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Nathuram Namdeo v. State Industrial Court, Indore And Others
Summary of Legal Opinion
Factual and Procedural Background
The petitioner was appointed as a bus conductor by the Madhya Pradesh State Road Transport Corporation on probation for one month from 29 February 1976. The probation was extended by two months with effect from 28 March 1976 and further extended by three months with effect from 28 May 1976. The Corporation terminated the petitioner's services by an order dated 10 July 1976.
The petitioner challenged the termination before the Labour Court. The Corporation relied on Regulation 51 of the Employees Service Regulations (under section 45 of the Road Transport Corporations Act, 1950) and contended the termination was for unsatisfactory work, producing three reports (Exs. D-1 to D-3). By order dated 22 June 1978 the Labour Court allowed the petition, holding that termination before expiry of probation defeated the purpose of fixing a probation period and that the petitioner should have been informed to improve, and therefore that termination was mala fide, victimisation and an unfair labour practice.
The Corporation filed a revision. By order dated 16 March 1979 the Industrial Court concluded that termination was within the Corporation's power under Regulation 51(b), and held it was unnecessary to give the petitioner notice of the adverse reports. The Industrial Court accepted the reports and held termination before expiry of probation was permissible under Regulation 51.
The present petition under Article 226 of the Constitution challenges the order of the Industrial Court.
Legal Issues Presented
- Whether Regulation 51 of the Employees Service Regulations can be applied to terminate the petitioner's services when the subject of termination is governed by Standing Orders certified under the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961.
- Whether Standing Order 11 applies to probationers (non-permanent employees) and, if so, whether it permits termination of probationers without notice while requiring reasons to be recorded and communicated under clause (b).
- What is the legal effect of non-compliance with the requirement in Standing Order 11(b) to record and communicate reasons for termination — in particular, whether non-compliance mandates automatic reinstatement or whether the employer should be permitted to disclose reasons in subsequent proceedings.
- Whether the Labour Court erred in holding that the petitioner's services could not be terminated prior to the expiry of probation and in inferring mala fides, victimisation and unfair labour practice.
- Whether the Industrial Court correctly upheld termination on the basis of Regulation 51 and the adverse reports regarding the petitioner's performance.
Arguments of the Parties
Petitioner's Arguments
- Regulation 51 could not be given effect because termination of employment is governed by Standing Orders certified under the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961.
- Standing Orders 11 and 12 were relied upon: termination before expiry of probation could occur only for misconduct under Standing Order 12 after an enquiry, or under Standing Order 11(a) after giving reasons as required by Standing Order 11(b).
- Because neither course (inquiry under SO12 or reasons as per SO11(b)) was followed, the order of termination was invalid.
Corporation's Arguments
- Standing Order 11 is limited to permanent employees; there is no specific provision in the Standing Orders for termination of a probationer, so Regulation 51 should apply.
