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  • V.P Gopalan Nambiyar, C.J
  • G. Balagangadharan Nair, J.
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  • V.P Gopalan Nambiyar, C.J
  • G. Balagangadharan Nair, J.
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Smart Summary

Structured Summary of the Opinion (Gopalan Nambiyar, C.J.)

Factual and Procedural Background

The Railway Administration appealed against a judgment of a learned Judge of the High Court which had quashed orders terminating the employment of certain temporary railway servants. The learned Judge had held that the terminations, though purportedly under paragraph 2302 of the Railway Establishment Manual (and corresponding Rule 149 of the Railway Establishment Code, Vol. I), were in fact mala fide and punitive—disguised disciplinary action taken because the petitioners were inconvenient to the Railway Administration.

The impugned action relied upon paragraph 2302 (and Rule 149) which permits termination of a temporary railway servant on 14 days' notice (or pay in lieu) and prescribes requirements about the authority issuing notice. The record included general notices of termination (Exts. PI–P4) and some individual notices (Exts. R1–R3) which did not state reasons. The petitioners alleged that the Railway Strike from 8-5-1974 to 28-5-1974 was the real cause of termination. The Railway Administration, in its counter-affidavit, maintained that terminations were in pursuance of the Rule authorising termination of temporary employees.

The learned Judge quashed the termination orders on the ground that they were punitive and mala fide, relying in part on earlier similar petitions where the court had found the strike to be the real cause. The Railway Administration appealed.

Legal Issues Presented

  1. Whether the terminations of the temporary railway servants, though framed under paragraph 2302 / Rule 149, were in truth punitive or mala fide (i.e., disciplinary action disguised as rule-based termination) on account of participation in the railway strike.
  2. Whether an otherwise innocuous termination (i.e., one in unexceptionable form and without stated reasons) can be re-characterised by the court as punitive or mala fide in appropriate circumstances.
  3. Whether the terminations constituted "retrenchment" within the meaning of Section 2(oo) of the Industrial Disputes Act and thereby offended Section 25-F of that Act (specifically, whether retrenchment compensation was payable but not paid).
  4. Whether a writ petition under Article 226 is maintainable in respect of alleged contraventions of Section 25-F, or whether the appropriate remedy lies exclusively by way of industrial adjudication (reference to Industrial Tribunal) under the Industrial Disputes Act.

Arguments of the Parties

Appellant (Railway Administration) — core positions

  • The terminations were validly effected under paragraph 2302 of the Railway Establishment Manual (and Rule 149 of the Railway Establishment Code) which permits termination of temporary railway servants on notice or pay in lieu; the notices given were legally sufficient.
  • Where termination is challenged as contravening Section 25-F of the Industrial Disputes Act, the appropriate forum is the Industrial Tribunal (or statutory machinery) and not extraordinary writ jurisdiction; hence Article 226 should not be used to short-circuit statutory remedies.
  • On authorities relied upon (including State Bank v. N.S. Money and Hindustan Steel), once termination has occurred the reasons are immaterial and the validity must be tested against Section 25-F.
  • Counsel also argued that certain Supreme Court authorities could not be displaced by later decisions (an argument addressed and rejected by the Court on analysis of the authorities).

