Holding

The Supreme Court held that the termination orders were punitive dismissals, that Section 11A applies to arbitrators, and that the High Court’s intervention under Article 226 was within its jurisdiction, leading to the award being set aside and appropriate reinstatement and compensation ordered.

Summary

Gujarat Steel Tubes Ltd. and its workers' union, Gujarat Steel Tubes Mazdoor Sabha, clashed after the company terminated 853 employees during an illegal strike. The dispute was referred to arbitration under Section 10A of the Industrial Disputes Act, 1947, and the arbitrator upheld the dismissals. The union challenged the award in the Gujarat High Court, which set aside the award and ordered reinstatement with back wages. The Supreme Court held that the dismissals were punitive, not simple discharges, that Section 11A of the 1947 Act applies to arbitrators, and that the High Court’s exercise of its extraordinary jurisdiction under Article 226 was proper. Consequently, the Court set aside the award, modified the High Court’s relief, and ordered reinstatement of a portion of the workmen with scaled back‑pay and other benefits.

Issues considered

The scope of Section 11A of the Industrial Disputes Act, 1947 – whether it includes arbitrators and permits them to re‑examine punishment.
Whether the termination orders were "discharge simpliciter" or punitive dismissals requiring a disciplinary enquiry.
Whether the High Court could interfere with the arbitrator’s award under Articles 226 and 227 of the Constitution.
The interpretation of Model Standing Orders 23 and 25 regarding discharge versus dismissal.
The appropriate relief – reinstatement, back wages and retrenchment compensation.

Legislation cited

Constitution of Indias. Article 226, s. Article 227, s. Article 39, s. Article 41, s. Article 42, s. Article 43, s. Article 43A
Industrial Disputes Act, 1947s. 10A, s. 11A, s. 1OA
Industrial Employment (Standing Orders) Act, 1946s. Model Standing Order 23, s. Model Standing Order 24, s. Model Standing Order 25

Subjects

industrial disputearbitrationSection 11Adischarge versus dismissalArticle 226Model Standing Orderspunitive dismissalreinstatementback wageslabour law

Judgment

146

A GUJARAT STEEL TUBES LTD.
v.
GUJARAT STEEL TUBES MAZDOOR SABHA
N<Wember 19, 1979
D [V. R. KRISHNA IYER, D. A. DESAI AND A. D. KosHAL, JJ.]
•
Industrial Disputes Act, 1941-Section llA-Scope· of-Whether the arbitra-
tor could exercise the powers conferred on; a Tribunal under seutlon 11A of the
\
Act and interfere with the punishment awarded by the management to the work-

~
men.

C Constitution o'f' India, 1950, Article· 227-Power of the lfigh Court to inter·
/ere with the decision of the management and revise the puni.Thment to the·
delinquent workmen.
Model Standing orders made under Section 15(2) of the Industrial Employ•
ment (Standing Orders) Act, 1946-M.S.Os. 23, 24 and 25 scope of-Whether
the discharge en masse of workmen valid.
D Value rision of Indian Industrial Jurisprudence-Conrlitution of India-
Articles 39, 41, 42, 43 43A and the Golden Rule for the Judicial resolution of '!"
industrial dispute.
The appellant manufactures steel tubes in the outskirts of Ahmedabad city.
It started its business in 1960i went into production since 1964 and waggled
from infancy to adulthood with snli1ing profitsJ and growling workers, punctuated
E by smouldering demands, strikes and settlement until there brewed a confron-
tation culminating in a head-on collision following upon certain unhappy
happenings. A total strike ensued whose chain reaction was a whole..gale termi-
nation of all en1ployees followed by fresh recruitment of workmen defacto
breakdown of the strike and dispute over restoration of the removed workmen.

As per the last settlem'ent between the management and the workmen of
F 4th August, 1972, it was not open to the workmen to resort to a strike till the
expiry of a period of five years; nor could the1 management decfare· a lock out
till then. Any dispute arising between the parties, aiccording to the terms arrived
nt were to be sorted out through negotiation or, failing that by recourse to
arbitTation. The n1atter was therefore, referred to an arbitrator and the arbitrator
by his award held the oction cf the management warranted. The respondent '
.Fhallenged the decision of the arbitrator under Article 226/227 of the Con·
G stitution and the High Court of Gujarat reversed the award and substantially
directed reinstat~ment. Hence the appeals both by the Management a-nd the
workmen.
Di:sroissing the appeals and modifying the awards substantially, the Court
HELD : (By Majority)
H Per Iyer J. 011 behalf of D. A. Desai J. and himself.

(i) The basic assumption is that the strike was not only illegal but also .,.,
unjustified. [210 HJ
GUJARAT STEEL TUBES V. MAzPQOR SABHA 147

(ii) Tho management did .punish its 853 workmeru when it discharged them
for reasons of misconduct set out in separate but .integrated _proceedings; even
though with legal finesse, the formal order was phrased in harmless verbalism.
(211 Al

(iii) The action taken under the general law or the standing orders, was
illegal in rhe absence ·of in<lividualised charge &beets,. proper hearing and
personalised punishment, if found guilty. None of these steps having been
taken, the discharge orders \Vere still born. But, the management could. as in
this case it did, offer to make out the delinquency of the employees El4ld the
arbitrator had, in such cases, the full jurisdiction to adjudge de novo both gllilt
and punishment. [211 B-C]

(iv) Section tJA of the Industrial Disputes Act~ 1947 does take in an .arbi~
trator too, and in ttm~ case, the arbitral reference, apairt from section 1lA is
plenary in scope. [211 C-D]

(v) Article 226 of the Constitution, however restrictive in practice is a pcwer
wide enough in all conscience, to be a friend, in need when thel summons. comes
in a crisis from a victim of injustice; and more importantly this extra--ordinary
reserve power is unsheathed to gnmt final relief without necessary recourse ta
a remand. What the Tribunal may in its discre<tion do the High Court too under D·
Article 226, can, if facts compel so. [211 D-E] ·
(vi) The Award, in the instant case, suffers from a fundamental :flaw thait
it equates an illegal and unjustified· strike with brozen misconduct by every
workman without so much as identification of thei charge against each, after
adverting to the gravamen of his misconduct meriting dismissal. Passive :Partici-
pation in a strike which is both illegal and unjustified does not ipso facto invite
dismissal or punitive discharge. There must be active individual excess. such
as master-minding the unjustified aspects of the strike, e.g.,, violence, sabotage or
other reprehensible role. Absent such gravamen in the accusation, the extreme
economic penalty of discharge is wrong. An indicator of the· absence of such
grievous guilt is that the management, after stating in strong terms all the sins
of workmen, took back over 400 of them as they trickled back slowly and
beyond the time set, with continuity of service, sugg~sitve of the dubiety of the
tnftated accusations and awarene~s of the minor role of the mass of workmen
in the lingering strike. Furthernlore, even though all sainctions short of punitive
discharge may be employed by a Management, low wages and high cost of
living, dismissal of several hundreds with disastrous impact on numerous families,
i~ of such sensitive social concern that, save in exceptional situations, the1 law
will inhibit such a lethal step for the peace of the· industry, the welfare of the
workmen and the broader justice that transcends transcient disputes. The hiunan!
dimensions have decisional relevance. The discharge orders though approved bY G
the Arbitrator are invalid. "[211 E-H, 212. A·B]

HELD FURTHER : I. In a society, capita1 shall be the brother and keeper
of Jabour and cannot disown this obligation of a partner in management,
especially because social justice and Articles 43 .and 43A are constitutional man-
dates. The policy directions in Articles 39, 41, 42., 43 and 43A speak ()If the·
right to an adequate means of livelihood, the right to work, humane conditions
of work, living wages ensuring a decent standard of life and enjoyment of
leisure and participation of \vorke1~ in management of industries. De hors these
148 SUPREME COURT REPORTS [1980] 2 s.c.R.

A mandatea, law will fail functionally. Such is the value-vision of Indian Industrial ;.... ,.
Jurisprudence. [!SS B, G-H, 156 AJ
2. Jural resolution of labour disputes must be sought in t·he law life complex
beyond the factual blinkers of decided cases, beneath the lexical littleness of
statutory texts, in the economic basics of industrial justice which must enliven
the consciousness of the Court and the corpus ;uris. [154 F-GJ

The golden ntle for thei judicial resolution of an industrial dispute is first to
{\ersuade fighting parties, by judicious suggestions, into the pea·ce-making zone,
disentangle the differences, narro"'' the mistrust gap and convert them through
consensual steps, into negotiated justice. Law is not the last word in justice, '
especially social justice. Moreover in an hierarchial system, the little man lives
in the short run but most litigation lives in the long1 r:un. So it is that negotia-
tion first and adjudication next, is a welcome formula "'foT the Bench and the·
·~
c Bar, the Management and Union. [1S7 C-EJ

The anatomy of a dismissal order is not a mystery, once· it is agreed that
substance, not se;mblance, governs the decision. Legal criteria are not so slippery
that verbal manipulations may outwit the Court. The fact is the index of the
mind and an order fair on its face may be taken at its face value. But there
is moro to it than that, because sometimes words are designed to conceal deeds
'D
by linguistic engineering. The form of the order of the Janguage in which it
is couched is not conclusive. The Court will lift the veil to see' the true nature
of the order. [171 G-H, 172 Al

If two factors·-motive and foundation! of the· order-co·exist, an inference of
punishment is reasonable though not inevitable. H the severence of service is
effected -the first condition is fulfilled and if the foundation or catua causans of
E such severence is the servant's misconduct, the second is 'fulfilled. If the basis or
foundation ,for the order of termination is clearly not turpitudes or stigmatic or
rooted in misconduct or visited with evil pecuniary effects, then the inference
of dismissal stands negated and vie~ versa. These canons run right through the
disciplinary brainch of master and servant jurisprudence, both under Article 311
aud in other cases including workmen under managements. The law cannot be
F stultified by verbal haberdashery because the Court will lift the mask and discover
the true face. [172 C-E)
,,
Masters and servants cannot be permitted to play hide and seek with the
Is. w of dismissals and the plain and proper criteria are not to be misdirected
by terminological cover-ups or by appeal to psychic processf\'11 but must be
grounded on the substantive reason for the order, whether disclosed or un-
·G disclosed. The Court will find out from' other proceedings or documents cOn-:
nected with the formal order of termination what the true, ground for the termi...
nation is. If thus scrutinised thei order has a punitive flavour in cause or conse-
quence, it is dismissal. If it fal1s short of this test, it cannot be called a
punishment. A tern1ination effected because the master is satisfied of the mis-
conduct and of the consequent desirability of terminating the service of the
delinquent servant, it is a dismissal even if he had the right in Jaw to teiminate
·B with an innocent order under the standing order or otherwise. Whether, in:
such a case the grounds are recorded in ai different proceeding from the formal
order does not detract from its nature. Nor the fact that, after being satisfied
of the guilt, the master abandons the· enquiry and proceeds to terminate. Given
GUJARAT STEEL TUBES V. MAZDOOR SABHA 149

an alleged misconduct and a live nexus between it and thej termination of service A
the conclusion is dismissal, even if full benefits as on simple termination are
given and non-injurious terminology is used. [173 E-H, 174 A]

On the contrary, even if there is suspicion of misconduct, thel master may say
that he does not wish to bother about it and may not go into his guilt but
may feel 'like not keeping a man he is not happy with. He may not like to
investigate nor take the risk of continuing a dubious servant. There it is not R
dismissal, but termination &impliciter, if no injurious record of reasons or punitive
pecuniary cut back on his full terminal benefits is found. For, in fact, mis·
conduct is not then the moving factor in the discharge. What is decisive is the.
plaiin reason for the discharge, not the strategy of a non-enquiry or clever avoid-
ance of stigmatising epithets. If the basis is not misconduct, thei, order is saved.
[174 B·Dl
Management of Muruga1z Mills v. Industrial Tribunal [1965] 2 SCR 148; c
Chartered Bank v. Employees' Union [1960) 3 SCR 441; Western India Auto•
niobi/e As.wciation v. Jndustriul Tribunal, Bombay [1949] S.C.R. 321; Assam
Oil Co. v. Workmen, [!960] 3 SCR 457; Tata 01'/ Mills Co. v. Workmen,
[1964] 2 SCR 125 @ 130; Tata Engineering & Locomotive Co. Ud. v. S. C.
Prasad & ,for. [1969] 3 SCR 372; L. Michael and Anr. v. Ml s. Johnson Pumps
India Ltd., [1975) 3 SCR 372; Workmen of Sudder Office, Cinnamore v.
Management, (1970] 2 L.L.J. 620; Municipal Corporation of Greater Bombay v. D
P. S. Malvankar, (1978] 3 SCR 1000; referred to.
Every wrong order cannot be righted merely because it was wrong. It can
, be quashed only if it is vitiated by the fundamental flaws of gross mfacarriage·
of justice, absence of legal evidence, pcr-verse misreading of facts, serious errors
•' of law on the face of the order, jurisdictional failure and the like. [182 F-GJ
E
While the remedy under A11. 226 is extraordinary and is of Anglosaxon
vintage, it is not a carbon copy of English processes. Article 226 is a sparing
surgery but the lancet operates where injustice suppurates. While traditional
restraints like availability of alternative remedy hold back the Court, and judicial
\. ..,power should not ordinarily rush in where the other two branches fear to tread.,
r judicial daring is not daunted where glaring injustice demands even affirmative
action.. The wide words of Article 226 are designed for service of the lowly F
numbers in their ·grievances if the subject belongs to the Court's province ana the
remedy is appropriate to the judicial procet!8. There is a native hue ~bout
article 226, without being anglophilic or anglophobic in attitude. Viewed from
this jurisprndentia! perspective the Court should be cautious both in not over
stepping as if Article 226 were as large as an appeal and not failing to interve11e
where a grave error has crept in. And an appellate power interferes not when:
the order appealed is not right but only when it is clearly wrong. The difference G
is real, though lino. [182 G-H, 183 A-Bl
The principle of law is that the jurisdiction of the High Court under Article 226
• ' of the Constitution is limited to holding the judicial or quasi judicial powers
witein the leading strings of legality and to see that they do not exceed their
statuory jurisdiction and corrtCtiy administer the law laid down by the statute.
under the Act. So long as the hierarchy of officers and appellate authorities
H
created by the statute function \\1thin their ambit tho manner in which they
do so can be no ground for intcrlerence. The power of judicial supervision of
the High Court under Article 227 of the Constitution (aa it thea stood) ill not

w·~ 'w
I
I SUPREME COURT REPORTS [1980] 2 S.C.R.
l 150
i greater than those under Article 226 and it must be lilnited to seeing that a
~ A
" tribunal functions \Vithin the limits of its authority. The v.·rit power is la.rge,
given illegality and injustice even if its use is severely disciplinary. The au1ended
t-. _..,
~
Article 226 would enable the liigh Court to interfere with an A"vard of the
industrial adjudicator if that is based on a complete misconception of law or it
is based on no evidence, or that no reasona.ble man would come to the conclu·
sion to which the Arbitrator has· arrived. [185 E-G 186 O-E]

Navinchandra Shanker Chand Shah v. Manager, Aflmedabad Cooperative
Department Stores Ltd., [1973] !'.> Guj. L.R. 108 @ 140; approved.

Rohtas Industries & Anr. v. Rohtas Industries Staff U11io11 and Ors. [1976] 3
SCR 12: followed.

Nagendranath Bara and Anr. v. The Con1missioner of Hills Divisions and
c Appeals, Assani & Ors., [1958] SCR 1240; Engineering lvlazdoor Sabha v. HiiTd
Cycle Ltd., [1963] Suppl. I SCR 625; State of A.P. v. Srel'rama Rao, [1964] 3
SCR 25 @ 33; P. H. Kalyani v. Mis Air France, Calcutta, [1964] 2 SCR 104;
referred to.

