thereof which applies to the case of termination of employment by the Society. Section 26(1) and the first proviso are relevant, and they read as follows:—

“Notice of the dismissal or discharge—(1) No employer shall dismiss or discharge or otherwise terminate the employment of any employee who has been in his employment continuously for a period of not less than six months, except for a reasonable cause and after giving such employee at least one month's notice or one month's wages in lieu of such notice:

Provided that such notice shall not be necessary where the services of such employee are dispensed with on a charge of such misconduct as may be prescribed by the State Government, supported by satisfactory evidence recorded at an enquiry held for the purpose:”

10. The Act, therefore, makes a distinction between a case of dismissal on a charge of misconduct and a case where the employment is terminated for a reasonable cause. In the case of dismissal for misconduct, the Authority is required to be satisfied that the order terminating the employment on a charge of misconduct is supported by satisfactory evidence recorded at an enquiry held for the purpose. This obviously brings into play the audi alteram partem rule. Such a requirement is not insisted upon where the termination is not on a charge of misconduct. In such cases where a person has been in employment continuously for a period of not less than six months, it has to be established that the termination of the employment is for a reasonable cause. Additionally, the employer is required to give such an employee at least one month's notice or one month's wages in lieu of notice. The action of the Administrator, therefore, must be tested for its fairness and reasonableness by reference to the provisions of section 26(1) of the Act which are applicable to the facts of the case. There is no requirement that the concerned employee must be afforded an opportunity of being heard before an order of termination is passed, except in a case where his services are dispensed with on a charge of misconduct. It would, therefore, not be fair to import an additional condition not envisaged by the Act, and insist that the rule of audi alterem partem will also apply to a case where the employer is not ‘State’ and the termination of employment is sought to be justified for a reasonable cause, on the ground of the appointment being contrary to law and the rules, and not on the ground of misconduct. [(See 1990 (4) SCC. Page 35]. Reliance placed by the authority upon the judgment reported in A.I.R 1991 (S.C) 309 is misplaced, because that was a case where the employer was the State of Bihar and their Lordships were not considering a case of termination of employment by a society which was not ‘State’ and whose actions had to be justified in the light of the provisions of a statute, such as the Bihar Shops and Establishment Act, which permits termination of employment for a reasonable cause in cases where the termination is not on the ground of misconduct. The statute requires that the reasonable cause must be established before the prescribed Authority, and additionally provides for grant of monetary compensation in appropriate cases. It cannot be lost sight of that though the actions of the Administrator are amenable to writ jurisdiction, he all the same exercises powers on behalf of Biscomaun, which is not “State” as held by the Court. I have, therefore, no doubt that the services of respondent no. 3 were terminated for a reasonable cause, and the action of the Administrator in doing so was neither unreasonable nor unfair.

11. The Act however, requires that before an order of termination can be upheld, it must not only be shown that the order was based on reasonable ground, but also that the concerned employee was given the mouth's notice or one month's wages in lieu of notice. The question as to whether respondent no. 3 was in fact paid one month's wages in lieu of notice, therefore, acquires significance. I shall consider that question hereafter.