Respondents (Writ petitioners / terminated employees) — core positions

  • The real cause of the terminations was punitive reaction to participation in the Railway Strike (8-5-1974 to 28-5-1974); the rule-based notices were a disguise for punishment.
  • The termination offended provisions of the Industrial Disputes Act—specifically Sections 25-F and (as stated in the record) "250" (as pleaded in the opinion), on the ground that retrenchment compensation required by Section 25-F was not paid.
  • The petitioners sought relief by writ petition (Article 226), and insisted the terminations were illegal on statutory grounds as well as mala fide/punitive grounds.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
State of Punjab v. Sukh Raj (A.I.R. 1968 S.C. 1089) Propositions emphasised: (3) An order that visits a public servant with evil consequences or casts aspersion on character/integrity is punishment; (4) An unexceptionable order of termination preceded by an inquiry merely to decide retention does not attract Article 311. The Court emphasised propositions 3 and 4 and treated them as guiding propositions in considering whether a termination in innocuous form could nonetheless be punitive; these principles formed part of the legal framework applied in the analysis.
State of U.P. v. Ram Chandra ((1976) 4 SCC 52 : AIR 1976 SC 2547) Laid down the test whether an impugned termination is innocuous or punitive: ask whether the vitiating cause was the foundation (operative cause) of the action or merely a motive. If the former, the order is mala fide/punitive; if the latter, it is not. The Court applied this motive-vs-foundation test and concluded that in the cases before it the strike was only background/motive and not the foundation of the termination; consequently the terminations were not mala fide/punitive on that ground.
Krishanan v. Southern Railway (1972 (2) LLJ 568) Division Bench ruling of this Court relied upon by counsel in relation to issues regarding statutory retrenchment and Section 25-F (as relied on by the parties). The Court recorded that counsel for the respondent relied on this Division Bench ruling; it was part of the authorities placed before the Court in relation to Section 25-F issues (the Court considered it among other authorities).
State Bank v. N.S. Money ((1976) 1 SCC 822 : AIR 1976 SC 1111) Authority stating that once there has been a termination of service, the reasons may be immaterial and the termination must be tested on the touchstone of Section 25-F (i.e., statutory requirements for retrenchment). The Court noted this pronouncement as part of the body of Supreme Court decisions addressing when termination amounts to retrenchment and the applicability of Section 25-F; it informed the Court's subsequent conclusion that the terminations satisfied the statutory definition of retrenchment.
Hindustan Steel v. Labour Court, Orissa ((1976) 4 SCC 222 : AIR 1977 SC 31) Considered the position in light of earlier Supreme Court decisions (including Pioraich Sugar Mills and Hariprasad Shukla) and held that on the actual facts the termination amounted to retrenchment effected to streamline organisation and effect economies. The Court treated this decision as an authoritative exposition that reconciled earlier decisions; it followed the exposition and concluded that the present terminations fell within the statutory definition of retrenchment and violated Section 25-F if retrenchment compensation was not paid.
Pioraich Sugar Mills Case (AIR 1957 SC 95) Earlier Supreme Court authority considered by later Supreme Court decisions dealing with retrenchment and Section 25-F. Mentioned by the Court as one of the earlier authorities that were considered and reconciled by subsequent Supreme Court decisions (in particular in Hindustan Steel) which the Court followed.
Hariprasad Shivashankar Shukla (AIR 1957 SC 121) Earlier Supreme Court decision relevant to the law on retrenchment and engagement of statutory protection; considered in later cases. Referred to as one of the cases explained by later Supreme Court decisions; the Court noted that the later decisions had considered and explained this earlier authority and followed that exposition.
Writ Appeal Nos. 33, 34, 37 & 38 of 1975 (earlier high court decisions) Earlier High Court decisions in which the Court had found that the Railway Strike was the real reason for termination in similar cases. The learned Judge below relied upon those earlier decisions in concluding malafides; the present Court noted those decisions but distinguished them on the facts (noting that in those cases the notices/pleadings contained sufficient indication that the strike was the reason).
W.A. 450 of 1976 (Full Bench of this Court) Full Bench opinion surveying the authorities on when a formally innocuous order may be treated as punitive; served as a local precedent and frame for analysis. The Court referred to that Full Bench survey as part of the background to applying the Supreme Court principles; it did not re-survey all decisions but relied on the legal propositions summarized therein.
W.A. No. 436 of 1976 (Division Bench of this Court) Earlier Division Bench view, cited as having taken a contrary position regarding whether pleas under Section 25-F could be entertained by writ jurisdiction. The Court recognised a conflict with that earlier view, allowed review, reheard the appeals and ultimately modified its earlier paragraph declining to consider Section 25-F, concluding that the earlier declination was not correct.

Court's Reasoning and Analysis

(Step-by-step recitation of the court's legal analysis as found in the opinion; statements are limited to the content of the opinion.)