"Tribunal" sirnpliciter has a sweeping signification and does not exclude
Arbitrator. A tribunal literally means a seat of justice, may be, a commission,
a Court or other adjudicatory organ created by the State. All these are tribunal
and naturally the. import of the word, in Section 2(r). ofl the Industrial Disputes
Act, embraces an arbitration tribunal. [188 E-F-H 189 A]

Dawki11g v. Rokely, L.R. 8 Q.B. 255; quoted with approval. r
.,
An Arbitrator has all the po~veys under the terms of reference, t'o which
·E both sides are party, confer. In the instant case, the Arbitrator had the authority
to investigate into the propriety of the discharge and the ver,acity of the mis-
conduct. Even if section llA of the Industrial Disputes Act is not applicable,
an Arbitrator under Section 10A is· bound to act in the spirit of the legislation
under which he is to function. A commercial Arbitrator who derives his juris~
diction from the terms of reference will by neca;sary implication be botind to
decide according to law and when one says "according to law", it only means
F existing law and the law laid down by the Supreme Court being the law of land,
an Arbitrator under section 10A will have; to decide keeping in view the spirit
of section llA. [196 B-DJ

Union of Ilidia v. Bungo Steel F"!niture (P) Ltd. [1967] I SCR 324; reterred
to.

G Per Koshal J. (Contra)

1. The orders of discharge could not be regarded as orders of their dismissal
and were on the other hand, orders of discharge simp1iciter properly passed
'
~'
.
under Model Standing Order 23. [235 C-D]

(a) Cl&Uses (3) and (4) of M.S.O. 25 speak of an inquiry only in the
case of an order falling under sub-clause (g) of clause (1) of that M.S.O.
H The only sub clause of clause (I) of M.S.O. 25 to which the provisions of
~lauses (3) and. (4) of that M.S.O. wonld be attracted is sub clause (g) and -/-
if an order of discharge falls under M.S.0. 23, an inquiry under clauses (3) and
GUJARAT STEEL TUBES V, MAZDOOR SABHA
• •
151

(.4) of }.f .S.0. 25 would not be a pre-requisite thereto even though such an A
order is mentioned in sub-clause (f) clauso (I) of tbat M,S.0. ' [222 H, 223 A]
(b) Under M.S.0.s. 23 and 25, the Management has tbe powers to effect
termination of the services of an empJoyee by having recourse to either ot: the1n.
• Jn action taken under I\.f.S.O. 23, no element of punishment is involved and
the discharge is a discharge simpliclter; and that is why no opportunity to the
.concerned employee to show cause against the termination is provided for.
Dismissal~ however~ which an employer may order is in its very nature, a punish-
B
' ment, the infliction of which therefore has been made subject to the result of an
inquiry (having the semblance of a trial in a criminal proceeding). Exercise of
each of the two powers hais the effect of the termination of the services of the
concerned employee but must be regarded, because of the manner in which each
bas been dealt with by the M.S.O. as separate and distinct from the other.
[223 C-E]
c
(c) To contend that once it was proved that the order of discharge of a
workman was passed by reaeon of a misconduct attributed. to hin1 by the·
management, the order cannot but amount to an order of dis missal is wrong for
two reasons. For one thing, clause (1) of M.S.0. 25 specifically states iii sub~
dames (f) tbat a workman guilty of misconduct may be dischargod under M.S.O.
23. This cleairly means that when. the employer is satisfied that a '\\-·orkman has
been guilty of misconduct he may [apart from· visiting the workman with any D
of tho punishments specified in sub clauses (a), (b), (c), (cl) and (e) of clause
(1) of M.S.O. 25] either pass against him an order of discharge for which
no inql!iry precedent as provided for in clauses (3) and ( 4) of M.S.0. 25 would
be necessary, or n1ay dismiss him a-ftoc holding such an inquiry which of the
two kinds of order, the employer shall pass is left entirely to his: discretion.
[223 E-H]
It is true that the employer cannot pass a real order of dismissal in the
E
garb of one of discharge. But that only means that if the order of termination
of services of an employee is in reality intended ta push an employee amd not
merely to get rid of tim because he is considered useless, inconvenient or
troublesome, the order even though specified to be an order of dismissal covered
by sub clause (g) of clause (I) of M.S.O. 25. On the other hand if no such
intention is made out the order would remain one of discharge simpliciter even
though it has been passed for the sole reason that a misconduct is imputed to
F
the employee. That is bnw M.S.Os. 23 and 25 have to be interpreted. M.S.O. 25
specifically gives to the employer the power to get rid of "a workman guilty
of misconduct" by passing an order of his discharge under M.S.O. 23 .
• [224 A-DJ
Secondly, the reasons for the termination of service of a permanent ""'orkn1an
under M.S. 0. 23 havo to be recorded in writing and communicatod to him, if he G
so desires, under clause ( 4-A) thereof. Such reasons must obviously consist of
an opinion derogatory to the workman in relation to the performance of his
duties, and whether such reasons consist of negligence, work shirking or of
-serious overt acts like theft or en1bezzlement~ they would in anY case amount to
misconduct for which he may be punished under M.S.O. 25. There being no
case in which such reasons would not amount to misconduct, the result is that
M.S.O. 23 would be render otiose if terminMion of service thereunder for H
misconduct could be regarded as a dism.issal and such a result strikes at the very
root of accepted canons of interpretation. If it Wlls open to the Court to "lift
•
•
I
I

i 152 SUPREME COURT REPORTS . (1980] Z S.C.R.

I A the veil" and to hold an order of discharge to amount to dismissal merely
because the motive behind it was a misconduct attributed to the employee, the

'
services of an employee could be terminated without holding against him an
inquiry such as is contemplated by clauses (3) and (4) of M.S.O. 25. (224 D-GJ

Bombay Corporation v. Malia11kar, [1978] 3 SCR 1000; applied. •
Merely because it is the reason which weighed with tho employer in effective
B the termination of services \vould not make thei order of such termination as one
1

founded on misconduct, for such a proposition would run counter to. the plain
meaning of clause ( 1) of M.S. 0. 25. For Ml order to be "founded" an mis·
conduct, it must be intended to have been passed by way of punishment, that
is, it must be intended to chastise, or cause pain in body· or mind or harm
or loss in reputation or money to the concerned worker. If such an intention
cannot be spelled out of the prevailing circumstances, the crder of discharge or
c the reasons for which it was ostensibly passed, it cannot be regarded as an order
of dismissal. Such would be the C'3.Se when the employer orders discharge 1n
the interests of the factory or of the general b~dy of workers. (226 A.CJ
Chartered Bank, Bombay v. The Chartered Bank Employees Union, [1960] 3
SCR 441; The Tata Oil Mills Co. Ltd. [1964] 2 SC!t p. 123; The Tata Engineer-
ing and Locomotives Co, Ltd. v.. S. C. Prasad, [1969] 3 S.C.C. 372; Workmen
D of Sudder Office, Cinnamore v. Management, [1970] 2 L.L.J. 620 followed.
The real criterion which forn1cd the touchstone of a test to determinel whether .
an order of termination of services is an order of discharge simpliciter or
amounts to dismissal is the real nature of the order, that! is, the intention with
which it was passed. If the intention was to punish, that is tol chastise; the order •
may be regarded as an order of dismissal; and for judging the intention, the
question of mala fides (which is the same thing as colourable exercise of power)
E becomes all important. If no mala fides can be attributed to the management,
the order of discharge must be regarded as one having been passed unde.r
M.S.O. 23 even though the reason for its passage is serious misconduct.
[228 CDJ
(2) The arbitrator could not exercise tho powm conferred on a Tribunal -~
under section 11A of the 1947 Act and could not therefore interfere with the
F punishment awarded by the Management to the workmen (even if the discharge
could be reaarded a punishment). [235 D-EJ
Throughout the I.D. Act, while ~arbitrator' would include an umpire. a Tri~
bunal would not include an arbitrator but would mean only an Industrial
Tribunal constituted under the Act unless the context makes it necessary to give
the word a different connotation. In sub section (1) of section 11, the word •
'Tn'bunal' has been used in accordance with the definition appearing in clause (r)
G section 2 because an arbitrator is separately mentioned in that sub"'5eCtion~ In
sub-sections (2) and (3) of that section a Board, a Labour Court, a Tribunal
and a National Tribunal have been invested with certain powers. A Tribunal I
-oc.
as cootemplated by sub-sections (2) and (3) then, would not include an
arbitrator. [233 A-BJ
It is a well settled canon: of interpretation of statutes that the language used
B by the Legislature must be regarded as the only oource of its intention uni..,.
such language is ambiguous, in which situation the Preamble to !he Act; the J-
statement Of Objects of and Reasons for bringing it on the statute book rutd
GUJARAT STEEL TUBES V. MAZDOOR SABHA
•• 153

the pnrpose underlying the legislation may be taken into consideration for A
ascertaining such intention. That the purpose of the legislatjon is to fulfil a
socio-economic need, or the express object underlying it does not con1e into the
picture till an ambiguity is detected in the language and the Court n1ust steer
clear of the temptation to mould the written word according to its own concept
of what should have been einacted, It is thus not permissible for the Supren1e
• Court to take the statements of objects and Reasons or the purpose underlying
the enactment into consideration, while interpreting section 1lA of the I.D. B
Act. [231 F-G, 234 Cl
'
3. The High Court exceeded the limits of its jurisdiction in interfering with
the said punishment, in the instant case, purporting to act in the exercise of its
powers under Article 227 of the Cnnstitution of India. [235 E·F]

The High Court, \Vhile discharging its functions as envisaged by that Article, C
does not sit as a Court of Appeal over the Award of the' Arbitrator but exercises
lin1itcd jurisdiction \vhich extends only to seeing that the arbitn1.tor uas functioned
within the scope of his Jegal authority. In this view of the m~tter it was not
open to the High Court to revise the punishment (if the discharge is regarded
as such) meted out by the l\<Ianagement to the delinquent workmen and left
intact by the arbitrator whose authority in doing so has not been shown to have
been exercised beyond the limits of his jurisdiction. [234 G-H, 235 A-CJ D

Nagendra .'Vath BoJ'a and Anr. v. The Con1missio11et of Hills Division and
Appeals, Assanl tu1d Ors., [1958] SCR 1240; P. H. Kalyani v. ,''J/.s Air Ftance,
Caic111ta, [1964] 3 SCR 25, State of A.P. v.. Sree Rama Rao, [1964] 3 SCR 25;
l\'avinchandra Shakerclzand Shah v. Manager Ahmeda~ad Conp,erath·e Dept.
Stare.• Ltd., [1978] 19 Guj. LR. 108; referred to.
E
CIVIL APPELLATE JURISDICTION; Civil Appeal Nos. 1212, 2089
and 2237 of 1978.
From the Judgment and Order dated 15-6-1978 of the Gujarat
High Court in Special Civil Application No. 1150 of 1976.
p
Y. S. Chitale, I. C. Bhatt, A. K. Sen, I. M. Nanavati, D. C.
Gandhi, A. G. Menses, K. J. John and K. K. Manchanda for the
Appellants in C.A. 1212 and 2237 /78 and RR. 1 in CA 2089.
V. M. Tarkunde, Y. S. Chitale, P. Ii. Parekh and N. I. Mehta for
the Appellant in CA 2089 and R. 1 in CA 1212.
G
M. C. Bhandare and B. Datta for the Intervener in CA 1212

.
•
~
(Ahmedabad Nagar Employee Union) .
R. K. Garg, Vimal Dave and Miss Kai/ash Mehta for the Interve-
ner Gujarat Steel Tubes Mazdoor Sabha in CA 1212.
The Judgment of V. R. Krishna Iyer, and D. A. Desai, JJ was H
" delivered by Krishna Iye;r, J. A. D. Koshal, J. gave a dissenting
Opinion.
l l··-868SCJ/79
154 SUPREME COURT REPORTS [1980] 2 S.C.R.

A KRISHNA IYER, J.-Every litigation has a moral and, these appeals
h:ive many, the foremost being that the economics of !aw is the es· !'- ;,
scnce of labour jurisprudence.

· The case in a nutshell-
An affluent Management and an indigent work force are the two •
B wings of the Gujarat Steel Tub~ Ltd. which manufactures steel tubes
in the outskirts of Ahmedabad city and is scarred by an industrial dis-
pute resulting in these appeals. This industry, started in 1960, went
into production since 1964 and waggled from infancy to adulthood with
smiling profits and growling workers, punctuated by Smouldering de-
mand, strikes and settlements, until there brewed a confrontation cul·
minating in a head-on collision following upon certain unhappy hap·
penings. A total strike ensued, whose chain reaction was a wholesale
termination of all the employees, followed by fresh recruitment of
workmen, de facto breakdown of the strike and dispute over restora-
tion of the removed workmen. This cataclysmic ep~ode and its .
D sequcl formed the basis of a Section lOA arbitration and award, a writ
petition and judgment, inevitably spiralling up to this Court in two
appeals--0nc by the Management and the other by the Union-which
have been heard together and are being disposed of by this common
judgment. The arbitrator held the action of the Management wanant-
ed while the High Court reversed the Award and substantially directed
E reinstatement.

The Jural Perspective
A few fundamental issues, factual and legal, on which bitter con-
troversy raged at the bar, settle the decisional fate of this case. A
plethora of precedents bas been cited and volumes of evidence read
F for our consideration by both sides. But the jural resolution of labour
disputes must be sought in the law-life complex, beyond the factual
blinkers of decided cases, beneath the lexical littleness of ~tatutory
texts, in the economic basics of industrial justice which must enliven
the consciousness of the court and the corpus juris. This Court has
developed Labour Law on this broad basis and what this Court has
declared holds good for the country. We must first fix the founding
faith in tl1is juristic branch before unravelling the details of the parti-
cular case. •
Viewing from this vantage point, it is relevant to note that the
ethical roots of jurisprudence, with economic overtones, are the cum
H vital of any country's legal system. So it is that we begin with two ,
quotations-one from the Old Testament and the other from Gandhiji
the Indian New Testament-as perspective-setters. After all'. ...,,..
0
GUJARAT STEEL TUBES V. MAZDOOR SABHA (Krishna Iyer, J.) 155

industrial law must set the moral-legal norms for the modus vivendi A.
between the partners in management, namely, Capital and Labour. Cain
reported, when asked by God about his brother Abel, in the Old Testa-
ment: 'Am I my brother's keeper?', 'Yes' was the implicit answ~r
in God's curse of Cain. In the fraternal economics of national pro-
<juction, worker is partner in this biblical spirit. In our society, Capi-
tal shall be the brother and keeper of Labour and cannot disown this B
·obligation, especially because Social Justice and Articles 43 and 43A
are constitutional mandates.
Gandhiji, to whom the Arbitrator has adverted in passing in his
award, way back in March 1946, wrote on Capitalism and Strikes in
the Harijan: c
"How should capital behave when labour strikes? This question
is in the air and has great importance at the present moment. One
way is that of suppression named or nicknamed 'American'. It con-
sists in suppression of labour through organised goondaism. Every-
body would consider this as wrong and destructive. The other way, D
right and honourable, consists in considering every strike on its merits
and giving labour its due-not what capital considers as due, but what
labour itself would so consider and enlightened public opinion acclaims
• as iust(') .. ......... .
Jn my opinion, employers and employed are equal partners, even E
if employees are not considered superior. But what we see today is
the reverse. The reason is that the employers harness intelligence
on tl1eir side. They have the superior advantage which concentration
of capital brings with it, and they know how to make use of it ..... .
Whilst capital in India is fairly organised, labour is >till in a more or
less disorganised condition in spite of Unions and Federation. There- F
fore, it lacks the power that true combination gives. (2)
Hence, my advice to the employers would be that should willingly
regard workers as the real owners of the concerns which they fancy
they have created. ( 3 ) . . • • • . • . . • "
Tuned to these values are the policy directives in Articles 39, 41, G
42, 43 and 43A. They speak of the right to an adequate means of
•• livelihood, the right to work, humane conditions of work, living wage
ensuring a decent standard of life and enjoyment of Je[sure and parti-
cipation of workers in management of industries. De hors these man-
-
(1) Socialism of my Conception (M.K. Gandhi) by Anand T. Hingorani,
Bhartiya Vidya Bhavan. H
(2) ibid.
(3) Ibid.
156 SUPREME COURT REPORTS [1980] 2 S.C.R.

