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Western India Match Co. Ltd. v. Third Industrial Tribunal, West Bengal And Others
Factual and Procedural Background
The appellant-employer terminated the services of the second respondent, a long-standing employee with an unblemished record, on 5 November 1963. The termination was grounded on a clause in the contract permitting dismissal without notice if the employee became “incapacitated … for a longer period than two calendar months from properly discharging” his duties. Prior to the dismissal, the employee had been continuously on employer-sanctioned medical leave.
The Industrial Tribunal set aside the termination and ordered reinstatement with back wages. A learned Single Judge of the High Court, and later a Division Bench in writ appeal, refused to interfere with that award. The present appeal to the Supreme Court was brought by special leave under Article 136 of the Constitution.
Legal Issues Presented
- Whether the contractual clause permitting dismissal for prolonged incapacity could be invoked when the employee was on employer-approved medical leave.
- Whether, upon holding the dismissal illegal, the employee was entitled to full back wages and benefits up to the date of reinstatement.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
Validity of Termination: The Court held that the contractual clause relied upon by the employer applies only when an employee, required to discharge duties, fails to do so owing to incapacity lasting more than two months. Because the second respondent had been on leave throughout, he was under no obligation to perform duties; therefore, the condition precedent for invoking the clause—incapacity while on duty—never arose. The termination was consequently “bad in law.”
Back Wages and Benefits: Acknowledging that reinstatement is the normal remedy for wrongful termination in industrial law, the Court affirmed the lower forums’ order of reinstatement. It also accepted the High Court’s award of full wages and benefits up to 30 November 1971, noting the absence of “substantial error, manifest injustice or exceptional circumstance” that would justify interference under Article 136.
Equitable Adjustment for Post-Judgment Period: For the period after the High Court’s judgment until the date fixed for reinstatement (1 December 1971), the Court invoked the maxim that an act of the court should harm no party. Recognising that the delay between 1971 and 1977 was attributable to docket congestion rather than either litigant, it ordered payment of 50% of wages and attendant benefits for that interval, together with 7% interest, subject to credit for sums already paid under interim orders.
Holding and Implications
Appeal Dismissed. The Supreme Court affirmed reinstatement of the second respondent.
Implications: The appellant must (a) restore the employee to service effective 1 December 1971, (b) pay full back wages and benefits up to 30 November 1971, (c) pay 50% wages with 7% interest for the subsequent period, and (d) bear the respondent’s costs of Rs 1,500. The decision turns on contractual interpretation and equitable adjustment rather than creation of new precedent.
V.R Krishna Iyer, J.— This is an appeal, by special leave, from a judgment of the High Court in writ appeal by a Division Bench which confirmed the judgment of a learned Single Judge of that Court who, in turn, refused to interfere with the award of the Industrial Tribunal.
2. The facts briefly are: that the second respondent was an employee under the appellant for a long number of years. There was no blemish in his service, and Shri Sachin Choudhary for the appellant has very fairly stated that there was no complaint against the services of the second respondent while he was employed by it. But the second respondent fell ill and applied for leave. It so happened that his illness persisted for a long time and the management, quite rightly, granted him leave from time to time. On November 4, 1963 his leave expired and on November 5, 1963 the management, invoking a clause in the contract of employment, terminated his employment. It is that order of termination that was set aside by the Industrial Tribunal and affirmed from court to court up to now. The particular clause in the contract which was relied on by the management stated that
“It was open to the employer to determine the employment at any time without any notice or payment in lieu of notice in the event of . . . .
Your becoming from any cause incapacitated by a longer period than two calendar months from properly discharging your duties.”
The courts below held, and quite rightly in our view, that since the employee was all along on leave granted by the employer no question of incapacity or being incapacitated from properly discharging his duties arose. It is obvious that when an employee is on leave he is not called upon to discharge any duties and therefore the question of the capacity to discharge duties does not fall for consideration. The clause relied upon comes into play only when an employee who has to discharge his duties fails to do so and the employer makes a judgment of the situation and comes to the conclusion that it is on account of an incapacity which will last longer than two months that the failure to discharge his duties has arisen. We are, therefore, satisfied that the clauses could not have been invoked and the termination of service was bad in law.
3. Even so, the further question arises as to whether the employee should be recompensated with full wages and other benefits until the date of reinstatement. We have to be realistic in this jurisdiction although in industrial law when termination of service is found to be illegal, the ordinary rule is reinstatement. We direct reinstatement in affirmance of the order passed by the High Court and the Industrial Tribunal. But the High Court as well as the Industrial Tribunal have also awarded full wages and other benefits during the period the employee's services had stood terminated. It is right for us to remember and Shri Sen Gupta has reminded us of the proposition that sitting in appeal under Article 136 against an order of the High Court passed under Article 226 we should not lightly interfere with the direction made in the judgment of the High Court unless there is some substantial error, manifest injustice or exceptional circumstance. None having been pointed out, we affirm the finding of the High Court regarding payment of back wages and other benefits up to the date the High Court passed its final order in Division Bench viz. November 30, 1971.
4. We are not fetteted by this constraint in regard to the period since then. We must remember the general principle that the act of the court should not injure any party. The length of the proceeding in this Court from 1971 to 1977 is the inevitable consequence of the backlog in this Court and not blamable on either side. In such a situation we must so mould the relief as not to prejudice either party bearing in mind the equities of the case. We think that it would be fair, having regard to the overall circumstances of the case, that till the date of reinstatement, which we fix as December 1, 1971, the management will pay the employee 50% of the wages including the benefits that he may be eligible for had he continued in service from the date of High Court's judgment on November 30, 1971 with interest at 7% per annum. Pursuant to the interim order of this Court certain sums have been paid by the appellant to the second respondent and while computing the amount that is payable to the second respondent credit shall be given for such payments.
5. In the result, the appeal is dismissed, but in the circumstances, we direct the appellant to pay the respondent's costs which we fix in a sum of Rs 1500.
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