12. The order of termination (Annexure-4) bears the date 17-10-88/8.11.88. It can, therefore, be safely assumed that the order was not issued before 8.11.88 The endorsement mentions that a demand draft for Rs. 1904,60, being one month's salary was enclosed with the order. The case of respondent no. 3 is that he was not paid one month's wages in lieu of notice. His specific case was that what he had been paid represented only the arrears of salary. The Authority, therefore, has rightly observed that the onus was upon the petitioner to prove that one month's wages in lieu of notice was paid to respondent no. 3 when the order of termination was passed. The authority has considered the evidence of respondent no. 3, and has noticed his specific plea in paragraph no. 4 of his cross-examination. He admitted that whatever amount was lastly paid to him was his arrears of salary and not one month's wages in lieu of notice. On the other hand, the petitioner examined only one witness, namely, O.P.W 1, Md. Suleman. He produced a copy of the salary sheet marked Ext. A. This could hardly be of any help to the petitioner, because Ext. A only showed that an amount of Rs. 232/- was paid after deduction of festival advance amounting to Rs. 750/-. This obviously related to the pay bill for the month of October 1988. According to O.P.W 1 the wages in lieu of notice was sent by demand draft on 8.11.1988 No material was produced to substantiate the case that one month's wages in lieu of notice was paid to respondent no. 3 by demand draft despatched on 8.11.1988 The petitioner was bound to prove that one month's wages in lieu of notice had been paid to the employee whose services had been terminated. If the amount had been paid as claimed by O.P.W 1, it would not have been difficult for the petitioner to produce evidence before the Authority to prove that fact. It appears that no effort was made to prove that fact. The deposition of O.P.W 1 has been annexed as Annexure-B to the counter affidavit filed on behalf of respondent no. 3. I have carefully gone through the deposition of the witness and there is nothing in his deposition to prove the fact that respondent no. 3 had been paid one months's wages in lieu of notice by demand draft Apart from merely stating this fact, the witness did not produce any documentary evidence, which the should have produced, in support of the claim. In the case of demand draft further particulars should have been given as to the mode of service. The receipt, if any, could have been produced. Even documentary evidence from the Bank could be produced for proving the fact that an amount representing one month's wages was in fact paid to respondent no. 3. There is complete lack of evidence on this aspect of the matter and, therefore, I cannot find fault with the finding of the Authority that the petitioner had failed to prove that one month's pay in lieu of notice was paid to respondent no. 3 at the time of termination of his employment. It must, therefore, be held that though there was reasonable cause for terminating the employment of respondent no. 3, the order of termination of employment was bad in view of non-compliance with the requirement of section 26(1) of the Bihar Shops and Establishment Act which additionally requires the employer to give to the employee, whose services are terminated, one month's wages in lieu of notice.

13. I, therefore, hold that the Authority under the Act was not justified in holding that the termination of the employment of respondent no. 3 was not for a reasonable cause, but the finding of fact recorded by the Authority, that one months wages in lieu of notice had not been paid to respondent no. 3, is justified. The question then arises as to what relief should be granted to respondent no. 3. Since the Authority under the Act came to the conclusion that the termination of the employment was not for a reasonable cause, and in breach of the provisions of section 26(1) of the Act, he was justified in ordering reinstatement with all other consequential benefits. However, since I have held that the employment of respondent no. 3 had been terminated for a reasonable cause, the matter requires to be reconsidered by the Authority. Sub-section 5(b) of section 26 of the Act confers power on the prescribed Authority to give relief to the employee by way of reinstatement or money compensation or both. The facts of the case disclose that respondent no. 3 had worked for about ten months only, and his appointment was made contrary to the Regulation, more by way of a personal favour. The termination of he employment was bonafide and for a reasonable cause, though one of the requirements of section 26(1) of the Act was not complied with, in-as-much as one month's wages in lieu of notice was not paid to respondent no. 3. The question that still arises for consideration is as to whether in the facts and circumstances of the case the award of money compensation may not be fair and appropriate. I wish to express no opinion on this question, because it is for the prescribed Authority, having regard to all the facts and circumstances of the case to exercise its jurisdiction under sub-section (5)(b) of section 26 of the Act. If it comes to the conclusion that money compensation may be fair and appropriate in the facts and circumstances of the case, it is for the prescribed Authority to calculate and award the aforesaid compensation to respondent no. 3. In these circumstances, I am of the opinion that though the termination of the employment of respondent no. 3 is in breach of the provisions of section 26(1) of the Act, since the termination was for a reasonable cause, the matter as to whether money compensation may not be fair and appropriate in the facts and circumstances of the case requires to be considered by the Authority. I, therefore, remit this matter to the Presiding Officer, Labour Court-cum-Authority under the Act to consider what relief should be granted to respondent no. 3 in the facts and circumstances of the case.

14. This writ application is allowed to the extent indicated above. There shall be no order as to costs.

15. S.K Chattopadhyaya, J.:—I agree.