  1. The Court began by examining the form and substance of the terminating instruments and the pleadings. Paragraph 2302 of the Railway Establishment Manual (and Rule 149) provides for termination of temporary railway servants on 14 days' notice (or pay in lieu) and prescribes that notice be given by an authority not lower than the appointing authority. The general and individual notices in the record gave no reasons and were prima facie innocuous.
  2. The petitioners alleged the Railway Strike (8-5-1974 to 28-5-1974) as the real cause. The Railway Administration's pleadings contended termination pursuant to the rule. The learned Judge below concluded they were punitive, relying in part on earlier High Court decisions where the strike was found to be the real reason.
  3. On appeal the Court analysed Supreme Court authorities concerning when an order in innocuous form may nevertheless amount to punishment. The Court emphasised propositions from State of Punjab v. Sukh Raj and the motive-vs-foundation test from State of U.P. v. Ram Chandra. Applying those principles, the Court initially concluded that, on the facts before it, the strike was background or motive rather than the operative foundation for the terminations and therefore the terminations were not mala fide or punitive on that basis. On that basis the Court initially allowed the appeal and set aside the learned Judge's quashing of the termination orders.
  4. During post-dictation correction, the Court noticed an inconsistency with an earlier Division Bench decision in W.A. No. 436/1976 on the question whether pleas under Section 25-F should be entertained in writ jurisdiction. The Court allowed a review and re-heard the appeals.
  5. Upon re-hearing, the Court modified its earlier position concerning Section 25-F. It considered the statutory definition of "retrenchment" (Section 2(oo)) and the requirements of Section 25-F. The Court noted authorities (Krishanan v. Southern Railway; State Bank v. N.S. Money; Hindustan Steel) and the Supreme Court's treatment of the earlier authorities (including Pioraich Sugar Mills and Hariprasad Shukla) as reconciled by subsequent decisions.
  6. The Court concluded that the terminations in the present cases satisfied the statutory definition of "retrenchment" under Section 2(oo) and therefore violated Section 25-F because no retrenchment compensation had been paid. The Court therefore found the termination illegal on statutory grounds.
  7. The Court rejected the contention that the remedy by reference to an Industrial Tribunal was an available alternative that would oust writ jurisdiction for purposes of Article 226. The Court observed that reference to the Industrial Tribunal can only be made at the instance of the government under Section 10 of the Act and therefore cannot be treated as an alternative remedy available to the respondent for holding a writ petition maintainable. Consequently the Court entertained the Section 25-F plea in writ jurisdiction.
  8. On the merits of the Section 25-F plea, the Court affirmed the learned Judge's conclusion that the terminations were illegal because retrenchment compensation had not been paid. The Court therefore affirmed the judgment of the learned Judge (though stating the reasons differed from those given below) and dismissed the Railway Administration's appeals.
  9. The Court clarified that nothing in the judgment should be taken to preclude any remedy the writ petitioners may have under the Industrial Disputes Act; the Court declined to short-circuit statutory adjudicatory procedures in general but nonetheless found writ relief appropriate on the facts and law before it.

Holding and Implications

Holding: APPEALS DISMISSED. The Court ultimately affirmed the learned Judge's quashing of the termination orders, but did so on the statutory ground that the terminations amounted to "retrenchment" within the meaning of Section 2(oo) of the Industrial Disputes Act and contravened Section 25-F because retrenchment compensation was not paid.

Direct implications for the parties:

  • The Railway Administration's appeals were dismissed and the High Court's order quashing the terminations was affirmed (the Court explicitly stated it affirmed that judgment for different reasons).
  • No retrenchment compensation had been paid and the terminations were held to violate Section 25-F — this is the statutory basis for the quashing upheld by the Court.
  • There was no order as to costs (the Court expressly stated there would be no order as to costs).

Broader or procedural implications noted by the Court:

  • The Court declined to treat statutory industrial adjudication as necessarily excluding writ jurisdiction in all cases: it rejected the argument that reference to an Industrial Tribunal was an alternative remedy available to the respondents for the purpose of ousting Article 226 jurisdiction, noting the limits created by Section 10 of the Industrial Disputes Act.
  • The Court observed that nothing in its judgment ought to be read as prejudicing any remedy the writ petitioners might have under the Industrial Disputes Act; such remedies remain available and the statutory machinery may be invoked separately.