- The Corporation relied on Regulation 51 and contended the petitioner's services were terminated during probation for unsatisfactory work, supported by reports (Exs. D-1 to D-3).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Madhya Pradesh State Road Transport Corporation v. Ramchandra, 1977 MPLJ 341 F.B. | The Full Bench principle that where there is inconsistency between Standing Orders and Regulations, the Standing Orders prevail. | The Court relied on this Full Bench ruling to hold that Standing Order 11 prevails over Regulation 51 to the extent of inconsistency (because Regulation 51 does not require reasons to be recorded, whereas SO11(b) does). |
| U. P. State Electricity Board v. Hari Shanker Jain, AIR 1979 SC 65 | The argument (raised but not decided here) that Regulations not notified under section 2(2) of the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961 cannot apply. | The Court stated it was not necessary in this case to consider this wider argument, so the precedent was noted but not applied. |
| L. Mischael v. Johnson Pumps Ltd., AIR 1975 SC 661 | Industrial adjudication can go behind the form of an order of termination to determine whether it is a colourable exercise of power, victimisation or unfair labour practice. | The Court cited this principle to support the proposition that the Labour Court (and this Court) may examine the substance behind an invalid or defective order and permit the employer to disclose reasons to justify termination. |
| Bombay Municipality v. P. S. Marvenkar, AIR 1978 SC 1380 | Standing Orders 11 and 12 confer independent powers on the employer; a bona fide termination based on unsatisfactory service is not necessarily punitive beyond SO11. | The Court used this authority to hold that SO11 and SO12 should not be construed so as to emasculate each other, and that a bona fide termination for unsatisfactory service can fall within SO11. |
| Express Newspapers v. Labour Court, Madras, (1964) 1 LLJ 9 (SC) | The general rule that ordinarily a probationer's services cannot be terminated before expiry of probation. | The Court acknowledged this rule but observed it does not apply where contract terms or Standing Orders permit termination during probation; used to demonstrate the limited scope of the general rule. |
| Agra Electric Supply Co. v. Alladin, AIR 1970 SC 512 | Similar to Express Newspapers: ordinarily probation cannot be terminated before expiry, subject to terms allowing otherwise. | The Court relied on this authority to explain that termination during probation may be lawful if the contract or Standing Orders permit it; applied to find the Labour Court's absolute rule incorrect in the present facts. |
Court's Reasoning and Analysis
The Court proceeded step-by-step as follows, relying solely on the materials and authorities set out in the opinion:
- Classification of the petitioner: The Court determined the petitioner was not a permanent employee because he had not completed six months' satisfactory service (Standing Order 2(i)), and was a "probationer" under Standing Order 2(iii). The petitioner's services were not terminated for misconduct and no domestic enquiry under Standing Order 12 was held.
- Interpretation of Standing Order 11: The Court examined Standing Order 11 in full. It observed that the heading refers to "Termination of employment and the notice thereof to be given by employer and employee" and is not restricted to permanent employees. Clause (a) explicitly states that no employee other than a permanent employee shall be entitled to notice or wages in lieu thereof, which the Court read as authorising termination of non-permanent employees without notice. Clause (b) requires that the reason for termination be recorded in writing and communicated to the employee (unless communication would expose the manager to legal proceedings), and the Court found this clause applies to all categories of employees.
- Inconsistency between Standing Order 11 and Regulation 51: Regulation 51 authorises termination of a probationer during probation but does not require recording reasons. The Court found an inconsistency between SO11(b) (requiring recorded reasons) and Regulation 51 (silent on reasons). Applying the Full Bench ruling in Madhya Pradesh State Road Transport Corporation v. Ramchandra, the Court held that Standing Order 11 prevails over Regulation 51.
- Effect of non-compliance with SO11(b): Because SO11 prevails, the order of termination which did not record reasons failed to comply with SO11(b) and was therefore invalid on that ground. However, the Court declined to adopt an automatic-reinstatement rule. It explained (drawing on L. Mischael and related authorities) that industrial adjudication can look behind form and that where an employer fails to comply with procedural requirements (such as SO11(b) or SO12 inquiry), the employer should be given an opportunity to disclose and prove the substantive reasons for termination. If the employer proves valid reasons and the Court is satisfied there was no colourable exercise of power, victimisation or unfair labour practice, the termination can be held valid notwithstanding the initial defect.
- Application to the present facts: The Corporation produced three adverse reports (Exs. D-1 to D-3) about the petitioner's work. The Labour Court refused to examine the question of unsatisfactory work because it concluded termination before expiry of probation was impermissible; it also inferred victimisation and mala fides because the petitioner had not been informed of adverse reports. The present Court held the Labour Court's assumption that termination before expiry of probation is always impermissible was incorrect: the general rule that a probationer ordinarily cannot be terminated before expiry does not apply where contract terms (here the order extending probation) or Standing Orders permit termination during probation. The Court found no Standing Order, rule or regulation requiring periodic communication of adverse reports to allow improvement during probation.
