Madras Aluminium Company, Ltd. v. Labour Court

1. The petitioner-company has a factory at Mettur Dam, engaged in the manufacture of aluminium. On 4 July, 1981, the petitioner-company appointed the second respondent as a die-maker trainee with effect from 18 July, 1980. It is clear from the appointment order that the second respondent will be under training for a period of 12 months from the date of his joining duty and during that period of training he will be paid a consolidated stipend of Rs. 286. The one year period of training expired on 17 July, 1981. On 29 July, 1981, the petitioner issued a communication to the second respondent stating that the period of training of the second respondent has been terminated with immediate effect. Thereafter, the second respondent raised an industrial dispute and the Government of Tamil Nadu in G.O Ms. No. 887, dated 30 April, 1982, referred to the Labour Court, Coimbatore, the first respondent herein the industrial dispute relating to the non-employment of the second respondent by the petitioner for adjudication. The Labour Court took the case on file in Industrial Dispute No. 81 of 1982. The second respondent filed a claim statement before the Labour Court contending as follows.

2. He joined in the petitioner-company as die-maker trainee on 18 July, 1980, on a monthly salary of Rs. 286. Without any notice or enquiry, the petitioner-company passed an order, dated 29 July, 1981, terminating the services of the second respondent. The order, dated 29 July, 1981, is against principles of natural justice. The second respondent completed the period of training on 17 July, 1981 and after the completion of the one year period of training, he became a worker under he petitioner and, therefore, the order, dated 27 July, 1981, terminating the services of the second respondent without any enquiry or notice is illegal. The management has also not resorted to S. 25-F of the Industrial Disputes Act. The persons who have joined with the petitioner subsequent to the second respondent continue in service and, therefore, the second respondent could not be retrenched from service. Therefore, the second respondent is entitled to be reinstated with continuity of service and back-wages.

3. The petitioner filed a counter in Industrial Dispute No. 81 of 1982 before the Labour Court contending as follows: The second respondent is not a workman under S. 2(s) of the Industrial Disputes Act. The second respondent was appointed as a die-maker trainee on 4 July, 1980 and be reported to duty on 18 July, 1980. At that time, when the order of termination was passed, the second respondent was only working as a trainee and he is not a workman under S. 2(s) of the Act. As the second respondent was not a permanent workman, there is no need to issue any show-cause notice and to conduct any enquiry before terminating the services of the second respondent. The termination of the services of the second respondent amounts to only discharge simpliciter and the provision of law has been duly complied with.

4. The Labour Court on a consideration of the documentary evidence available on record held that the non-employment of the second respondent is not justified and consequently directed that the second respondent should be reinstated in service with back-wages and continuity of services. Aggrieved by the award passed by the Labour Court in Industrial Dispute No. 81 of 1982, the petitioner has filed the present writ petition to quash the award made by the first respondent in Industrial Dispute No. 81 of 1982.

5. The learned counsel for the petitioner in the first place contended that the mere fact that the period of training is one year from 18 July, 1980 to 18 July, 1981 did not confer on the second respondent the status of a permanent employee, the second respondent was never appointed as a permanent employee; the second respondent was only an apprentice and such an apprentice is not a workman. In support of his contention, the learned counsel relied on Ss. 18 and 22 of the Apprentice Act, 1961, and rule 5 of the Apprentice Rules, 1962. The learned counsel for the petitioner further contended that since the second respondent is only an apprentice and not a workman, the procedure prescribed in standing order 43 of the standing orders of the Madras Aluminium Company, Ltd. (hereinafter called the standing orders), for the termination of the employment of the workman need not be followed. There is no substance in the contention of the learned counsel for the petitioner. Exhibit W 10 is the xerox copy of the certificate of craftsmanship issued from Lakshmi Machine Works, Coimbatore, to the second respondent. Exhibit W 11 is the xerox copy of the National Apprentice Certificate issued to the second respondent. Exhibits W 10 and W11 will go to show that the second respondent has completed his apprenticeship and that with that qualification, the second respondent was appointed a die-maker trainee in the petitioner-company and the second respondent joined as a trainee on 18 July, 198). It is significant to note that the second respondent was retained in service even after the expiry of one year period from 18 July, 1980 and only 10 days after the expiry of the period of one year from 18 July, 1980, the order of termination was passed against the second respondent. In these circumstances, it has to be held that the second respondent completed his period of trainee on 17 July, 1981 and thereafter he has become a permanent worker. Further, even assuming that the second respondent is an apprentice, he is covered by standing order 3 of the standing orders. Standing order 3 deals with classification of workers and it includes the apprentices as one of the category of workers. However, in the counter filed by the management in Industrial Dispute No. 81 of 1982 before the Labour Court it has averred that the petitioner is not a workman under S. 2(s) of the Industrial Disputes Act. According to S. 2(s) of the Industrial Disputes Act, a workman means any person including an apprentice employed in any industry. In view of the standing order 3 and in view of the definition of workman in S. 2(s) of the Industrial Disputes Act, it has to be held that the second respondent is a workman for the purpose of standing order 43. Standing order 43(1) runs as follows:

“Subject to the provisions contained in the standing order 55, no employer shall dispense with the service of any workman with not less than one year of continuous service except for a reasonable cause and without giving such workman at least one month's notice or wages in lieu of such notice.”

Standing order 43 provides that the services of any workman with not less than one year of continuous service cannot be terminated except for a reasonable cause and without giving such workman at least one month's notice or wages in lieu of such notice. Admittedly, in the present case, no show-cause notice was issued to the second respondent by the petitioner before passing the order of termination and the procedure prescribed in standing order 43 has not been followed by the petitioner. In these circumstances, the Labour Court rightly held that there is no termination of the services of the second respondent in the manner known to law and that the non-employment of the second respondent is not justified. There is no infirmity in the said finding of the Labour Court.