, A dates, law will fail functionally. Such is the value-vision of Indian
Industrial Jurisprudence.

The matrix of facts-A Pre-view
The nidus of facts which enwomb the issues of law may be elabo-
B rated a little more at this stage. In t1le vicinity of Ahmedabad City,
the appellant is a prosperous engineering enterprise which enjoys entrc-
preneureal excellence and employs over 800 workmen knit together
into the respondent Union called the Gujarat Steel Tubes Mazdoor
Sabha (lhe Sabha, for short). Fortunately, the indusry has had an
innings of escalating profits but the workmen have had a running com-
e plaint of a raw deal. Frequent demands for better conditions, followed
by ;iego:iated settlements, have been a lovely feature of this establish-
ment, although the poignant fact remains that till the dawn of the
seyenties. the gross wages of the workmen have hovered around a
harrowii;g hundred rupees or more in this thriving Ahmedabad indus-
try.
D
The course of this precarious co-existence was often ruffled, and
there \Vas, '110\V and then. some flare-up leading to strike, conciliation
anLl even reference under Section 10. When one such reference was
•
pending, another unconnected dispute arose which, after some twists
and tmns, led to an industrial break-down and a total strike. The
E episodic s!ages of this bitter battle will have to be narrated at length
a little later. Suffice it to say that the Management jettisoned all the
853 workman and recruited some freshers to take their place and to
keep the wheels of production moving. In the war of attrition that
ensued, labour lost and capitulated to Capital. At long last, between
F the two, a reference to arbitration of the disputes was agreed upon
under Section lOA of the Industrial Disputes Act 1947 (the Act, for
short). The highlight of the dispute referred for arbitration was
whether the termination orders issued by the Management against the •
\vork1ncn whose names \Vere set oy.t in the annexure to the reference '
\\'er~ "legal, proper and justified"; if not, \\"hethcr the workn1un \Vere
G 'entitled to any reliefs including the relief of reinstatement with con-
tinuity of service and full back wages'. The arbitrator's decision went
against the Sabha while, on a challange under Article 226, the High
Court's judgment virtually vindicated its stand. This is the hang of
the case. The substantial appeal fr. Ly the Management while the
Sabha has a marginal quarrel over a portion of the judgment as dis-
H closed in its appeal. The 'jetsam' workmen, a few hundred in. number,
have been directed to be reinstated with full or partial back pay and
this is the bitter bone of contention.
<;UJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 157

A stage-by-stage recapitulation of the developments iS: impo;rtant A
to get to grips with the core controversy.

Sri Ashok Sen, for the appellant-Management, and Sri Tarkunde
for the respondent-Sabha, have extensively presented their rival versions
with forceful erudition. Sri R. K. Garg, of course, for some workmen
has invoked with passion the socialist thrust of the Constitution as a B
substantive submission and, as justificatory of the workmen's demands,
relied on the glaring contrast between the soaring profits and the S'1g-
ging wages,. while Sri Dhandare has pressed the lachrymose case of the
several hundreds of 'inte.rregual' employees whose ren1oval fron1 ;,,crvice,
on re-instatement of the old, might spell iniquity.
Olive Branch Approach : At this stage we must disclose an: effort at c
settlement we made with the hearty participation of Sri Ashok Sen and
Sri Tarkunde at the early stages of the hearing.
The golden rule for the judicial resolution of an industrial dispute
is first to persuade fighting parties, by judicious suggestions, into the
peace-making zone, disentangle the differences, narrow the mis1rust D
·gap and convert them, through consensual steps, into negotiated
jGstice. Law is not the last word i11 justice, especially social jusiice.
Moreover, in our hierarchical court system, the little man lives in
' the short nm but most litigation lives in the long run. So it is that
negotiation first and adjudication next, is a welcome formula for the
Bench and the Bar, Management and Union. This 'Olive Branch' E
approach brought the parties closer in our court and gave use a better
understanding of the problem, although we could not clinch a scttie-
ment. So we heard the case in depth and felt that some of the legal
issues did merit this court's declaratory pronouncement, settlement
or no settlement. Mercifully, counsel abbreviated their oral argu-
F
ment~ into an 1~ight-day exercise, sparing us the sparring maraG10'.'.
of 28 labori.Pus days through which the case stretched out in the High
} Court
Orality ad libitem may be the genius of Victorian era advocacy but
in our 'needy' Republic with crowded dockets, forensic brevity is a
necessity. The Bench and the Bar must fabricate a new shorthand G
form of court methodology which will do justice to the pockets of the
poor who seek right and justice and to the limited judicial hours
humanly available to the court if the delivery system of justice is not
to suffer obsolescence.

The facts : Back to the central facts. Proof of the 'efficient' manage- H
ment of the Gujarat Steel Tubes Ltd. is afforded by the testimony of
larger turnover and profits, year after year, from the beginning down
158 SUPREME COURT REPORTS [1980] 2 S.C.R.

A to date. The mill was commissioned in January 1964 but by the
accounting year 1971-72 the turnover had leapt to Rs. 560 lal!.hs. It ,,.;,__ -·
scaled to Rs. 680 lakhs the next year, to Rs. 1136 lakhs the year after
and to Rs. 20 crores in 1974-75. This enterprise entered the export
trade and otherwise established itself as a premier manufactory in the
line. Steel shortage is the only shackle which hampers its higher pro-
B ductivity. But its increasing shower of prosperity was a sharp contrast,
v
according to Sri Garg, to the share of the wage bill. The worker star-
ted on a magnificent sum per mensem of Rs. 100/- in toto even as late
as 1970, although some workmen, with more service, were paid some-
what higher. The extenuatorY plea of the Management, justificatory
of this parsimony, was that other mill-hands were receiving more ni!!-
c gardly wages in comparable enterprises. Probably, unionisation, under
these luridly low-paid circumstances, caught on and a workers' union
was born somewhere around 1966. A sensible stroke of enlightened
capitalism persuaded the Management to enter into agreements with
the Union, somewhat improving emoluments and ameliorating condi-
D tions. By 1968, the Sabha, a later union, came into being and com-
manded the backing of all or most of the mill-hands. By March 1969,
the Sabha presented a charter of demands, followed by resistance from
the Management and strike by the workers. By July 1969, a settle-
ment with the Sabha was reached. Agreements relating to the various
demands brought quiet and respite to the industry '.1\though it proved
E temporary.
A vivid close-up of the sequence and consequence of the dramatic
and traumatic events culminating in the reference to arbitration and
the impugned award is essential as factual foundation for the decision
of the issues. Even so, we must condense, since labyrinthine details
are not needed in a third tier judgment. Broad lines with the brush
F bring out the effect, not minute etches which encumber the picture.
An agreement of futuristic import with which we may begin thl'l
confrontatio~al chronicle is that of April 1970. Clause 6 thereof runs
thus:
"Management of the Company agrees to implement recom-
G mendations of the Central Wage Board for Engineering
Industries as and when finally declared and all the increments
granted to workmen from time to time under this agreement .
_., •
shall be adjusted with those recommendations provided that
such adjustment shall not adversely affect the wages of work-
H man''.
The engineering industry, where India is forging ahead, was appa-
rently exploitative towards labour, and to make amends for this un-
llUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) I 59

healthy position, the Central Wage Board was appointed in 1964 A
although it took six long years to recommend revision of wages to be
implemented with effect from 1-1-1969. Meanwhile, the masses of
workers were living 'below the broad line' Saintly patience in sncll a
milieu was too much to expect from hungry demands and pressing
for the recommendations of the Wage Board to be converted into
immediate cash. But, as we will presently unravel, Wage Board B
expectations' were proving teasing illusions and premises of unreality
because of non-implementation, viewed from the Sabha's angle. The
Management, on the other band, had a contrary version which we will
briefly consider. Luckily, agreed mini-increases in wages were taking
place during the years 1970, 1971 and 1972. Likewise, bonus was
also the subject of bargain and agreement. But in September 1971.
c
an allegedly violent episode broke up the truce between the two, spawn-
ed criminal cases against workers, led to charges of go-slow tactics
and lock-outs and burst into suspension, discharge and dismis.sal of
workmen.
D
The crisis was tided over by continued c'.>nciJ'at'ons and two settle-
ments. We MC not directly concerned with tho cluster of clauses there-
in save one. 64 workmen bad been discharged or dismissed, of whom
half the number were agreed to be reinstated. The fate of the other
half (32 workers) was left for arbitration by the Industrial Tribunal.
The dark clouds clem:ed for a while but tho sky turned murky over E
again, although the previous agreement bad promised a long, spell of
normalcy. The Sabha, in October 1972, met and resolved to raise de-
mands of which the principal ones were non-implementation of tbc Wage
Board recommendations, bonns for 1971 and wages during the lock-
out period. The primary pathology of industrial friction is attitudinal.
The Management could have (and, indeed, did, with a new Uriion) F
solved these problems had they regarded the Sabha as partner, not sabo-
teur. Had the bitter combativeness of the Sabha been moderated,
may be the showdown could have been averted.

Apportioning blame does not help now, but we refer to it here
G
because Sri Ashok Sen, with feeling fury, fell fow of the criticism by
I ,J the Hlgh Court that the Management had acted improperly in insisting
on arbitration, and argued that when parties disagreed, arbitral reference
was the only anGwer and the workers' fanatical rejection of arbitration
made no sense. We need not delve into the details of the correspon-
dence relied on by either side to reach the truth. For, the Unions H
--,.. case is that in the prior settlement between tho two parties arbitral
refenince came only after negotiations failed. That was why they
160 SUPREME COURT REPORTS (1980) 2 S.C.R.

A pressed the Management to reason together, avoiding wrestling with
each other before a slow-moving umpire.
Sri Tarkunde, for the Sabha, urged that the workmen were not in-
transigent but impatient and pleaded for a negotiated settlement since
· the main point in dispute, namely the implementation of the Central
n Engineering Wage Board's recommendations, was too plain to admit
of difference, given good faith on both sides. Wc will examine the
substance of this submission later but it needs to be emphasised that
workmen, surviving on starving wages and with notoriously fragile
staying power, are in no mood for adjudicatory procedures, arbitral or
other, if the doors of negotiation are still ajar. The obvious reason
c for this attitude is that the litigative length of the adjudicatory appara-
tus, be it the tribunal, the court or the arbitrafur, is too lethargic and
long-winded for workmen without the wherewithal to survive and is
beset with protracted challenges either by way of appeal upon appeal
or in the shape of writ petitions and, thereafter, appeals upon appeals.
The present case illustrates the point. Where workmen on hundred
D rupees a month demand immediate· negotiation the reason is that priva-
tions have no patience beyond a point. Now and here, by negotiation,
is the shop-floor glamour. In this very matter, although the contro-
versy before the arbitrator fell within a small compass, he took a year
and ninety printed pages to decide, inevitably followed by a few years
and hundred and thirty printed pages of judgment in the High Court
E
and a longer spell in this Court with slightly lesser length of judgment.
Which workman under Third World Conditions can withstand this
wasting disease while hunger leaves no option save to do or die?
Raw life, not rigid logic, is the mother of law. ~

After the demands were raised by the Union, the main issue being
implementation of the Wage Board recommendations, a stream of cor-
respondence, meetings and inchoate settlements ensued, but the crucial
1
question, which would have meant 'cash and carry' for the workmen,
balled solution. Do negotiate since the appl;cation of the Wage Board
recommendations are beyond ambiguity, was the Sabha's peremptory
G plea. We differ; therefore, go to arbitration, was the Management's
firm response. A stalemate descended on the scene.

No breakthrough being visible, the Sabha charged the Management
by its letter of January 25, 1973 with breach of clause 6 of the Agree-
ment of August 4, 1972 which ran thus :
H "That the parties agree that for a period of 5 years from
the date of this settlement all disputes will be solved by
mutual negotiations or, failing that, by joint arbitration under
GUJARAT STEEi TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 161

Section lOA of the I.D. Act, 1947. Neither party shall take A
any direct action including go-slow, strike and lock-out for
a period of 5 years from the date of this settlement."
Various aspersions of anti-labour tactics were included in the Sabha's
letter but the most money-loaded item was the grievance about the
Wage Board recommendations. The temper, by now, was tense.
B
• The Management, on the same day, (January 25, 1973) set out
its versinn on the notice board and the High Court's summary of
it runs thus :
"The notice stated that during the course of the meeting
with the representatives of the Sabha held on January 20,
1973 the Company had expressed i!IS willingness to implement
c
the Wage Board recommendations according to its interpreta-
tion oo and with effect from January 1, 1969 without prC:.
judice to the rights and contentions, of the workmen and leav-
ing it open to the parties to take the matter to1 arbitration for
resolution of the points of dispute. The Sabha, however, D
had turned down thi.s suggestion and it came to the notice
of the Company that workmen were being instigated by mak-
ing false representations. The Company clarified that on
and with effect from January 1, 1972 every workman would
• be entitled to the benefits of Wage Board recommendations,
irre.;pective of whether the concerned workman had put in E
240 days attendance."
The Sabha's answer was a strike two days later. This event of
January 27 was countered quickly by the Management restating its
attitude on the Wage Board recommendations, asserting that the strike
was illegal and in breach of the settlement of August 4, 1972 and
p
wholly unjustified because the offer of reference to arbitration, nego-
tiations failing, had been spurned, by the Sabha. The notice wound up
with a command and a caveat :
"If the workmen do not immediately resume duty, the
Company would not be under any obligation to continue in
service those 32 workmen who have been taken back in service G
pursuant to the settlement dated August 4, 1972. Be>ides,
if (the workmen) continue causing loss to the Company from
time to time in this manner, the Company will not also be
bound to implement the Wage Board, recommendations on
and with effect from January 1, 1969, which may a15o be
noted. The Company hereby withdraws all its proposals H
unless the Workmen withdraw the strike and resume work
within two days."
I
I, 162 SUPREME COURT REPORTS [1980] 2 S.C.R.
! A This threat was dismissed by the workmen as a brutum fulmen
i and the strike continued. The Management, therefore, came up on
the notice board castigating the Sabha with irresponsible obduracy in
I waging an illegal and unjustified strike, A warning of the shape of
things to come was given in this notice. The High Court has summed
it up thus :
B "The Company gave an intimation that in view of such
obstinate attitude on the part of the Sabha and the workmen,
•
it had decided to withdraw its earlier offer to implement the
Wage Board recommendations on and with effect from
January 1, 1969 as already cautioned in the notice dated
January 27, 1973. The said decision must be taken to have
been thereby co=unicated to the workmen and Sabha.
The notice further stated that having regard to the obdurate,
unreasonable and illegal attitude adopted by ~he workmen
and Sabha, the Company had decided to take disciplinary
proceedings against the defaulting workmen. In this connec-
tion, the attention of the workmen was drawn to the fact that
D the strike was illegal not only because of the terms of the
settlement dated August 4, 1972 but also because of the pen-
dency of the reference relating to reinstatement of 32 workmen
before the Indnstrial Court and, that, therefore, the Company (