- Conclusion on the competing orders: Although the order of termination was invalid for want of recorded reasons as required by SO11(b), the Industrial Court — despite incorrectly relying on Regulation 51 — was correct in accepting the adverse reports and holding that the termination was not a case of victimisation, mala fides or unfair labour practice but a bona fide termination on the ground of unsatisfactory work. On that basis the termination was upheld after allowing the employer's reasons disclosed in the proceedings to justify the action.
Holding and Implications
Petition dismissed.
Consequences and immediate effects:
- The Court held that Standing Order 11 prevails over Regulation 51 to the extent of any inconsistency; Standing Order 11(b) requires reasons for termination to be recorded and communicated.
- Because the termination order did not record reasons as required by SO11(b), that order was procedurally invalid on its face. However, the Court permitted consideration of the substantive reasons placed before the Labour Court (Exs. D-1 to D-3) and upheld the termination on the basis that the employer proved unsatisfactory service and there was no victimisation, mala fides or unfair labour practice.
- The Labour Court's conclusion that a probationer's services cannot be terminated prior to expiry of probation irrespective of contract terms or standing orders was held to be incorrect. Where terms of appointment or Standing Orders permit termination during probation, such termination may be lawful.
- The petition is dismissed without any order as to costs.
Broader jurisprudential implications: The opinion applies and follows existing authorities (including a Full Bench decision) on the precedence of Standing Orders over inconsistent regulations and on the power of industrial adjudication to examine substance over form. The Court did not indicate the setting of any new legal precedent beyond applying existing principles to the facts of this case.
G. P. Singh C. J.-
The petitioner was appointed as a bus conductor by the Madhya Pradesh State Road Transport Corporation on probation for a period of one month on 29th February 1976. The period of probation was extended by two months with effect from 28th March 1976. The period of probation was further extended by three months with effect from 28th May 1976. The petitioner's services were terminated by order dated 10th July 1976. The petitioner moved the Labour Court challenging the order of termination. The Corporation relied upon Regulation 51 of the Employees Service Regulations made under section 45 of the Road Transport Corporations Act, 1950, to support the order of termination. The Corporation also contended that the petitioner's services were terminated during the period of probation on the ground of unsatisfactory work. The Corporation produced the reports (Exs. D-1 to D-3) regarding the work of the petitioner. By order dated 22nd June 1978, the Labour Court allowed the application of the petitioner on the ground that if a person is kept on probation for a particular period, then he should be given full opportunity to prove to be worthy for retention in the job, otherwise there would be no use and purpose for fixing the probation period while appointing a man on probation. The Court further said that even assuming that the work of the petitioner was unsatisfactory, the same should have been brought to the knowledge of the petitioner so that he could improve his work before the expiry of the period of probation. On this reasoning, the Court held that the termination of the petitioner's employment before the expiry of the period of probation was a mala fide act and amounted to victimisation and unfair labour practice. The Court observed that it was not necessary for it to discuss whether the work of the petitioner was satisfactory or not because in either case the petitioner's services could not have been terminated prior to the expiry of the period of probation. In a revision filed by the Corporation, the Industrial Court by order dated 16th March 1979 came to the conclusion that the termination of the petitioner's employment was well within the power of the Corporation under Regulation 51 (b). The Industrial Court also observed that it was not necessary to bring to the notice of the petitioner the reports about his unsatisfactory work. The Industrial Court was satisfied that in view of the reports (Exs. D-1 to D-3) the petitioner's work was unsatisfactory and his services could be terminated before the expiry of the period of probation. It is this order of the Industrial Court which is challenged by this petition under Article 226 of the Constitution.