6. The next contention of the learned counsel for the petitioner is that even assuming that the non-employment of the second respondent is not justified, this is not the fit case for ordering the reinstatement of the second respondent in service and there is valid ground for awarding monetary compensation of the second respondent in lieu of reinstatement. In support of the above contention, the learned counsel for the petitioner relied on the decisions in Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-Labour Court, New Delhi [1980 — II L.L.N 456] and in Mount Mettur Pharmaceuticals, Ltd v. Second Additional Labour Court, Madras [1985 — I L.L.N 801]. There is substance in the contention of the learned counsel for the petitioner. The apex Court of the land as well as this Court have taken the view that even where it is held that the non-employment of the workman is not justified, reinstatement is not the universal rule in all cases, and compensation can be awarded in lieu of reinstatement in exceptional cases. The Supreme Court in Surendra Kumar Verma v. Central Government Industrial Tribunal [1980 — II L.L.N 456] (vide supra), adverted to this question in the following terms in Para 5, at page 459:

“… But there may be exceptional circumstances which make it impossible or wholly inequitable vis-a-vis the employer and workmen to direct reinstatement with full back-wages. For instance, the industry might have closed down or might be in severe financial doldrums; the workmen concerned might have secured better or other employment elsewhere and so on. In such situations, there is a vestige of discretion left in the Court to make appropriate consequential orders. The Court may deny the relief of reinstatement where reinstatement is impossible because the industry has closed down. The Court may deny the relief of award of full back-wages where that would place an impossible burden on the employer…”

7. In Coimbalore Pioneer B. Mills v. Labour Court, Coimbatore [1979 — I L.L.N 811, a Bench of this Court consisting of V. Ramasamy, J., as he then was, and Rathnavel Pandian, J., as he then was, held that compensation can be awarded in lieu of reinstatement in exceptional cases. In Mount Mettur Pharmaceuticals, Ltd. v. Second Additional Labour Court, Madras [1985 — I L.L.N 801] (vide supra), another Bench of this Court while dealing with the question under what circumstances, money compensation can be awarded to the workman in lieu of reinstatement has observed as follows in Para 4, at page 804:

“… As already stated, it is not the law that in every case of infringement of S. 25-F, the award of reinstatement with back-wages is a must by the Labour Court, In cases where the management is found to be justified is effecting retrenchment and its decision to effect retrenchment is not mala fide, the Labour Court will be exercising its discretion properly if suitable compensation in lieu of reinstatement with back-wages is ordered. In this case, the Labour Court has proceeded on the basis that since there is infringement of S. 25-F it should straightaway grant the relief of reinstatement with back-wages, ignoring the fact that discretion is left with the Labour Court either to direct reinstatement with back-wages or to award compensation instead. Since the Labour Court has not directed its mind on this aspect as to the relief to be granted to the concerned four workmen, we set aside the order of the learned Judge and also the award passed by the Labour Court and direct the Labour Court to pass fresh orders fixing suitable compensation in lieu of reinstatement for these four workmen.”

8. In the present case, exhibit W 7 shows that the management was not satisfied with the work of the second respondent. Further, in the counter-affidavit filed by the management before the Labour Court, it is stated that the work of the second respondent during the training period was not up to the mark and he failed to pick up work and rise up to the expectations of the management. Further, admittedly, the second respondent joined as a trainee on lb July 1980 and bis training period of one year expired on 17 July, 1981 and after the completion of the training period he worked only for a period of 12 days in the petitioner-company. Again, the second respondent has not alleged any mala fide against the petitioner for terminating his services. The learned counsel for the petitioner in the course of his arguments submitted that the petitioner-company was in financial difficulties for some time in the past and ultimately it was closed down recently in these circumstances, I am satisfied this is a fit and proper case where money compensation should be awarded to the second respondent in lieu of reinstatement. In these circumstances, it has to be held that the Labour Court has not applied its mind to this aspect of the case and that it has not exercised its discretion properly, in ordering reinstatement of the second respondent in service with back-wages and continuity of service and hence that portion of the award of the first respondent directing the petitioner to reinstate the second respondent in service is liable to be set aside. The Labour Court, on the facts and circumstances of the case ought to have directed the petitioner to pay money compensation to the second respondent in lieu of reinstatement.

9. The next question we have to examine is what is the quantum of money compensation that should be awarded to the second respondent in lieu of reinstatement in the present case. There is no consensus between the parties with regard to emoluments last drawn and would have to be drawn in future by the second respondent. Further, sufficient factual materials are not available before this Court to fix the quantum of money compensation that should be awarded to the second respondent in lieu of his reinstatement and, therefore, the matter has to be remanded to the first respondent for the limited purpose of fixing the appropriate compensation to be awarded to the second respondent by the petitioner in lieu of reinstatement. It is open to both the parties to let in evidence both oral and documentary for the limited purpose of fixing the money compensation in lieu of reinstatement.

10. In the result, the following directions will issue in this writ petition:

(a) The finding of The first respondent that there is no termination of the service of the second respondent by the petitioner in the manner known to law and that the non-employment of the second respondent by the petitioner is not justified, is confirmed.

(b) However, the award of the Labour Court directing the petitioner to reinstate the second respondent in service with back-wages and continuity of service is set aside.

(c) Instead, there will be a direction in this writ petition that the petitioner is liable to pay money compensation to the second respondent in lieu of reinstatement.

(d) The matter is remanded to the first respondent for the limited purpose of fixing the quantum of money compensation to which the second respondent is entitled to in lieu of reinstatement.

11. The writ petition is ordered accordingly. No costs.