was entitled to take disciplinary action against them. Finally, •
E the Company appealed to the workmen to withdraw their
illegal and unjustified strike forthwith and to resmne work."
These exercises notwithstanding, the strike raged undaunted. the
production was paralysed and the Management retaliated by an elabo-
rate notice which dilated on its preparedness to negotiate or arbitrate
and the Sabha's unreason in rejecting this gesture and persisting on the
F war path. The stern economic sanction was brought home in a critical
paragraph :
"By this final notice the workmen are informed that they 1
should withdraw the strike and resume work before Thursday, •
February 15, 1973. If the workmen resume duty according- •
ly, the management would be still willing to pay salary
G according to the recommendations of the Wage Board on and
with effect from January !, 1969. Furthermore, the mana-
gement is ready and willing to refer to the arbitration of the
Industrial Tribunal the question as lo whether the fflflnage-
ment has implemented the settlement dated August 4, 1972
and all other labour problems. In spite of this, if the work-
H men do not resume duty before Thursday, February 15,
1973. then the Company will terminate the serv!ces of all
workmen who are on strike and thereaftu it will run the
GUJARAT STEEL TUBES v. MAWOOR SABHA (Krishna Iyer, J.) 163

factory by employing new workmen. All workmen may take A
note of this fact."
The count-down thus began. February 15, 1973 arrived, and the
Management struck the fatal blow of discharging the strikers-all the
labour force, 853 strong-and recruiting fresh hands and thus work
was resumed by February 19, 1973. I
This public notice was allegedly sent to the Sabha and circulated
to such workmen as hovered around the factory. It is common case
that the notice of February 15, 1973, was not sent to individual work-
men but was a signal for action. The drastic consequence of dis-
obedience was spelt out in no uncertain terms :
c
"The workmen are hereby informed that \.hey ;hould
resume duty on or before Monday, February 19, 1973 failing
which the Management will presume that the workmen want
to continue their strike and do not wish to resnme work
until their demands as aforesaid are accepted by. the manage-
ment. '} D
Parallel negotiations were going on even while mailed fist mano-
euvres were being played up-thanks to the basic goodwill and tradi-
tion of dispute settlements that existed in this company. Even amidst
the clash of arms, bilateral diplomacy has a place in successfnl indns-
• triaf relations. The Management and the Sabha allowed the talks to
continue which, at any rate, clarified the area of discord. One thing E
that stood out of these palavers was that both sides affirmed the pre-
condition of negotiations before arbitration over differences although
the content. accent and connotation of 'negotiations' varied with each
~ side. No tangible results flowed from these exercises and the inevitable
I
happened on February 21, l 973 when the Management blotted out p
the entire lot of 853 workmen from the roster, by separate orders of
discharge from service, couched in identical terms. The essential terms
read thus :
"Your services are hereby terminated by giving you
one month's salary in lieu of one month's notice and accord-
ingly you are discharged from service. G
You should collect immediately from the cashier of the
factory your one month's notice-pay and due pay, leave
entitlements and gratuity, if you are entitled to the same.
The payment will be made between 12 noon and 5 p.m.
Tf and when you desire to be employed, you may apply H
in writing to the Company in that behalf and on receipt of
. the application, a reply will be sent to you in the matter."

----·'ft1'0"--~
....
I64 SUPREME COURT REPORTS [1980] 2 S.C.R.

A Casual workmen were issued separate but similar orders. The
Management did record its reasons for the action taken, on Febru-
ary 20, 1973 and forwarded them to the Sabha and to the individual
workmen on request. The anatomy of this proceeding is of critical
importance in deciding the character of the action. Was it a harm-
less farewell to the workmen who were unwilling to rejoin or a
B condign punishment of delinquent workmen ?
The separate memorandum o! Reasons refers to the strike as illegal
and unjustified and narrates the hostile history of assault by workmen
of the officers, their go-slow tactics and sabotage activities, their
contumacious and a host of other perversities vindicating the drastic . ~
c action of determining the services of all the employees. The conclud- ~·
ing portion reads partly stern and partly non-committal :
"In the interest of the Company it is decided to termi-
nate the services of all the workmen who are on illegal and
unjustified strike since 27th January, 1973.
D Under the circumstances, it is decided that the services
of all the workmen who arc on illegal and unjustified strike
should be terminated by way of discharge simpliciter.
These workmen, however, may be given opportunity to
• apply for employment in the Company and in case applica-
tions are received for employment from such employee~,
•
E
such applications may be considered on their merits later
on.
It may be mentioned here that while arriving at the
aforesaid decision to terminate the services of the workmen,
various documents, notices, correspondence with the Union
F and others, records of production,. etc. have been considered
and .therefore the same are treated as part of the relevant
evidence to come to the conclusion as aforesaid.
FINAL CONCLUSION
The services of all the workmen who are on illegal anc\
G unjustified strike since 27-1-1973 should be terminated by
way of discharge simplicitcr and they should be offered all
their legal dues immediately.
The Administrative Manager is hereby directed to pass
orders pn individual workers as per draft attached.
H We thus reach the tragic crescendo when the Management and
the workmen fell apart and all the workmen's services were severed.
Whether each of these orders using, in the contemporaneous rerrsons,
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer,!.) 165

the vocabulary of misconduct but, in the formal part, the expression A
~ .1 'discharge simpliciter', should be read softly as innocent termination
~ or sternly as penal action, is one of the principal disputes demand-
~¥ ing decision.

We may as well comolete the procession of events before taking
up the major controversies decisive of the case. The total termina-
tion of the entire work force of 853 employees was undoubtedly a
calamity of the first magnitude in a country of chronic unemployment
/ and starving wages. Nevertheless, under certain circumstances, dis-
~. charge of employees may well be within the powers of the Manage-
. ment subject to the provisions of the Act. With all the strikers
struck off the rolls there was . for a time the silence of the grave. c
The conditional invitation to the employees to seek de nova employ-
ment by fresh apolications which would be considered on their
merits, left the workers cold. So the factory remained closed until
April 28, 1973 when, with new workers recruited from the open
market, production recommenced. Among the · militans, the morale
which kept the strike going, remained intact but among the others the D
pressure to report for employment became strong. Re-employment
of discharged workmen began and slowly snowballed, so that by July
31, 1973 a substantial number of 419 returned to the factory. •
The crack of workman's morale was accelerated by escalating re-
employment and the Management's restoration of continuity of ser- E
vice and other benefits for re-employed hands. The Employer relied
on this gesture as proof of his bona fides. Meanwhile, there were
exchanges of letters between and 'trading' of charges against each
,_ other. The Management alleged that the strikers were violent and
prevented loyalists' return while the Sabha was bitter that goondas
were hired to break the strike and promote blacklegs. These impu-
tations have a familiar ring and their impact on the legality of the
discharge of workmen falls for consideration a little later. The stream
of events flowed on. The Sabha protested that the Management
was terrorising workmen, exploiting their sagging spirit and illegally
insisting on fresh applications for employment while they were in Jaw
G
continuing in services. With more 'old workers' trickling back for
work and their discharge orders being cancelled, the strike became
·~
counter-productive. Many overtures on both sides . were made
through Je•ters but this apistolary futility failed to end the embroglio
and brought no bread. The worker wanted bread, job, and no
phyrric victory. H
A crescent of hope appeared on the industrial sky. The Manage-
ment nut out a 'final offer' on May 31, 1973, calling on all workmen
166 SUPREME COURT REPORTS [1980] 2 S.C.R.

A to rejoin lest the remaining vacancies also should be fiiled by fresh
recruits. The Sabha responded with readiness to settle and sough' ~
some clarifications and assurances. The employer informed :

"Our offer is open till 10-6-1973. From 11-6-1973 we
shall recruit new hands to the extent necessary. Thereafter
B workers who will not have reported for work shall have
no chance left for re-employment with us.

We repeat that those workers who will report for work
wiU be taken back in employment with continuity of their
services, that the orders of discharge passed against them
c on 21-2-1973 shalt be treated as cancelled and they will
also be paid the difference in wages from 1969 as per the
rec1o'mmendations of the Wage Board."

The Sabha was willing and wrote back on June 8, 1973 but
sought details about the attitude of the Management to the many
pending de.mands. MeanwhHe, the sands of time were running out
and so the Sabha telegraphed on 9th June that the workers were
• willing to report for work but were being refused work. They de-
manded the presence of au impartial observer. The reply by the
Management repelled these charges, but there was some thaw in the
E estrangement, since the time for return to work of the strikers was
extended upto 16-6-73. An apparent end to a long strike was
seemingly in sight with the Sabha sore but driven to surrender. On
13-6-73 th<: Sabha Secretary v.Tote back :

"This is a further opportunity to you even now to show
F your bona fides. If you confirm to take all the workmen
discharged on 21-2-1973 as stated in your various letters
and to give them intimation and reasonable time to join, I
will see that your offer is accepted by the workmen."

G Here, at long last, was the Management willing to 'welcome' back
all the former employees and the Sabha limping back to the old
wheels of work. Was the curtain being finally drawn on the
feud? Not so soon, in a world of bad blood and bad faith; or may-
be, new developments make old offers obsolete and the expected end
proves an illusion. Anyway, the victor was the Management and
H the vanquished the Sabha and the re-employment offered was watet-
ed down. In pur materialist cosmos, offen Might is Right atfd
victory dictates morality !
GUJARAT STEEL TUBES .v. MAZDOOR SABHA (Krishna Iyer, J.) 167

) Hot upon the receipt of the Sabha's letter accepting the offer A
~e Management back-tracked or had . second thoughts on full re..
1 employment. For, they replied with a long catalogue of the Sabha's
I sins, set out the story of compulsion to keep the production going
and explained that since new hands had come on the scene full re-
employment was beyond them. In i~ new mood of victorious righte-
ou~ess, the Management modified the terms of intake of strikers
B
and saddled choosy conditions on such absorption suggestive of
breaking the Sabha's solidarity :

''As on the present working of the Company, the Com-
pany, may still need about 250 more workers including
thor-.:e to he on the casual list as per the employment position c
prier to the start of the ::.trike.

You may, therefore, send to us inim.edintely per return
of post the list of the workers who can and are willing to
join duty immediately so as to e11ilble us to select and .em-
D
play the workmen as per the requirement of the Company.
Further, it would also be necessary for you to state in your ·
reply that you have called 'off the strike and have advi5ed
the workers to resume the work as otherwise it is not
clear from your letter . as ·to whether you are still advocat-
ing the continuance of ·the strike or that you ·liave called off E
the &trike. Therefore, unless we have a· very definite stand
known from you on this issue, it may not be even now
· possible _for us to enter into any correspondence with you.
L-_ .
We may 'pgain stress that if your tactics. of prolonging
the issue by · correspondence are continued the management F
would bi constrained to take· new recruits and in that
· case, at n later date it 1JUIY not be even possible to emplcy
as many workmen as may be possible to employ now."

Nothing is more galling, says Sri Tarkunde, than · for a Union · G
which has lost the battle and offered to go back to work to be told
, that it should further humilate itself by formally declaring the call-
~ -- ing o!I of the strike. Sentiment .apart;the Sabha had agreed to go
back, but then the Management cut down the number to be . re-
employed to 250 and, even this, on a selective basis.. This t5elec-
tion cou!d well be to weed out Union activists or to . drive a wedge II
among the Union members. These sensitive thoughts and hard
bargains kept the two apart. The Sabha, wounded but not wiped

;, J"
168 SUPREME COURT REPORTS [1980] 2 s.c.R.

A out, did not eat the humble pie. The Management, on account of
the intervening recruitments and injuries inflicted --by the strike, did
not budge either.
At this point we find that out of 853 employees who had been
sacked 419 had wandered back by July 31, leaving 434 workmen
at flotsam. Their reinstatement became the focus of an industrial
dispute raised by the Sabha. A few more were left out of this
jobless mass, and through the intercession of the Commissioner of
Labour both sides agreed to resolve their disagreement by arbitral
reference under Sec. 1OA of the Act, confining the dispute to re-
instatement of 400 workmen discharged on February 21 1973. A
c reference under Sec. lOA materialised. The 'Labour litigation' began
in May 1975 and becoming 'at each remove a lengthening chai'll'
laboured from deck to deck and is coming to a close, hopefully,
by this decision. Is legal justice at such expensive length worth
the candle or counter-productive of social justice 'I Is a streamlined
alternative beyond the creative genius of Law India?
D
An aside
As urgent as an industrial revolution is an industrial law revo-
lution, if the rule of law were at all to serve as social engineering.
The current forensic process needs thorough overhaul because it
E is over-jndicialised and under-professionalised, lacking in social
orientation and shop-floor know-how and, by its sheer slow moti,on
and high price, defects effective and equitable solution leaving both
Managements and Unions unhappy. If Parliament would heed, we
stress this need. Industrial Justice desiderates specialised proces-
sual expertise and agencies.
F
This factual panorama, omitting a welter of debatable details
and wealth ofl exciting enbellishmcnts, being not germane to the
essential issues, leads us to a formulation of the decisive questions
which alone need engage our discussion. The Management might
have been right in its version or the Sabha m;ght have been wronged
G as it wails, but an objective assessment of the proven facts and
unbiased application of the declared law will yield the broad basisi
for working out a just and legal solution. Herc, it must be noticed /

that a new Union now exi~ts even though its numerical following
is perhaps slender. We are not concerned whether it is the favour-
ed child of the Management, although it has received soft treatment
II in several settlements which have somewhat benefited the whole work
force and suggests a syndrome not unfamiliar among some indus-
trial bosses allergic to strong unions.

...
.
'
)

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Tyer,!.)' 169

11ie central problem on the answer to which either the award of A
lI
the arbitrator or the judgment of the High Court can be sustained
as sound is whether the disclpuge of the w,drkmen en masse was an
innocuous termination or a disciplinary action. If the latter, the High
• Court's reasoning may broadly be invulnerable. Secondly, what has
•
been mooted before us is a question as to whether the evidence before
the Arbitrator, even if accepted at its face value, establishes any mis- B
conduct of any discharged workman and further whether the mis-
• · conduct, if any, made out is of such degree as to warrant punitive
) discharge. Of course, the scope of Section 1!A as including arbi-
~ .!~ators, the power of arbitrators, given sufficiently wide terms of refer-
.,.. ' - ence, to examine the correctess and propriety of the punishment, inter
alia, deserve examination. Likewise the rules regarding re-instatement,
c
retrenchment, back wages and the like, fall for subsidiary consi-
deration.
Prefatory to this discussion is the appreciation of the constitutional
consciousness with regard-to Labour Law. The Constitution of India
a
is not non-aligned par~hment but a partisan of social justice with D
a dire~ou and destination which it sets in the Preamble and Art. 38,
and so, when we read the evidence, the rulings, the statute and the rival
pleas we must be guided by the value set of the Constitution. We not
only appraise , Industrial Law from this perspective in the dis-
putes before us but also realise that ours is a mixed economy with
capitalist mores, only slowly wobbling towards a . socialist order, E
notwithstanding Sri Garg's thoughts. And, after all ideals apart, 'law
can never be higher than the economic order and the cultural deve-
lopment of society brought to pass by that economic order'. The new
jurisprudence in industrial relations must prudently be tuned to the
wave-length of our constitutional values whose emphatic expression
is found in a passage quoted by Chief Justice Rajamannar of the F
Madras High Court. The learned judge observed : (1)
"The doctrine of 'laissez faire' which held sway in the
world since the time of Adam Smith has practically given
place to a doctrine which emphasises the duty of the state to
interfere in the affairs of individuals in the interests of the G
social well-beiilg of the entire community. As Julian Huxley
.....
I, remarks in his essay on "Economic Man and Social Man" :
"Many of our old ideas must be retranslated, so to speak,
into a new language .. The democratic idea of freedom, for
instance, must lose its nineteenth century meaning of indivi-
• dual liberty in the economic sphere, and become adjusted H
'4r· to new conception of social duties and responsibilities.
(I) Law and the Poople - A collc<tioa of Essays by V. R. Krisbna Iyer, p. 36
1Z.-868SCI!7'
17 0 SUPREME COURT REPORTS [1980]). S.C.R.