End of summary. This summary is strictly confined to the statements and reasoning contained in the provided opinion and does not infer or introduce information beyond the opinion's text.

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    The Divisional Superintendent, Southern Railway, Madurai And Others () v. Sasidharan And Others (S).

    Gopalan Nambiyar, C.J:— All these appeals have been preferred by the Railway Administration against the decision of a learned Judge of this Court holding that the termination of the employment of certain temporary Railway servants was in fact a mala fide termination disguised as a termination under the Rules, but in fact a termination which spelt in the regions of disciplinary action, and was meant for purpose of getting out of the employment the petitioners who were found to be in convenient to the Railway Administration. The action, on the face of it, purported to have been taken under paragraph 2302 of the Railway Establishment Manual which reads as follows:—

    “2302. Termination of service and periods of notice.—

    (1) Service of a temporary railway servant shall be liable to termination on 14 days' notice on either side provided that such a railway servant shall not be entitled to any notice of termination of his service—

    (i) If the termination is due to the expiry of the sanction to the post which he holds or the expiry of the officiating vacancy or to his compulsory retirement due to mental or physical incapacity or to his removal or dismissal from service as a disciplinary measure after compliance with the provisions of clause (2) of Article 311 of the Constitution of India:

    (ii) When he is deemed to have resigned his appointment and ceased to be in railway employ in me circumstances detailed under note 2 below Exception II to rule 732(i) of the Indian Railway Establishment Code, Volume I.

    (2) In view of the notice prescribed in this paragraph, it shall be permissible on the part of the Railway Administration to terminate the service of a railway servant by paying him the pay for the period of notice.

    (3) The notice of termination of service under this paragraph should be given by an authority not lower than the appointing authority.

    (4) In the case of a railway servant or Apprentice to whom the provisions of the Industrial Disputes Act, 1947, apply, he shall be entitled to notice or wage in Hew thereof in accordance with the provisions of that Act.”

    2. The same provision is to be found in Rule 149 of the Railway Establishment Code Volume I. Exts. PI to P4 are the general notices of termination and Exts. R1 to R3 are some of the individual notices issued to the writ petitioners for termination of their services. Neither the general notices nor the individual notices give any indication of any reason for termination, so that, on the face of the notices, the termination is nothing other than innocuous, and there is nothing to infer or suggest that an offencive or a punitive termination was either intended or brought about. The pleadings in the case do not carry us any further. While the petitioners have alleged that the Railway Strike which raged from 8-5-1974 to 28-5-1974 was the real reason that was responsible for and operated behind the mind of the Railway Administration to bring about the termination, the counter-affidavit died emphasises the fact that the termination was in pursuance of the Rule authorising such termination of a temporary employee. So that, the pleadings again, reinforce the fact that the termination was prima facie, on the facts of it, an innocuous and not an offencive one.

    3. The learned Judge however held that the termination spelt in the realms of punishment and was a punitive or mala fide termination, on account of the fact that in certain cases of a similar nature, filed earlier, in respect of similar orders of termination of temporary employees, this Court had held that the real reason for termination was the Railway Strike and that the termination was sought to be disguised under the protection of the Rule authorising termination of temporary servants. That was in Writ Appeal Nos. 33, 34, 37 and 38 of 1975 which is referred to in the judgment of the learned Judge. But it is plain from the records of that case and from what is noticed in the judgment that the notice of termination as well as the pleadings contained sufficient indication that the Railway strike was the real reason for the termination of service. Although this distinction was noticed be the learnt Judge in the judgment under appeal, the learned Judge observed that the Railway Administration had grown wiser since that decision, and had avoided the necessary averment in the pleadings which were made in the earlier counter-affidavit in which they had admitted that the relevant Rule was invoiced as a consequence of participation in the strike, and way of punishment of the petitioners (vide paragraph 7 of the learned Judge's judgment). At the end of the discussion the learned Judge concluded in paragraph 7 of the Judgment as follows:

    “that the railway strike was the background for the action taken against the petitioners is beyond doubt. It is the view of the respondents that the petitioners have participated in the strike that led to the issue of notice as in the case of the petitioners who had come to this Court in the earlier petitions”.