2 The learned counsel for the petitioner submitted that Regulation 51 could not be given effect to against the petitioner as the subject of termination of employment is governed by Standing Orders certified under the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961. The learned counsel in this connection referred to Standing Orders 11 and 12. It was submitted by the learned counsel that the petitioner's services could be terminated before the expiry of the period of probation on the ground of misconduct under Standing Order 12 after holding an enquiry or under Standing Order 11 (a) after giving reasons for the termination of service as required by Standing Order 11 (b); and as none of these courses was adopted by the Corporation, the order of termination was invalid. The learned counsel for the Corporation, on the other hand, submitted that Standing Order 11 was limited to permanent employees and that there was no specific provision in the Standing Orders for termination of services of a probationer and, therefore, Regulation 51 could be applied to the petitioner.
3. Now, the petitioner was clearly not a permanent employee as he had not completed six months' satisfactory service as required by the definition of "permanent employee" given in Standing Order 2(i). The petitioner was a "probationer" as defined in Standing Order 2(iii). The petitioner's services were not terminated for any misconduct under Standing Order 12 and no domestic enquiry was held against the petitioner. It is, therefore, not necessary for us to refer to Standing Order 12. The question, however, is whether the petitioner's services could be terminated understanding Order 11 which reads as follows:
"11. Termination of employment and the notice thereof to be given by employer and employee.
(a) When the employment of a permanent employee is to be terminated, he shall be given one month's notice or shall be paid wages for one month in lieu of notice. No employee other than a permanent employee shall be entitled to any such notice or wages in lieu thereof for termination of his service.
(b) The reason for the termination of service shall be recorded in writing and shall be communicated to the employee unless such communication may, in the opinion of the manager, directly or indirectly lay the company or the manager or the person signing the communication open to civil or criminal proceedings at the instance of the employee.
(c) Any permanent employee desirous of leaving the employment shall give one month's notice to his departmental officer stating the reason for which he is leaving but if he so requires he may be relieved earlier than the date on which the period of notice expires.
(d) No notice shall be necessary for the discontinuance of the employment of a permanent seasonal employee on the expiry of the season, but he shall have a lien on his post at the commencement of the next season."
4. The heading of Standing Order 11 describes the subject-matter covered by it in the words: "Termination of employment and the notice thereof to be given by employer and employee". The heading is thus not restricted to permanent employees. Further, the last sentence of clause (a)- "No employee other than a permanent employee shall be entitled to any such notice or wages in lieu thereof for termination of his service"-clearly postulates and impliedly authorises the termination of employment of non-permanent employees without any notice. Similarly, clause (b) which provides that "the reason for the termination of service shall be recorded in writing and shall be communicated to the employee" is not restricted to permanent employees and applies to all categories of employees. We are, therefore, of opinion that the services of all non-permanent employees which will include probationers and other temporary employees can be terminated without notice under clause (a) of Standing Order 11, but it is necessary that the reasons for the termination of service should be recorded in writing as required by clause (b) of the same Standing Order. Regulation 51 which authorises the Corporation to terminate the services of a probationer during or at the end of the period of probation does not require that reasons should be recorded in the order of termination. To this extent there is an inconsistency between the requirement of Standing Order 11 and Regulation 51. Standing Order 11 would, therefore, prevail over Regulation 51 on the principle of the Full Bench ruling in Madhya Pradesh State Road Transport Corporation v. Ramchandra, 1977 MPLJ 341 F.B.. On this conclusion we do not find it to be necessary in this case to consider the wider argument addressed by the learned counsel for the petitioner on the authority of the U. P. State Electricity Board v. Hari Shanker Jain, AIR 1979 SC 65, that as the Regulations have not been notified under section 2 (2) of the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961, they cannot at all apply irrespective of any question of inconsistency or repugnancy with the Standing Orders.