A When a big employer talks about his democratic rights to
individual freedom, meaning thereby a claim to socially irres-
ponsible control over a huge industrial concern and over the
lives of tens of thousands of human beings whom it happens
to employ, he is talking in a dying language."
•
.B Homo economicus can no longer warp the social order. Even
so the Constitution is ambitiously called socialist but realists will agree ~
that a socialist transformation of the law of labour relations is a •
slow though steady judicial desideratum. Until specific legislative~
mandates emer~e from Parliament the court may mould the old but ·
not make the new law. 'Interstitially, from the molar to the mole- .
c cular' is the limited legislative role of the court, as Justice Holmes, .
said and Mr. Justice Mathew quoted (see [1976] 2 S.C.C. at p. 343).

The Core Question
Right at the forefront falls the issue whether the orders of dis-
D charge are, as contended by Sri Tarkunde, de facto dismissals, punitive
in impact and, therefore, liable to be voided if the procedural impera-
tives for such disciplinary action are not qYIIlplied with, even though
draped in silken phrases like 'termination simpliciter'. It is common
case that none of the processes implicit in natural justice and man-
dated by the relevant standing orders have been complied with, were
E we to construe the orders impugned as punishment by way of discharge
m dismissal. But Sri Ashok Sen impressively insists that the orders
here are simple terminations with no punitive component, as, on their
face, the orders read. To interpret otherwise is to deny to the em-
ployer the right, not to dismiss but to discharge, when the law give'
him option.
F
An analysis of the standing orders in the background of discip-
linary jt'risprudence is necessitou~ at this point of the case.
The Model Standing Orders prescribed under Section 15 of the
y
\
Industrial Employment (Standing Orders) Act, 1946, apply to this
G factory. Order 23, clauses (1) and (4), relate to termination of
employlJlent of permanent workmen. Termiation of their services on
giving the prescribed notice or wages in lieu of such notice is provided i \
'4l-,
for. But clause ( 4A) requires reasons for such termination of service
of permanent workmen to be recorded and, if asked for, communicated.
This is obviously intended to discover the real reason for the dis-
H charge so that remedies available may not be defeated by clever
phraseology of. orders of termination. Clause (7) permits the
•
services of non-permanent workmen to be terminated without notice
, '
. GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) I 71

except when such temporary workmen are discharged by way A.
of punishment. Punitive discharge is prohibited unless opportunity
to show-cause against charges of misconduct is afforded (Standing
Order 25). Orders of termination of service have to be by the
• Manager and in writing and copies of Orders shall be furnished to the
workmen concorned. Standing Order 24 itemises the acts and
ti omissions which amount to misconduct : B
•
'According to clause (bf of the said Standing Order,
going on an illegal strike or abetting, inciting instigating
or acting in furtherance thereof amounts to misconduct.
Standing Order 25 provides for penally imposable on a
workman guilty of misconduct. Accordingly amongst other c
punishments, a workman conld be visited with th·~ ·penalty of
discharge under Order 23 of dismissal withont notice for a
misconduct [see sub-clauses (f) and (g) of clause (1) j.
Clause (3) provides that no order of dismissal under sub-
clause (g) of clause ( 1) shall be made except after holding
D
an enquiry against the workman concerned in respect of the
·alleged misconduct in the manner set forth in clause ( 4).
Clause ( 4) provides for giving to the concerned workman
a charge-sheet and an opportunity to answer the charge· and·
the right to be defended by a workman working in the same
department as himself and production of witnesses and E
cross-examination of witnesses on whom the charge rests.
Under clause (6), in awarding punishment the Manager has
to take into account the gravity of the misconduct, the prit-
vious record, if any, of the workman; and any other extenua-
ting or aggravating circumstances."
F
The finding of the Arbitrator that the workmen went on a strike
.,,hich was illegal and in which they had participated is not disputed.
ln this background, the application of tl)e procedural imperatives before
• termination of services of the workmen, in the circumstances of tbe
present case, has to be judged. This, in turn, depends on the key
1inding as to whether the discharge orders issued by the management G
were punitive or non-penal.

The anatomy of a dismissal order is not a mystery, once we agree
that substance, not semblance, governs the decision. Legal criteria
are not so slippery that verbal manipnlations may outwit the court.
• Broadly stated, the face is the index to the mind and an order fair H
on its face may be taken at its face value. But there is more to it
'lhan that, because sometimes words are designed to conceal deeds
'· ..
172 SUPREME COURT REPORTS [1980] 2 S.C.R.

A by linguistic e'ngineering. So it is beyond dispute that the form of
the Older or the language in which it is couched is not conclusive
The court will lift the veil to see the true nature of the order.

•.
Many situations arise where courts have been puzzled because the
B manifest language of the termination order is equivocal or misleading
and dismissals have been dressed up as simple termination. And so, •
judges have dyed into distinctions between the motive and the foundc
ation of the order and a variety of other variations to discover the-~
true effect of an order of termination. Rulings are a maze on this
question but, in sum, the conclusion is clear. If two factors cO'-exist, .
c an inference of punishment is reasonable though not inevitable. What
are they?

If the severance of service is effected, the first condition is fu]C
filled and if the foundation or causa causans of such severance is the
D servant's misccrnduct the second is fulfilled. If the basis or fouhdation
for the order of termination is clearly not turpitudinous or stigmatic
or rooted in misconduct or visited with evil pecuniary effects, then
the inference of dismissal stands negated and vice versa. These-
canons rim right through the disciplinary branch of master and servant
jurisprudence, both under Article 311 and in other cases include
E ing workmen under -managements. ]be law cannot be stultified
by verbal haberdashery because the court will lifL the mask and dis-
cover the true face. It is true that decisions of this Court and of the
High Courts since Dhingra's case (1958 SCR 828) have been at timeJ
obscure, if cited de h01·s the full facts. In Samsher Singh's case( 1) thet
F unsatisfactory state of the law was commented upon by one of us,
per Krishna Iyer, J., quoting Dr. Tripathi for support :

"In some cases, the rule of guidance has been stated
to be 'the substance of the matter' and the 'foundation' of
the order. When does 'motive' trespass into 'foundation' r
G When do we lift the veil of form to touch the 'substance'?
When the Court says so. These 'Freudian' frontiers obvious-
ly fail in the work-a.,day world and Dr. Tripathi's observations-
in this context arc not without force. He says :

'As already explained, in a situation where the order of·
H termination purports to be a mere order of dischar~ without
•
(!) {1975] 1 S.C.R. 814at pp. 880.
\
'<iUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna ['jer, J.) 17 3

. .,._ stating the stigmatizing results of the departmental enquiry a
search for the 'substance of the matter' will be indistinguish-
A

able from a search for the motive (real, unrevealed object)
·of the order. Failure to appreciate this relationship between
• motive (the real, but unrevealed object) and from (the
apparent, or officially revealed object) in the present con-
text has lead to an unreal inter-play of words and phrases B
.. wherein symbols like 'motive', 'substance' 'form' or 'direct'
parade in differen_t combinations without communicating pre-
cise situations or entities in the world of facts.'
The ne~d, in this branch of .iurisprudence, is not so much
·to reach perfect justice. but to lay down a plain test which c
the administrator and civil servant can understand without
subtlety and apply without difficulty. After all, between 'un-
suitability' and 'misconduct' thin partitions do their bounds
divide'. And over the years, in the rulings of this Court
the accent bas shifted, the canons have varied and predic~
tability has proved difficult because the play of legal light D
and shade has been baffling. The learned Chief Justice has
in his judgement, tackled this problem and explained the rule
\ which must govern the determination of the qirostion as to
Y' when termination of service of a probationer can be said to
amount to discharge simpliciter and when it can be said to
E
amount to punishment so as to attract the inhibition
of Art 311."
Masters and servants cannat ·be permitted to play hide and seek
with the law of dismissals and the plain and proper criteria are not
to be misdirected by terminological cover-ups or by appeal to phychic
F
processes but must be gronnded on the substantive reason for the
order, whether disclosed or undisclosed. The Court will find out from
other proceedings or documents connected with the formal order of
termination· what the trne ground for the termination is. If, thus
scrutinised, the order has a pnnitive flavour in cause or consequence,
it is dismissal. If it falls short of this test, it cannot be called a G
punishment. To put it slightly differently, a termination effected be·
cause the master is satisfied of the misconduct and of the consequent
desirability of terminating the service of the delinquent servant, it is
a dismissal, e\l'on if he had the. right in law to terminate with an iuno-
-cent order under the standing order or otherwise. Whether, in such ai
,. case the grounds are recorded in a different proceeding from the formal H
order does hot detract from it~ nature. Nor the fact that, after being
-satisfied of the guilt, the master abandons the enquiry and proceeds to
174 SUPREME COURT REPORTS [1980] 2 S.C.R.

A terminate. Given an alleged misconduct and a live nexus between
it and the termination of service the conclusion is dismissal, even if
full benefits as on simple termination, are given and non-injurious
termir.ology is used.
On the contrary, even if there is suspicion of misconduct the •
B master may say that he does not wish to bother about it and may
not go into his guilt but may feel lik·~ not keeping a man he is not '-
happy with. He may not like to investigate nor take the risk of con-· •
tinuing a dubious servant. Then it is not dismissal but termination~
simpliciter, if no injurious record of reasons or punitive pecuniary
cut-back on his full terminal benefits is found. For, in fact, miscondw;t ·
c is not then the moving factor in the discharge. We need not chase ·
other hypothetical situations here.
What is decisive is the plain reason for the discharge. not the
strategy of a non-ehquiry or clever avoidano~ of stigmatising epithets.
If the basis is not misconduct, the order is saved. In Murugan
D Mills,(') this Court observed :
"The right of the employer to terminate the services of
his workman under a standing order, like cl. 17(a) in the
present case, which accounts to a claim "to hire and fire"' an
employee as the employer pleases and thus completely nega-
E tives security of service which has been secured to industrial
employees through industrial adjudication, came up for
consideration before the Labour Appellate Tribunal in
Buckingham and Carnatic Co. Ltd. v. Workers of the Com-
pany.(') The matter then came up before this Court also
in Chartered Bank v. Chartered Bank Employees Union(')
and the Management oif U.B. Dutt & Co. v. Workmen of
U. B. Dutt & Co.( 4 ) wherein the view taken by Labour
A ppe!late Tribunal was approved and it was held that even
in a case like the present the requirement of bona fides was
essential and if the termination of service was a colourable
exercise of the power or as a result of victimisation or unfair
G labour practice the industrial tribunal would have the jurisdic-
tion to intervene and set aside such termination. The form
of the order in such a case is not conclusive and the tribunal
...
'
~T
can go behind the order to find the reasons which led to the
(1) [196512 S.C.R. 148 (at 151·152).
H (2) [19521 L.A.C. 490. . '
(3) [1960] 3 S.C.R. 441.
(4) [19621 Supp. 2 S.C.R. 822.
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 17 5

order and then consider! for itself whether the tennination was
a colourable exercise of the power or was a result of v'cfmi-
sation or unfair labour practice. If it came to the conclusion
that the termination was a colourable exercise of the power
or was a result of victimisation or unfair labour practice it
would have the jurisdiction to intervene and set aside such
termination." B

-. Again, in Chartered Bank v. Employees Union,(@) his Court
emphasised :

,L -
" .... The form of the orcter of termination is not con-
elusive of the true nature of the order, for it is possible that
the form may be merely a camouflage for an order of niis- c
conduct. It is, therefore, always open to the Tribunal to go
behind the form and look· at the substance and if it comes
...
to the conclusion, for example, that though in form the order
amounts to termination simpliciter, it in reality cloaks a
dismissal for misconduct, it will be open to it to set it aside
D
as a colourable exercise of the Power."
A rain of rulings merely adds to the volume, not to the weight
of the proposition, and so we desist from citing all of them. A bench
of seven judges of this Court considered this precise point in Shamsher
Singh's ~ase( 1 ) and Chief Justice Ray ruled:
"The fonn of the order is not decisive as to whether the E
otder is by way of punishment. Even an innocuously word-
ed order tenninating the service may in the facts and cir-
cumstances of the case establish that an enquiry into a!lega-
~-- tio·ns of serious and grave character of misconduct involving
stigma has been made in infractio11 of the provision of Article
311. In such a case the simplicity of the form of the F
order will not give any sanctity. That is exactly what_ has
happened in the case of Ishwar Chand Ag;!rwal. The Order
of termination L< illegal and must be set aside."
• Simple termination or Punitive Discharge ?
We must scan the present order of discharge of 853 workmen and G
ask the right questions to decide whether they' are punishments or inno-
cent terminations. Neither judicial naivete nor managerial ingenuity will
put the court off the track of truth. What, then, are the diagnostic factors
in the orders under study ?
' An isolated reading of the formal notices terminating their services H
reveals no stigma, no penalty, no misconduct. They have just been told
(!) [1975] I S.C.R. 814 at pp,841-842.
176 SUPREME COURT REPORTS [1980] 2 S.C.R.

A off. But the Management admits that as required by the Standing Orders
it has recorded reasons for the discharge. There, several pages of
damnatory conduct have been heaped on the workers collectively
accounting for the resort of the Management to the extreme step of dis-
charging the whole lot, there being no alternative. Sri A. K. Sen took us
through the various appeals made by the Management, the losses sus-
B tained, the many offers to negotiate and arbitrate, the Sabha's deaf .,
obduracy and resort to sudden strike and violent tactics and, worst of , •
all, ifs attempts to persuack! the Central GoV>~rnment to take over the
factory as a 'sick' mill. These ordeals were described by Sri Ashok Se~ (
graphically to justify the submission that the Management had no choic~
c caught between 'Scylla of strike aud Charybdis of take-over, but to get
rid of the strikers and recruit new workers. If the employer did not dis-
charge the strikers they were adamant and would not return to work,
and the very closure compelled by the Sabha was being abused by it to
tell the Central Government that for three months there had been no
production and so the mill qualified to be taken over as 'sick' under the
D Industries (l)evelopment and Regulation) Act. If the Management
discharged the workers to facilitate fresh recruitment and save the
factory from statutory takeover the cry was raised that the action was
dismissal because an elaborate enquiry was not held. TI1e Management
had avoided injury to the workmen, argued Sri Sen, by merely terminat-
ing their services without resort to disciplinary action and recording the .
E uncomplimentary grounds in a separate invisible order. He also under-
scored the fact that the strike was illegal and unjustified. as concurrently
held by the Arbitrator ahd the High Court.
)
We agree that industrial law promotes industrial life, not industrial •. ~
death, and realism is the soul of legal dynamics. Any doctrine that
F destroys industrial progress interlaced with social justice is lethal
juristic and cannot be accepted. Each side has its own version of the
role of the other which we must consider before holding either guilty.
Sri Tarkunde told us the tale' of woe of the workmen. In a country
where the despair of Government is appalling unemployment it is a •
G terrible tragedy to put to economic death 853 workmen. And for what?
For insisting that the pittance of Rs. 100 per month be raised in terms
of the Central Wage Board recommendations, as long ago agreed to by
the Management but put off by the tantalising but treacherous offer of
arbitration when the point admitted of easy negotiated solution. Arbitra-
tion looks nice, but, since 1969, the hungry families have been yearning
H for a morsel more, he urged. Blood, toil, sweat and tears for the workers
2nd all the profits' and production for the Management, was the indus-
trial irony! Knowing that every arbitral or other adjudicatory agency in
GUJARAT STEEL TUBES V. MAZDOOR SABHA (Krishna Iyer, J.) 177

{ndia, especially when weak Labour is pitted against strong Capital in A
~1- the sophisticated procP..ssual system, consumes considerable time, the ·
lowly working class is allergic to this dilatory offer of arbitration. They
just don't survive to eat the fruits. Such was his ca5e.
'
The story of violence was also refuted by Sri Tarkunde, since
the boot was on the other leg. Goondas were hired by the B
J
Management to sabotage the fundamental right to strike and with
I
• broken hearts .several of them surrendered. When, at last, the Sabha

Jj
·
eed to see that all workmen reported for work within the extended
me, the Management took to the typical tactics of victimisation, of
using work for all, as first offered, and of picking and choosing
even for the 250 vacancies. Moreover, other conditions were put c
upon the Sabha calculated to break unionism which those familiar
with trade union movements would painfully appreciate. This insult
and injury apart, the .orders of termination were painly dismissals for
a series of alleged misconducts which were chronicled in separate pro-
ceedings. The formal order was like a decree, the grounds recorded n-
contemporaneously. were like the judgment, to use court vocabulary.
It was obvious that the foundation for the termination was the
catena oi charges set out by the Management. The true character of
the order could not be hidden by the unfair device of keeping a
separate record and omitting it from th~ formal communication. Law
is not such an ass as yet and if the intent and effect is damnatory the E
action is disciplinary.
Between these two competing cases, presented by counsel, we
have to gravitate towards the correct factual-legal conclusion. A
number of peripheral controversies have been omitted from this
statement, for brevity's sake. When two high tribunals have spread F
Qut the pros and cons it is supererogation for this Court to essay like-
wise, and miniaturization is a wise husbandry Of judicial resources.
First, we must decide whether the order of termination was a puni-
tive discharge or a simple discharge .
•
Here we reach the dj!emma of the law for discovering unfailing G
guidelines to distinguish b~tween dischar!i~ simpliciter and dismissal
sinister. The search for infallible formulae is vain and o'nly pragma-
tic humanism can help navigate towards just solutions. We have
earlier explained that from ·Dhingra's case to Shamsher Singh's case,
the law has been dithering but some rough and ready rules can be
decocted to serve in most situations. Law, in this area, is a pragma- H
1ist, not a philologist, and we have set out the dual diagnostic tests
applicable in such cases.
178 SUPREME COURT REPORTS [1980] 2 S.C.R.