    4. It was in this view that the learned Judge quashed the orders of termination. We are unable to agree with the learned Judge. The question whether an order which is prima facie, on the face of it, innocuous can sound in the realm of a punitive action or punishment, how far, and in what circumstances, this Court can re-examine the order and find it to be vitiated as punitive or mala fide action, have all been the subject-matter of a number of decisions of the Supreme Court and of this Court. A Full Bench of this Court to which one of us (myself) and the learned Judge whose judgment is under appeal were parties recently had occasion to survey these decisions and to lay down and to re-state tee principles of law applicable to the situation. In W.A 450 of 1976, judgment in which was pronounced on the 23rd December 1977. We do not wish to survey the entire gamit of the decisions noticed therein. But we wish to emphasise the propositions 3 and 4 stated by the Supreme Court in State of Punjab v. Sukh Raj (A.I.R 1968 S.C 1089). These propositions are:

    “3. If the order visits the public servant with my evil consequences or costs an aspersion against his character or integrity it must be considered to be one by way of punishment, no matter whether he was a mere probationer or a temporary servant.

    4. An order of termination of service in unexceptionable form preceded by an enquiry launched by the superior authorities only to ascertain whether the public servant should be retained in service, does not attract the operation of Article 311 of the Constitution.”

    5. We have also noticed the recent decision of the Supreme Court in State of U.P v. Ram Chandra, (1976) 4 SCC 52 : AIR 1976 SC 2547 in which the Court laid down the proposition that the test to find out whether the impugned termination is innocuous or punitive is to enquire whether the vitiating cause was the foundation for the action or was merely a motive of the action. If it was the foundation for the action, the order was mala fide and punitive; if it was only the motive of the action, it is not. In the light of the above principles we have no hesitation that in these cases the orders of termination were innocuous had not punitive or mala. The learned Judge himself at the end of paragraph 7 of the judgment which we have extracted earlier, was of the view that the Railway strike was only the background of the action. It cannot therefore, in the circumstances, be said to be the foundation of the action. We allow this appeal, and set aside the Judgment of the learned Judge and direct that the writ petitions which have given rise to these appeals will stand dismissed. We make no order as to costs.

    6. Counsel for the writ petitioners-respondents raised the plea that the termination offended the provisions of Sections 25F and 250 of the Industrial Disputes Act. We decline to go into this aspect of the matter and to pronounce on this question as we are of the opinion that a contravention of these provisions may well be raised in the form of an industrial dispute and adjudicated upon by the Special Tribunal or Courts, provided under the provisions of the statute. We see no reason for short-circuits the procedure provided for adjudication of an industrial dispute and for pronouncing on these questions in our extraordinary jurisdiction under Article 226 of the Constitution.

    7. Nothing said in this judgment should be understood as precluded or prejudiced the remedy if any of the writ petitioners-respondents under the provisions of the Industrial Disputes Act.

    JUDGMENT

    (20-1-1978)

    Gopalan Nambiyar, C.J:— The judgment in these cases was dictated on 5-1-1978. When the script was typed and submitted for correction, it was noticed that the judgment, in so fir as it negatived the plea of the writ petitioners-respondents based on Section 25-F of the Industrial Disputes Act, was directly contrary to the view taken by this Division Bench on an earlier occasion in W.A No. 436/1976. The matter was posted on 10-1-1978 “for being spoken to” Counsel applied for review of the judgment. The application was allowed and the writ appeals were re-heard again. There is no ground to modify or alter paragraphs 1 to 3 of the judgment rendered on the earlier occasion. But after re-hearing, we are satisfied that paragraph 4 of the judgment should stand modified. That paragraph deals with the plea of the writ petitioners-respondents placed on Section 25-F of the Industrial Disputes Act. The plea was that retrenchment compensation had not been paid as required by Section 25-F of the Act and therefore the termination offended the statutory provision of Section 25-F of the Act. We declined to go into the plea thus raised no the ground that this was a matter which had to be raised by way of an industrial dispute and adjudicated upon by the Special Tribunals under the Industrial Disputes Act in W.A No. 436 of 1976 we had taken exactly the contrary view. Dealing with the submission based on the contravention of Section 25-F of the Industrial Disputes Act, after noticing the definition of the term retrenchment and the provisions of Section 25-F of the Act, we stated as follows:

    “In the light of the above provisions it was argued that, having regard to the statutory definition of ‘retrenchment’ as a termination of service ‘for any reason whatsoever’ it had to satisfy the requirements of Section 25-F in order to be regarded as valid and proper. As compensation had not been paid, it was contended that the termination was illegal and in effective, and therefore, the learned Judge was justified in quashing the same. Counsel for the respondent placed reliance on the Division Bench ruling of this Court in Krishanan v. Southern Railway (1972 (2) LLJ 568) and on two recent decisions of the Supreme Court viz., State Bank v. N.S Money ((1976) 1 SCC 822 : AIR 1976 SC 1111) and Hindustan Steel v. Labour Court, Orissa ((1976) 4 SCC 222 : AIR 1977 S.C 31). The earlier Supreme Court decision states in categoric fashion that, once there has been a termination of service, the reasons therein would be immaterial and that it must be tested on the touchstone of the provisions of Section 25-F. The latter decision in (1976) 4 SCC 222 : AIR 1977 S.C 31 has considered the position in the light of the two previous pronouncements of the Supreme Court in Pioraich Sugar Mills Case (AIR 1957 SC 95) and Hariprasad Shivashankar Shukla's case (AIR 1957 SC 121) and has pointed out that, on the actual facts of the case before the Supreme Court, the conclusion that there was retrenchment of the workman, was quite consistent with the two previous decisions of the Supreme Court. In (1976) 4 SCC 222 : AIR 1977 SC 31 the termination of service of the workman was to streamline the organisation and to effect economics wherever possible.

    3. In the light of these pronouncements of the Supreme Court, we are of the opinion that the termination in this case satisfies the definition of ‘retrenchment’ under Section 2(oo) of the Industrial Disputes Act, and therefore, violates the provisions of Section 25-F of the Act. In that view, the conclusion of the learned Judge that the termination was illegal, is correct.

    4. Counsel for the appellant contended that even if the termination be illegal, the respondent has an alternative remedy by way of reference of the dispute to the Industrial Tribunal and therefore, a petition under Art. 226 of the Constitution would not be entertain able. We are unable to accept this argument. Reference of Industrial dispute to the Tribunal can only be at the instance of the Government on certain conditions mentioned in Section 10 of the Act. We cannot regard it as an alternative remedy available to the respondent for the purpose of holding that a petition under Article 226 is not maintainable, and attracting clause (3) of Article 226 of the Constitution, as amended by the 42nd Amendment read with Section 58 of the 42nd Amendment Act.”

    8. In view of the above, the view taken on the earlier occasion declining to go into the plea based on the contravention of Section 25-F of the Industrial Disputes Act is not correct. On the merits of the plea, we are satisfied that the termination of services of the writ-petitioners-respondents directly offends the provisions of Section 25-F of the Act in so far as no retrenchment compensation was paid as provided by the terms of the Section. In that view of the matter, we affirm the Judgment of the learned Judge although for different reasons and dismiss the Writ Appeals.

    9. Counsel for the appellant Railway Board made a strenuous attempt to contend before us that the recent decisions of the supreme Court in State Bank v. N.S Money ((1976) 1 SCC 822 : AIR 1976 SC 1111) and Hindustan Steel v. Labour Court, Orissa ((1976) 4 SCC 222 : AIR 1977 SC 31) both of which where referred to in the judgment in writ Appeal No. 436 of 1976 cannot prevail against the judgment in Hariprasad Shivashankar Shukla's (AIR 1957 SC 121). We are unable to agree with this stand of the Counsel. The earlier Supreme Court decision had been expressly considered and explained by the decision in (1976) 4 SCC 222 : AIR 1977 SC 31. We are bound by the exposition of the Supreme Court. We respectfully follow the same and following the said decision, we cannot escape the conclusion that this appeal must be dismissed. And we have done so. There will be no order as to costs.

    10. Appeal dismissed.

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