5. As standing Order 11 prevailed over Regulation 51, the petitioner's termination of employment can be supported only under the former. It is admitted that no reasons were recorded in the order of termination. The order of termination thus did not comply with the requirement of Standing Order 11 (b) and was for this reason invalid. The requirement of giving reasons is to ensure that the employer does not act in an arbitrary manner. This is an important safeguard for the protection of employees and non-compliance of it makes the order invalid. The question then is whether the petitioner was entitled to reinstatement simply because no reasons were given in the order of termination and the order was invalid on this ground. Now it is well settled that even when an employee's services are terminated on the ground of misconduct without holding an enquiry as required by Standing Order 12 or on the basis of a defective enquiry, the employee is not straightway entitled to reinstatement and the employer has to be given opportunity to prove the misconduct and justify the order of termination by producing evidence and it is only when he fails to prove the misconduct that the Labour Court can order reinstatement of the employee. There is no reason why the same principle should not apply when the failure by the employer is to give the reasons as required by Standing Order 11 (b). The Labour Court should in such cases allow the employer to disclose the reasons for termination of employment; and if on the reasons disclosed by the employer the Labour Court is satisfied that the reasons were valid and that there was no colourable exercise of the power, or victimisation or unfair labour practice, it will have to hold the order of termination as valid. In this connection, two principles have to be kept in mind : (i) Industrial adjudication can go behind the form of the order of termination to find out whether it is a case of colourable exercise of power, victimisation Or unfair labour practice, see L. Mischael v. Johnson Pumps Ltd., AIR 1975 SC 661 and other cases referred to therein; and (ii) Standing Orders 11 and 12 confer independent powers on the employer and neither should be so construed so as to emasculate the other or to render it ineffective and, therefore, a bona fide order of termination of employment which is not founded on misconduct and is based on unsatisfactory service record of the employee cannot be held to be punitive in nature and beyond the scope of Standing Order 11 : see Bombay Municipality v. P. S. Marvenkar, AIR 1978 SC 1380, p. 1384, 1385.
6. It is in the light of these principles that it is to be seen whether the petitioner was entitled to reinstatement. The Corporation supported the order of termination on the ground of unsatisfactory work of the petitioner and produced three reports (Exs. D-1 to D-3) regarding his unsatisfactory work during probation. The Labour Court refused to examine whether the petitioner's work was unsatisfactory or not because in its opinion on either view the petitioner's services could not be terminated prior to the expiry of probation period. The Labour Court also inferred victimisation, mala fides and unfair labour practice on the ground that the petitioner was not allowed to continue during the entire period of probation and adverse reports regarding his work were not brought to his notice. The assumption made by the Labour Court in face of Standing Order 11 that the petitioner was entitled to continue till the expiry of his probation period was clearly wrong. It is true that ordinarily and without more a probationer's services cannot be terminated before the expiry of probation period. Express Newspapers v. Labour Court, Madras, (1964) 1 LLJ 9 (SC), and Agra Electric Supply Co. v. Alladin, AIR 1970 SC 512. But this rule does not hold good if the terms of contract which are not inconsistent with the Standing Orders or the Standing Orders enable termination during the period of probation. In the instant case, the order of extension of probation itself provided that the petitioner's services were purely temporary and could be terminated at anytime. Further, Standing Order 11 (a) enables the termination of employment of every non-permanent employee without any notice. Now having regard to these provisions it was entirely wrong for the Labour Court to hold that the services of the petitioner could not be terminated before the expiry of his probation period. Similarly it was also not correct for the Labour Court to hold that periodical adverse reports should have been communicated to the petitioner and he should have been allowed to improve till the expiry of the probation period. No Standing Order, rule or regulation has been brought to our notice prescribing such a requirement. It also necessarily follows that the Labour Court was wrong in inferring vicitimisation, mala fides and unfair labour practice. The Industrial Court in revision accepted the adverse reports (Exs. D-1 to D-3) regarding the work of the petitioner which were not considered by the Labour Court. Though wrong in relying upon Regulation 51, the Industrial Court was right in holding that this was not a case of victimisation, mala fides or unfair labour practice but a case of termination simpliciter on the ground of unsatisfactory work of the petitioner. The position thus is that although the order of termination was invalid for want of reasons required by Standing Order, 11 (b), the termination has to be upheld on the basis of the reasons disclosed in proceedings before the Labour Court.
7. The petition fails and is dismissed but without any order as to costs.
Petition dismissed.
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