A It was not retr2nchment, according to the Manag~ment. Then
· what was it ? If there was work to be done, why terminate services
of workmen except as punishment ? Because, argued Sri Sen, the·
workers did not work, being on strike and the Management, bent on ,
keeping the factory going, needed workmen who work. To recruit
fresh hands into the lists and to keep the old hands on the roster was
B double burden, and, therefore, the stri~ers had to be eased out to
yield place to new recruits. The object was not to punish the work-
men but to keep the factory working. Accepting this plea, as it were, {
•
the award ~f t~e arbitr.ator has _exonerated the Managem~nt of th~e .
charge of d1sm1ssal while the High Court has held the achoo to be' ·
c dismissal for misconduct and therefore bad in law.
In our opinion, the facts of the case before us speak for them-
selves Here are workmen on strike. The strike is illegal. The·
Management is hurt because production is paralysed. The strikers
allegedly indulge in objectionable activities. The exasperated Manage-
ment hits back by orderin'g their discharge for reasons set out ill'
D
several pages in the appropriate contemporaneous proceeding. Mis-
conduct after misconduct is flung on the workers to justify the drastic
action. In all conscience and common sense, the discharge is the
punishment for the misconduct. The Management minces no wocds.
What is explicitly stated is not a colourless
, farewell to make way for
E fresh hands to work the fac'ory until the strike is settled but a hard
hitting order with grounds of gL@ and penalty of removal.

The inference is inevitable, however, ingenious the contrary
argument, that precisely because the Management found the work-
men refractory in their misc,onduct they were sacked. Maybe, the-
F Management had no other way of working the factory but that did not
change the character of th~ action taken. Once we hold the discharge
punitive the necessary consequence is that enquiry before punishment
was admittedly obligatory and confessedly not undertaken. The orders
were bad on this score alone.
•
G Sri A. K. Se'n urg·od that in a dismissal the employee is denied sotne
of the "lira! and other benefits which he gets in a simple discharge,
aod here all the empfoyees were offered their full monetary benefits,
so that it was wrong to classify the orders of discharge as punitive.
Maybe, a dismissed servant may well be disentitled to some, at least,
of the financial benefits which his counterpart who-is simply discharged
H may draw. But that is not a conclusive test. Otherwise, the master
may 'cashier' his servant and camouflage it by offering full retiral
•
benefits. Dismissal is not discharge plus a price. The substance of
tlUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 179

1!he action is the litmus test. In th~ present case, the penal core, 'tied
in tooth and claw", shows up once we prok; and the non-committal
frame of the formal order is a disguise. For a poor workman loss of
his job is a heavy penalty when inflicted for alleged misconduct, for
he is so hungry that, in Gandhiji's expressive words, he sees God
Himself in a loaf of bread.
Before we leave this part of the case, a reference to some indus-
' · trial law aspects and cases may be apposite though a little repetitive.
ding orders certified for an industrial undertaking or the model
ding Orders framed under the Industrial Employment Standing:
rs Act provide for discharge simpliciter, a term understood in
contradistinction to punitive discharge or discharge by way of_pe'nally. c
It is not unknown that an employer resorts to camouflage by garbing:
or cloaking a punitive discharge in the innocuous words of discharge
simpEciter. Courts have to interpose in order to ascertain whether the
discharge is one simpliciter or a punitive discharge, and in doing so.
the veil of langnage is lifted and the realities perceived. In the initial
stages the controversy raised was whether the court/tribunal had any D•
jurisdiction to lift such a veil. Prove and penetrate so as to rev>~al the
reality, but this controversy bas been set at rest by the decision in
Western India Automobile Association v. Industrial Tribunal.
x
Bombay.(') The wide scope of the jurisdiction of industrial tribunal/
court in (his behalf is now well established. If standing orders or the
terms of contract permit the employer to terminate the services ·of E
his employee by discharge simpliciter without assigning reasons, it
would be open to him to take recourse to the said term or condition
~ and terminate the services of his employee but when the validity of
__,..,.___ such termination is challenged in industrial adjudication it would be
competent to the industrial tribunal to ensure whether the
F
impugned discharge has been effocted in the bona fide exercise of
the power coµferred by the terms of employment. If the discharge bas
been ordered by the employer in bona fide exercise of his power, then
the industrial tribunal may not interfere with it; but the words used
in the order of discharge and the form which it may have taken are
not conclusive in the matter and the industrial tribunal would be G.
entitled to go behind the words and form and decide whether the
discharge is a discharge simpliciter or not. If it appears that the pul'-
ported exercise of power to terminate the services of the employee
was in fact the result of the misconduct alleged against him, then the
tribunal would be justified in dealing' with the dispute on the basis
that, despite its appearance to the contrary, the order of discharge is If
in effect an order of dismissal. In the exercise of this power, the
(1) [1949] S.C.R. 321.
180 SUPREME COURT REPORTS [1980] 2 S.CI!..

.A court/tribunal would be entitled to interfere with the order in question
[see 'Assam Oil Co. v. Its Workmen(')]. fn the matter of an order of
discharge of an employee as understood within the meaning of the
Industrial Disputes Act the form of the order and the language in
which it is couched are not decisive. If the industrial court is .>atis- '
fied that the order of discharge is punitive or that it amoun~s to
B victimisation or unfair labour practice it is competent to the court/
tribunal to set aside the order in a proper case and direct reimtate··
ment of the employee [see Tata Oil Mills Co. Ltd. v. Workmen(')].
The form used for terminating the service is not conclusivy and the
tribunal has jurisdiction to enquire into the reasons which led to s:;:u;:.ch~_...r--,i('
termination. In the facts of the case it was found that Standing Or ers
c provided that an employee could ask for reasons for discharge i'l the
case of discharge simpliciter. Those reasons were. given before the.
tribunal by the appellant, viz., that the respondent's services were
terminated because he deliberately resorted to go-slow and was
negligent in the discharge of his duty. It was accordingly held that
the services of the employee were terminated for dereliction of duty
and_ go-slow in his work which clearly amounted to punishment for
misconduct and, therefore, to pass an order under cl. 17(a) of the
Standing Orders permitting discharge simpliciter in such circumstances
was clearly a colourable exercise of power to terminate services of a
workman under the provisions of the Standing Orders. Ii1 these
circumstances, the tribunal would be justified in going behind the
order and deciding for itself whether the termination of the respon-
dent's services could be sustained (vide Management of Murugan
Mills Ltd. v. Industrial Tribunal, Madras & Anr. (3) This view was
affirmed in Tata Engineering & Locomotive Co. Ltd. v. S. C. Prasad ~
& Anr.( 4 ). Aftw approving the ratio in Mumga11 Mills case, this
F Court in L. Michael & Anr. v. M/s. Joh11son PumpsJ11dia Ltd(•)
observed that the manner of dressing up an order did not matter. The
slightly different obs•:wation i'n Workmen of Sudder Office, Cinna-
mare v. Ma11agmie11t( 6 ) was explained by the Court and it was
further affirmed that since the decision of this Court in The Chartered
Bank v. The Chartered Bank Employee's Union(7) it has taken the
consistent view that if the termination of service is a colourable exer-
cise of power ''~sted in the management or is a result of victimisation
(I) [19601 3 S.C.R. 457 at 462.
(2) [1964] 2 S.C.R. 125 at 130.
(3) [1965] 2 S.C.R. 148 at I 52.
(4) [1969] 3 S.C.R. 372 at 373.
H (5) [1975] 3 S.C.R. 489.
(6) [19701 2 L.i.J. 620.
(7) [[960] 3 S.C.R. 441.
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 181

-
or u.'lfair labour practice, the court/tribunal would have jurisdiction
to intervene and set aside such termination. It was urged that a diffe-
rent view was taken by this Court in Municipal Corporation of Greater
Bombay v. P. S. Ma/venkar & Ors.( 1). The employee in that was
qiscbarged ·from service by paying one month's wages in lieu of
notice. This action was challenged by the employee before the Labour
Court and it was contended that it was a punitive discharged. The
Corporation contended that under Standing Order No. 26 the Corpo-
~ ration had the power to discharge but there was an obligation to give
reasons if so demanded by the employee. The Corporation had also
~ower to disc~arge by way of punishment. The Court in this con-
nect•on observed as under :

"Now one thing must be borne in mind that these are two
distinct and · independent powers and as far as possible
neither should be construed so as .to· emasculate the other
or to render it ineffective. One is the power to punish an
employee for misconduct while the other is the power to
terminate simpliciter the service of an employee without any
other adverse consequence. Now, proviso (i) to clause (1)
of Standing Order 26 requires that the reason for termina-
tion of the employment should be given in writing to the
employee when exercising the power of termination of
service of the employee under Standing Order 26. There- E
fore, when the se.rvice of an employee is terminated simpli-
citer under Standing Order 26, the reason for such termi-
nation has to be given to the employee and this provision
has been made in the Standing Order with a view to ensur-
ing that the management does not act in an arbitrary
manner. The management is required to articulate . the F
reason which operated on its mind in terminating the service
of the employee. But merely because the reason for termi-
nating the service of the employee is required to be given and
!he reason must obviously not be arbitrary, capricious or
irrelevant--it would not necessa.rily in every case make the
order cf termination punitive in, character so~ as require G
compliance with the requirement of clause (2) of Standing I
Order 21 read with Standing Order 23. Otherwise, the
power of termination of service of an employee under
Standing Order 26 wonld be rendered meaningless and
futile, for in no case it would be possible to exercise it. Of
R
course, ifmisconduct of the employee constitutes the
(l) 11978] 3 S.C.R. IOQO.
182 SUPREME COURT REPORTS [l 980] 2 S.C.R.

A foundation for terminating his service, then even if the
order of termination is purport·~d to be made under
Standing Order 26, it may be liable to be regarded as
punitive in charapter attracting the procednre of clause (2)
of Standing Otder 21 read with Standing Order 23, though
even in such a case it may be argued that the management
has not punished the employee but has merely terminated
bk service under Standing Order 26."
It does not purport to run counter to the established ratio that the ~
form of the order is not decisive and the Court can lift the veil. How- _...J.
ever, it may be noted that there was an alternative contention ~ .
·c the Court that even if the order of discharge was considered pl'l'nitive
in character, the employer corporation had Jed evidence before the
Jabour court to substantiate the charge of misconduct and that
finding was also affirmed.
We are satisfied that the Management, whatever its motives vis-a-vis
• ;D keeping the stream of production flowing, did remove from service, on
punitive grounds, all the 853 workmen.
The Jaw is trite that the Management may still ask for an opportu-
nity to make out a case for dismissal before the Tribunal. The refine-
ments of industrial Jaw in this branch need not detain '" because the
arbitrator did investigate and hold that the workmen were gnilty of
misconduct and the 'sentence' of dismissal was merited, even as the
High Court did reappraise and reach, on both counts, the reverse con-
clusion.
The Sweep of Article 226 ~
Once we assume that the jurisdiction of the arbitrator to enquire
into the alleged misconduct was exercised, was there any ground under
Article 226 of the Constitution to demolish that hl:>lding ? Every
wrong order cannot be righted merely because it is wrong. It can be
quashed only if it is vitiated by the fundamental flaws of gross mis-
carriage of justice, absence of legal evidence, perverse misreading of
facts, serious errors of la'v o·n the face of the order, jurisdictional
failure and the like.
While the remedy under Article 226 is extraordinary and is of I
~
Anglo-Saxon vintage, it is not a carbon copy of English processes.
Article 226 is a sparing surgery but the lancet operates where injuoth:e
suppurates. While traditional restraints like availability of alternative
;ff remedy hold back the court, and judicial power should not ordinarily
rush in where the other two branches fear to tread, judicial daring is
not daunted where glaring injustice demands even affirmative action.
--.:1

GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 183

The wide words of Article 226 are designed for service of the lowly A
numbers in their grievances if the subject belongs to the court's pro-
vince and the remedy is appropriate to the judicial proces3- There is
a native hue about Article 226, without being anglophi!i~ or anglo-
' phobic in attitude. Viewed from this jurisprudential perspective, we
have to be cautious both in not overstepping as if Article 226 were as

"
• large as an appeal and not failing to intervene where a grave error bas B
erept in. Moreover, we sit here in appeal O\'~r the High Court's Judge-

µ
ment. A.Jld an appellate power interferes not when the order appealed
not right but only when it is clearly wrong. The difference is real,
ough fine.
' '

What arc the primary facts which have entered the Tribunal's ver- c
dict in holding the strikers guilty of misconduct meriting · dismissal ?
We must pause to remove a confusion and emphasise that the dismissal
-01:der is not against the Union but the individual workers. What did
each one do ? Did his conduct, when sifted and scrutinised, have any
exculpation or extenuation ? Not strikers in the mass, but each worker
separately, inust be regarded as the unit of disciplinary action. Eacl1 D
-0ne's role and the degree of turpitude, his defence on guilt and punislo-
ment, must be adjudged before economic death sehtence is inflicted. A
typical trial process instance will illumine the point. Suppose there iB
case of arson and murder in a village because of communal factioM
and a hundred men from the aggressive community are charged in court E
with serious offences. Suppose further that convincing testimony of
the provocation and aggression by that community is produced. Caii
any single member of the violent community be convicted on 'mass'
_-... ·evidence, without specific charge.i; of participation or clear proof of
\_..--. 'constructive involvement ? Judicial petspicacity clears this common
fallacy. It is dangerous to mass-convict on the theory of community F
'iuilt. Anger sometimes brings in this error.

In our assessment, the arbitrator has been· swayed by generalities
where particularities alone wonld have sufficed. A long story may be
·made short by skipping the details and focussing on essentials. We
· must, in fairness, state that the Arbitrator, an experienced and accepted G
tribunal in labour disputes, has exhaustively brought into the Award
·all available details pro and con with over-emphasi~ hen: and there .
•>
There are only a few confusions in his long award but, regrettably,
they happen to be on a few fundamentals. The foremost, of course,
is a mix-up between mob-misconduct and individual guilt. The next
is getting Jost in the oceanic evidence while navigating towards a H
specified ,port. The High Court too has excelled in marshalling the .
details a'nd l!a~dling the legal issues, although, even there, sbortcomir:gs'
184 SUPREME COURT REPORTS [1980] 2 ~.c.a. ,.
A on basic issues have been pointed out by Sri A. K. Sen. We too are
apt to err and reverse ourselves altbough we try our best to avoid error,
The Supreme Court is final not because jt is infallible; it is infallible
because it is final. We propose to examine the essential issues from •
the perspective we have set out and in their proper jmisprudential
bearings.
B
lf misconduct was basic to the discharge and no enquiry precedent
to the dismissal was made the story did not end there in favour of the
workmen. The. law is well-settled that the Management may stiff
satisfy the tribunal about the misconduct.
As a fact the' arbitrator held misconduct proved. He further· tlund;
C that the circumstances justified dismissal though he decided the order
to mean discharge simpliciter. Was misconduct proved against each
discharged worker at least before the arbili:ator ? If it was, did every
worker deserve punitive discharge ?
Dual jurisdictional issues arise here whlch have beeu argued at
D some length before us. The position taken up by Sri Sen was that the
High Court could not, under Article 226, direct re-instatement, and·
even if it felt that the arbitrator.had gone wrong in refusing reinstate-
ment, the court could only demolish the order and direct the arbitrator
to reconsider the issue. What belonged, as a discretionary power, to a
tribunal or other adjudicatory body, could not be wrested by the writ-
E court. To put it. pithily, regarding the relief of reinstatement, the arbi-
trat.or could but would not and the High Court would bnt could not.
(We will deal later with the point that the arbitrator had himself no
power under Section l l A of the Act but did have it in view of the wide
terms· of reference.)
The basis of this submission, as we conceive it, is the traditional
F limitations woven around high prerogative writs. Without examining
the correctness of this limitation, we disregard it because while Article
226 has been inspired• by the royal writs its sweep and scope exceed
hide-bound British processes of yore. We are what we are because
our Constitution -framers have felt the need for a pervasive reserve
G power in the higher judiciary to right wrongs under our comlitionsc
Heritage cannot hamstring nor custom constrict where the language
I ~
used is wisely wi~e. The British paradigms are not necessarily models •-IL.
in the Indian Republic. So broad are the expressive expressions design-
edly used in Article 226 that any order which should have been made
by the lower authority could be made by the High Court. The very
H width of the power and the disinclination to meddfe, except where
gross injustice or fatal illegality and the like are present, ilihibit the
. exercise but do not abolish the power.
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 185

.
. '-· We may dilate a little more on Article 226 vis-a-vis awards of arbi-
trators. The first limb of tbe argument is tbat when there is a volun-
tary joint submission of an industrial dispute to an Arbitrator named
A

by tbem under s. lOA of the Industrial Disputes Act, he does not func-
tioo as a Tribunal and is not amenable to the jurisdiction of that Court
under Article 227 or under Article 226. W'ithout furtl1er elaboration
this contention can be negatived on a decision of this Court in Rohtas B
Industries Ltd. & Anr. v. Rohtas Industries Staff Union & Ors.(')
This Court observed that as the Arbitrator under s. 1OA has the power
., to bind even tbose who are not parties to the reference or agreement
tbe whole exercise under s. 1OA as well as the source of the force
e Award on publication derived from the statute, it is legitimate to c
rd such an arbitrator now as part of the infra-structure of the·
sovereign's dispensation of justice, thus falling within the rainbow of
statutory tribunals amenable to judicial review.
The second limb of tbe argument was tbat a writ of certiorari could
not be issued to correct errors of facts. In this connection after affirm-
ing the ratio in' Engineering Mauloor Sabha v. Hind Cycle Ld., (') D
this Court observes that what is important is a question of law arising
on the face of the facts found and its resolution ex facie or sub silentio.
The Arbitrator may not state tbe law as such; even then such acute
silence confers no greater or subtler immunity on the award than plain
speech. We do not dilate on this part of the argument as we are satis-
fied that be the test the deeply embedded rules to issue certiorari or the E
traditional grouncls to set aside an arbitration award, 'thin partition do
their bounds divide' on the facts and circumstances of the present case.
Broadly stated, tbe principle of law is that the juristliction of the High
.~· Court under Article 226 of the Constitution is limited to holding the
judicial or quasi-judicial tribunals or administrative bod~;,s exercising
F
the quasi-judicial powers within the leading strings of legality and to
see that they do not exceed tbeir statutory jurisdiction and conectly
administer the law laid down by the statute wider which they act. So
long as tbe hierarchy of officers and appellate authorities created by
the statute function within their ambit the manner in which they do so
can be no ground for interference. The power of judicial supervision G
of the High Court under Article 227 of the Constitution (as it then
..... stood) is not greater tban those under Article 226 and it must be
limited to seeing that a tribunal functions within the limits of its autho-
rity [see Nagendra Nath Bora & Anr. v. The Commis1ioner of Hills
DMsion & Appeals, Assam & Ors.(')]. This led to a proposition that in
' (I) (1976] 3 S.C.R. 12. H
(2) (19ti3] Supp. 1 S.C.R. 625.
(3) [1958] S.C.R. 1240.
13-868SCJ/79

_____ _____ _______________
.:_.; ...-.. __.
186 SUPREME COURT REPORTS [l 980! 2 S.C.R.
A exercising jurisdiction under Article 226 the High Court is not constitut-
/
ed a Court of appeal over the decision of authorities, administrative or
quasi-judicial .. Adequacy or sufficiency of evidence is not its meat.
It is not ~e function of a High Court in a petition for a writ under Art.
226 to' review the. evidence and to arrive at an independent finding on
the evidence. [See State of Andhra Pradesh v. S. Sree Rama Rao.(')]
B A con,titution Bench of this Court in P.H. Kalyani V· M/s. Air France,
Calcutt?(') succinctly set out the limits of the jurisdiction of the High
Court in dealing with a writ petition. It was sa'id that in orderµto
justify a writ of certiorari it must be shown that an order suffers from
an erro/apparent on the face of the record. It was further pointed out
that ii the finding of fact is made by the impugned order and it is sho n
c that it suffers from an error of law and not of fact, a writ under Article
226 w0uld issue, and, while so saying, the decision in Na~endra Nath
Bora's case was affirmed. Following the aforementioned d:dsion, the
Gujarat High Court in Navinchandra Shakerchand Shah v. Manager,
Ahmedabad Coop. Department Stores Ltd. ( 8 ) observed that the
D amended Article 226 would enable the High Court to interfere with an
Award of the industrial adjudicator if that is based on a complete mis-
conception of law or it is based on no evidence or that no reasonable
man would come to the conclusion to which the Arbitrator oos arrived.
Even apart from, but while approving, the Gnjarat ruling in 19
G.L.R. p. 108 cited before ns, we are satisfied that the writ power is
larger given illegality and injustice, even if its use is severely discre-
tionary as decided cases have repeatedly laid down. We over-rule the
/ objectiop of invalidity of the High Courts order for want of power.
The more serious question is whether the arbitrator had the plenti-
tude of power to re-examine the punishment imposed by the Man:rge-
F ment, even if he disagreed w.ith its severity. In this case the arbitrator
expressed himself as concurring with the punishment. Ilut if he bad
disagreed, as the High Court, in his place, did, could he have inter-
fered ? Armed with the' language. of Sec. 1 lA, which confers wide
original power to the tribunal to re-fix the 'sentence', Sri Sen argued
that an arbitrator was uncovered by this .new Section. So, even if he
G would, he could not. And, in this case if he contd, he would not.
There the matter ended, was the argument. We disagree. Even if he
contd. he would not, .true; but that did not preclude the High Court .......i _'
from reviewing the order in exercise of its extraordinary constitutional
power. Moreover, Sec. liA did clothe the arbitrator with similar
H (!) [1964] 3 S.C.R. 25 at 33.
(2) [1964] 2 S.C.R. 104.
(3) [1978] 19G.L.R.108 atl40.
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, I,) 187

power as tribunals, despite the doubt created by the ab>truse absence A J
of specific mention of 'arbitrator' in Sec. llA. This position needs
closer examination and turns on interpretational limitations. At this
stage, to facilitate the discussion, we may read the provision :

"llA. Where an industrial dispute relating to the dis-
<charge or dismissal of a workmen has been referred to a B
Labour Court, Tribunal or National Tribunal for adjudica-
tion and, in the course of the adjndication _proceedings, :he
Labonr Court, Tribunal or National Tribunal, as the case may
be, is satisfied that' the order of discharge or dismiss-al was not
j ified, it may, as it thi'nks fit, or give such other relief to
lhe Workman on such terms and conditions, if any, as it 'thinks C
fit, or give such other relief to the workman, including the
award of any lesser punishment in lieu of discharge or dis-
missal as the circumstances of the case may require :

Provided that in any proceeding under this section the
Labour Court Tribunal or National Tribunal as the case D
may be, shall rely on the materials on record and shall not
take any fresh evidence in relation to the matter".

Sec. llA was introduced in purported implementation of the I.L.0.
recommendation which expressly referred, inter alia to arbitrators. E ,,
The Statement of Objects and Reasons which illumines the words of
the legislative text when it is half-lit, even if it cannot directly supple-
ment the section, does speak of the I.J-,.0. recommendations and, in
Ii terms of tribunals and arbitrators. When it came to drafting Section
"11.A the word 'arbitrator' was missing. Was- this of deliberate legis-
lative design to deprive arbitrators, who discharge identical functions- F -,
as tribunals under the Industrial Disputes Act, of some vital powers ,
which vested -in their tribunal brethren ? For what mystic purpose
could such distinction be ? Functionally, tribunals and arbitrators
belong to the same brnod. The entire scheme, from its I.L.0. genesis,
through the Objects and Reasons, fits in only with arbitrators being
covered by Section 1 lA, uuless Parliament cheated itself and the G
nation by proclaiming a great purpose essential to industrial justice I

I
.;i.nd, for no rhyme or reason and wittingly or unwittingly, withdrawing
one vital word. Every reason for clothing tribunals with Sec. 1lA
powers applies a fortiori to arbitrators. Then why omit ? Could it
be a synopic omission which did not affect the semantics because a
tribunal, in its wider connotation, embraced every adjudicatory organ, H ..
including an arbitrator ? An economy of words is a legislative risk
before a judiciary accustomed to the Angla-Saxon meticulousness in
188 SUPREME COURT, RliPO!lTS [1980] 2 S.C.R.

A drafting. We may easily see meaning by one construction. A 'tribu-
nal' is merely a seat of justice or a judicial body with jurisdiction to
render justice. 1f an arbitrator fulfils this functional role and he does
-how can he be excluded from these scope of the expression ? A caste
distinction between courts, tribunals, arbitrators and others, is func-
tionally fallacious and, in our context, stems from confnsion. The'.
• Section makes only a hierarchical, not functional, difference by speak- :~
ing of tribunals and national tribunals. So we see no ground to truncate
.the natural meaning of 'tribunal' on the supposed intent of Parliament
to omit irrationally the category of adjudicatory organs known as arbi-
trators. To cut down is to cripple and the art of interpretation ma~
whole, not mutilates, furthers the expressed purpose, not hampet( by
c narrow literality. ·
Section 2 ( r) defines Tribunal thus :
'Tribunal' means an Industrial Tribunal constituted
under Section 7A and includes an Industrial Tribunal
constituted before. the 10th day of March, 1957, under thls:
D Act;

Prima-fade it is a different category from arbitrators but all statu~
tory definitions are subject to contextual changes. It is perfectly open
to the court to give the natural meaning to a word defined in the Act
if the context in which it appears suggests a departure from the defic
E nition because then there is something repugnant in the subject or
context.
Then what is the natural meaning of the expression "Tribunal"?
A 'tribunal' literally means a seat of justice. May be, justice is dis- ·~
pensed by a quasi-judicial body, an arbitrator, a commission, a court
F or other adjudicatory organ created by the State. All these are tribu-
nals and naturally the import of t:J:ie word embraces an arbitration
tribunal. Stroud's Judicial Dictionary (Vol. 4 p. 3093) speaks of
'tribunal' in this wider sense and quoted Fry, L.J. in Dawkins v.
Rokeby [L.R. 8 Q.B. 255, affirmed, L.R. 7 H.L. 744] :
G "I accept that, with this qualification that I do not like
the word 'tribunal'. The word is, ambiguous, because it bas
not like 'court' any ascertainable meaning in English law"·
(Royal Acsuarium v. Parkinson. [1892] 1 Q.B. 431. cited
COURT).

H There is a reference to the bishop's commission of enquiry as a
judicial tribunal and, significantly, specific mention has been made im
the11e terms.
Gl1.1ARAT STEEL TUBES v. MA7000R SABRA (Ktishna Iyer, l.) 189

"Disputes between employers and employees are
referred to such tribunals as the Civil Service Arbitration
Tribunal, National Arbitration Tribunal and the Industrial
• Disputes Tribunal". (Stroud's Judicial Dictionary p. 3094)
I
We have hardly any doubt that 'tribunal' simpliciter has a sweep-
ing signification and does not exclude 'arbitrator'. B
Here we come upon a fundamental dilemma of interpretative
technology vis-a-vis the judicative faculty. What are the limits of
statutory construction ? Does creativity in this jurisprudential area
--.~ tiermit travel into semantic engineering as substitute for verbalism?
Ii is increasingly important for developing countries, where legisla-
tive transformation of the economic order is an urgent item on the
national agenda, to have the judiciary play a meaningful role in the
-constitutional revolution without ferretting out flaws in the draftsman,
once the object ancj effect are plain. Judges may not be too 'anglo-
phonic' !es~ the system fail.
It is edifying to recall from Robert Stevens' Law and Politics of D
the House of Lords as a judicial body :
"Moreover, Macmillan, who began to specialize in the
increasingly frequent tax appeals, continued to develop this
highly artificial approach In Inland Revenue Commissioner v.
Ayrshire Employers Mutual Insurance Asociation('), when
Parliament had clearly iritended to make the annual sur-
pluses of mutual irisurance companies, subject to tax,
Macmillan found a particularly formalistic argument to
show that this had not been the effect of section 31 of the
Finance Act of 1933. He was then happily able to announce,
/'The Legii;lature has plainfy missed · fire."('). Of this F
decision Lord Diplock was later to say that "if, as in this
case, the Courts can identify the target oif Parliamentary
.. legislation their proper function is to see that it is hit : not
merely to record that it has been missed. Here is judicial
legislation at its worst." ( 3 )
we' would rather adopt Lord Diplock's thought and have the court
help hit the legislative target, within limits, than sigh relief that the
legislative fire has missed the bull's eye. Of course, the social philoso-
phy of the Constitution has, as ruled by this court in several cases, a
role in interpretative enlightenment and judicial value vision.
' (I) [1946] I All E.R. 637.
B
(2) Ibid, 641.
(3) Sir Kenneth Diplock-The Courts as Legislators, 10.
190 SUPREME COURT REPORTS [1980] 2 s.c.R.

We may reinforce this liberal rule of statutory construction, being
a matter of importance in the daily work of the Court, by reference
even to Roman Law from Justinian's days down to the American
Supreme Court. "Not all special cases can be contained in the laws
and resolutions of the Senate", said the Roman jurist Jullianus, "but •
where their meaning is manifest in some case, the one, who exercis1<5
B jurisdiction must apply the provision analogously and in this way
administer justice."(') Prof. Bodenheimer has explained that Civil Law·,
does not regard words as the sole basis of law but allows it to be modi-
fied by purpose. "Celsus added the following admonition to these gene-
ral principles of interpretation : "The laws should be liberallv
interpreted, in order that their intent be preserved".(')
"Samuel Thome has shown that, during certain periods of English
medieval history, the position of the Common Law towards the cons-
truction of statutes was similar to the general attitude of the Roman
and Civil Law. Statutes were frequently extended to situations not
expressly covered by them." ( 3 )
D Plowden pointed out that "when the words of a statute enact one
thing, they enact all other things which are in the like degree," (4)
Plowden demonstrated that a statutory remedy at that time was deemed
to be merely illustrative of other analogous cases that deserved to be
governed by the same principle.
"Our law (like all others) consists of two parts,. viz. of body and
soul, the letter of the law is the body of the law, and the sense and
reason of the law is tbe soul of the law ........ And it often happens
thaf when you know the letter, you know not the sense, for sometimes
the sense is more confined and contracted than the letter, and some-~
times it is more large and extensive"(') . ·
'. I' Prof. Bodenheimer states that the American trend is towards a
purpose-oriented rather than a plain-meaning rule in its rigid ortho-
doxy. In United States v. American Trucking AsJociation( 6 ). The'
U.S. Supreme Co,urt wrote :
"When the plain meaning has led to absurd or futile •
results . . . . this Court has looked beyond the words to the
.: 8
purpose of the Act. Frequently, however, even when the
(1) Jurisprudence-The Philosophy and method of the law by Edgar '-"·
Bodenheimer p. 474.
(2) Ibid p. 474.
(3) Jurisprudence-The Philosophy and Method of the law by Edgar

H
Bodenheimer-p. 414. ,
(4) Ibid p. 415.
(5) Ibid p. 115-116.
(6) 310 U.S. 534 at 543-544 (1940)
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 191

plain meaning did not produce absurd results but merely an A
unreasonable one "plainly at variance with the policy of the
legislation as a whole" this Court has followed that purpose
rather than the literal words. When aid to construction of the
meaning of words, as used in th•e statut·e, is available, there
can certainly be no "rule of law" which forbids its use, how-
ever, clear 'the words may be on "superficial examination." B
, In the present case, as the narration of the facts unfolded, the
J reference of the dispute was to an arbitrator. He reinvestigated and
eassessed the evidence bearing on the guilt of the discharged workmen
fter giving an opportunity to both sides to adduce evidence thereor,
Aamittedly, be bad this power. But had he the follow-up power, if he c
held the men guilty of punitive misconduct, to reweigh the quantum
of punishment having regard to the degree of culpability ? This juris-
diction he enjoys if Sec. llA includes 'arbitrators'. This, in turn, flows
from our inference as to whether the word 'tribunal' takes in an adjudi-
c,atory organ like the arbitrator. It is plain that the expression 'arbi-
trator' is not expressly mentioned in Section llA. Nevertheless, if the D
meaning of the word 'tribunal' is wider rather than narrower, it will
embrace arbitrator as well. That is bow the dynamics of interpreta-
tion are, in one sense, decisive of the fate of the present appeal.
Competing interpretative angles have contended for judicial accep-
tance. English preferences apart, Indian socio-legal conditions must E
decide the choice in each situation. Sometimes Judges are prone to
castigate creative interpretation in preference to petrified literality by
stating that Judges declare the law and cannot make law. The reply
to this frozen faith is best borne out by Lord Radcliffe's blunt words :
" There was never a more sterile controversy than that
·Upon the question whether a judge makes law. Of course F
he does. How can he help it? .... Judicial law is always a
reinterpretation.-0f principles in the light of new combinations
of facts. . . . . . Judges do 'not reverse principl•es, once well
• established, but they do modify them, extend them, restrict
them and even deny their application to the combination
in hand."(') G
Lord Devlin in his "Samples of Lawmaking", agreed that Judges
are fashioners of law, if not creators out of material supplied to them
and went on to obserw :
"If the House of Lords did not treat itself as bound by
' its own decisions, it might do its own lopping and pruning H
(I) Robert Stevens-Law and Politics, The House of Lords as a Judicial
Body, 1800-1976, p. 447.
192 SUPREME COURT REPORTS [1980J 2 S;C.lt.

A .... and perhaps even a little grafting, ins:ead of leaving
all that to the legislature. But it could not greatly alter the
shape of the tree."(')

Even so eminent a Judge as Lord Reid leaned to the view that the
law should be developed since it was not static and, in this limited \
B sense, Judges are law-makers although this view prevented "technical
minded Judges (from pressing) precedents to their logical conclu-
sions".(') On the whole, a just and humanist i'nterpretative technique, \
meaning permitting, is the best. We do not mean to conclude t ; _ \ a t
Judges can take liberties with language ad libitem and it is wholesome
to b;, cautious,as Lord Reid in. Shaw v. D.P.P.( 3 ) warned: "Wb
c Parliament fears to tread it is not for the courts to rush in."

We are persuaded that there is much to learn from Lord Denning's
consistent refrain about the inevitable creative element in the judicial
process in the interpretative area. We permit ourselves a quote from
Lord Denning because Shri A. K. Sen did draw our attention to
D straightening the creases as permissible but not stitching the cloth,
making a critical reference to the controversial activism of which Lord
Denning was a leading light :
"The truth is that the law is uncertain. It does not
cover all the situations that may arise. Time and again prac-
E titioners and judges are faced with new situations where the
decision may go either way. No one can tell what the law is
until the courts decide it. The judges do every day make law,
' though it is almost heresy to say so. If the truth is recognised
then we may hope to escape from the dead hand of the past
and consciously mould new principles to rrieet the needs of
F
the present."

Mr. Justice Mathew in Kesavananda Bharti's case(') referred with ~
approval-and so do. we--to the observations of Justice Holmes(").
"I recognize without hesitation that Judges do and must •
G legislate, but they can do so only interestitially; they are
confined from molar to molecular motions."

(l) Devlin-Samples of Law making p. 116.
(2) Judge as Law Maker p. 28-470 (Stevens).
(3) 1962 A.C.C. 220, 275.
H (4) [1973] Supp. S.C.R. p. I.
,
(5) Sources and Techniques of the Law "Jurisprudence" by Edgar
Dodenheimec.

••
.I
•
GUJAllAT STEEi. TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 193

Arthur Selwyn Miller writes, "Some have called it (the Supreme A
Court) the highest legislative chamber in the nation. Although there
is no que$tion that the Court can and does make law, and does so
routinely,. ..... "(').
Assuming the above approach to be too creatively novel for
traditionalism, let us approach the same problem from a conventional B
angle authenticated by case-law. The question of construction of s. 1lA
was argued at length, as to whether an ommission of any reference to
Arbitrator appointed under s. lOA in s.1 lA would suggest that the
Arbitrator under s. 1OA, notwithstanding the terms of reference,
---~.ild not enjoy the power conferred on all conceivable industrial
adjudicators under s. l lA. It was said, after referring to the objects c
and reasons in respect of the bill which was moved to enact s. 1lA
in the Industrial Disputes Act, that while the I.LO. had indicated that
an arbitrator selected by the parties for adjudication of industrial dis-
. pute must be invested with power by appropriate legislation as found
in s. llA, the Parliament, while enacting the section in its wisdom, did
·:iiot include the Arbitrator even though other adjudicators of industrial D
disputes have been conferred such power and, therefore, it is a case of
Sasus omissions. Reliance was placed on Gladsto11e v. Bower('): where ·
the question arose whether a reference to a tenancy from year to year
ins. 2(1) of the Agricultural Holdings Act, 1948 would also cover a
tenancy for 18 months which could be terminated at the end of the E
first year. The submission was that even though no notice was necessary
at common law because the tenancy would automatically terminate at
the expiry of the specified peribd 'of tenancy, the tenancy took effect •
as tenancy from year to year by virtue of S. 2(1) of the Act so that it
- continued until termim\ted by notice to quit and, therefore the landlord
was not entitled to possession without notice. It was further contended F
that if a tenancy from year to year was to get the protection of the Act
it is inconceivable that tenancy for a longer duration would not qualify
for that protection. Court of Appeal negatived this contention holding
that this is a case simply of casus omissus and the Act is defective. The
I
court further held that if it were ever permissible for the Court to
repair a defective Act of Parliament, the Court would be very glad to G
i.,.. ____ _ do so in this case so far as the Court could. The Court will always
allow the intention of a statute to override the defects of wording but
the Court's ability to do so is limited by the recognised canons of inter-
pretation. The Court may, for example, prefer an alternative construe-

' (I) Arthur Selwyn Miller, The Supreme Court, Myth and Reality, H
p. 133.
)
(2) [1963) All E.R. 35 .
194 SUPREME COURT REPORTS [1980j 2 S.C.R.

A lion which is less well-fitted ·to the words but better fitted to the
intention of the Act. But here, for the reasons given by the learned
Judge, there is no alternative construction; it is simply a case of some-
thing being overlooked. The Court cannot legislate for a casl'(S
omissus. To do so would be to usurp the function of the Iegislatu~
, [s~ Magor & St. Mellons Rural District Council v. Newport Corpo~.
8
ration.( 1 )] Where the Statute's meaning is. clear and explicit, words\
cannot be interpolated. Even where the meaning of the statute is clear
and sensible, either with or without the omitted word, interpolation
is improper, since the primary source of the legislative intent is in the
language of the statute [see Crawford's "Constructioni of Statutes"
c I 940 Edn., p. 269 extracted in S. Narayanaswami v. G. Panneer-
selvam. ( 2 )] Undoubtedly, the Court cannot put into the Act words
which 'are not expressed, and which cannot reasonably be implied on
any recognised principles of construction. That would be a work of
legislation, not of construction, and outside the province of the Court
[see Kamalaranjan v. Secretary of State(•).] Similarly, where the
D words of the statute are clear it would· not be open to the Court in
order to obtain a desired result either to omit or add to the words of
the statute. This is not the function of the Court charged with a duty
of construction. This approach has, however, undergone a sea change
as expressed by Denning, L. J. in Seaford Court Estates Ltd. v.
Asher(') wherein he observed as under:
E
"When a defect appears a Judge cannot simply fold hi~
hands a'nd blame the draftman. He must set to work on the
constructive task of finding the intention of Parliament ....
and then he must supplement the written words so as to give
'force and life' to the intention of legislature .... , A judge
F should ask himself the question how, if the makers of the Act
had themselves come across this ruck in the texture of it,
they would have straightened it out '? He must then do as
they would have done. A judge must not alter the material
of which the Act is woven, but he C'an and should iron out
•
the creases."
G
(Approved in State of Bihar & Anr. v. Dr. Asis Kumar Mukherjee &
Ors.(°) where in he observgd as under :

(I) [1952] A.C. I 89.
(2) A.I. R. 1972 S.C. 2284 at 2290, para 2 J.
B (3) A.LR. 1938 P. C. 281 · t 283. ,
(4) [1949] 2 All E.R. 55 at 164.
(5) [1975] 2 S.C.R. 894 ,t 9)2. (
. '
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Tyer, l.) 19 5

This long excursion has become important because, once , in a • A>.
while, social legislation which requires sharing of social philosophy bet-
ween the Parliament and the Judiciary; meets with its Waterloo in the
higher courts beoause the true role o~ interpretation shifts from Judge
to Judge. We are clearly of the view that statutory construction
which fulfils the mandate of the statute must find favour with the
Judges, except where the words. and the context rebel against such B·
flexibility. , We would prefer to be liberal rather than lexical when
, reading the meaning of industrial legisfation which develops from day
to day in the growing economy of India. The necessary conclusion
~~~from this discµssion is that the expression 'tribunal' includes, in the
statutory setting, an arbitrator also. Contempor11neous para-legislative
material may legitimately be consulted' when a word of wider import
and of marginal obscurity needs to t>e interpreted. So viewed, we are
not in a 'sound-proof system' and the I.L.0. recommendation accepted
by Indra· and the Objects and Reasons of the amending Act leave no
doubt about the sense, policy and purpose. Therefore Section llA
applies to the arbitrator in the present case and he has the power D·
to examine whether the punishment imposed in the instant case is
excessive. So has the High Court, if the Award suffers from a fnnda- ,
mental flaw.
A study of the lengthy award discloses no mention of Section l lA,
and presumably, the authority was unmindful of that provision while B-
rendering the verdict. In a limited sense, even prior to Section. 11A,
there was jurisdiction for a labour tribunal; including an arbitrator,
to go into the punitive aspect of the Management's order. This Court
has, in a catena of cases, held that a mala fide punishment is bad in
law and when the punishment is grotesquely condign or perversely
harsh or glaringly discriminatory, an easy inference of bad faith, un- p·
fair labour practice or victimisation arises. The wider power to
examine or prescribe the correct punishment belongs to tribunal/arb.-
trator even under Sec. 11 in no enquiry (or a defective enquiry which
• is bad, and, therefore, can be equated with a 'no enquiry' situation)
has been held by the Management. For, then, there is no extant order
of guilt or punishment and the trib_unal determines it afresh. In such G'
a virgin situation both culpability and quantification of punisliment are
within the jurisdiction of the tribunal/arbitrator. The present is such
a case.
Volleys of rulings from both sides were fired during arguments,
the target being the limited area of the tribunal's power to overturn e•
the quantum of punishment awarded by the Mamigement.. We do not
think it necessary to re-gurgitate all that has been said by this Court
196 SUPREME COURT REPORTS [1980] 2 S.C.R.
I

& . upto now, since it is sufficient to bring out the correct law in theligh~
of the leadiog citations. It is incontrovertible that where, as here, no
enquiry has been held by the Management, the entire subject is at
large and both guilt and punishment, in equal measure, may be
determined, without inhibition of jurisdiction, by the tribunal.
Lastly, as rightly urged by counsel for the Sabha, an arbitrator has
all the powers the terms of reference, to which both sides are party,
confer. Here, adinittedly, the reference is very widely worded and
includ~s the nature of the punishment. The law and the facts do not
call for further el'aboration and we ·hold that, in any view, the arbi-
trator had the :mthority to investigate into the propriety of the dlil.'--_ __..'II
charge and the veracity of the misconduct. Even if S. 1lA is not
applicable, an Arbitrator under s. lOA is bound to act in the spirit of
the legislation under which he is to function. A commercial arbitra-
tor who derives his jurisdiction .from the terms of reference will by
necessary iruplication, be bound to decide •according to law and, when
one si>ys 'according to law', it only means existing law and the law
laid down bY, the Supreme Court beiog the law of the land, an Arbi-
trator under s. lOA will have to decide keeping in view the spirit of
S. llA [See Union of Jndill v. Bungo Steel Furniture Pvt. Ltd. (1967)]
1 S.C.R. 324]. The Jurisdictional hurdles being thus cleared, we
may handle the basic facts and the divergences between the Arbitrator
and the High Court before moulding the final relief.
Prefatory to the discussion about the factum of misconduct and
its sequal, we must remind ourselves that the strike was illegal, having
been launched when another industrial dispute was pending adjudi-
cation. Sec. 23(a) appears, at a verbal level, to convey such a• mean-
ing although the ambit of sub-clause (a) may have to he investigated
fully in some appropriate case in the light of its scheme and rationale.
It looks strange that the pendency of a reference on a tiny or obscure
industrial dispute--and they often pend too long-should block strikes
on totally unconnected yet substantial and righteous demands. The
constitutional implications and proctical complications of such a veto •
of a valuable right to strike often leads not to industrial peace but to
seething unrest and lawless strikes. Bnt in the present case, both
before the arbitrator and the High Court, the parties have proceeded,
on the agreed footing that the strike was illegal under Section 23 (a).
We do not reopen the issue at this late stage and assume the illegality
of the strike.
H The Fatal Flaw in the Award: '
The Achilles heel of the arbitrator's award is where he makes, -
!IS a substitute for specific and individuated findings of guilt and
GUJARAT STEEL TUBES v. MA:l.DOOR SABHA (Krishna lyer, J.) 197

~ppropriate penalty vis-a-vis each workmen, a wholesale survey of A
the march of events, from tension to breakdown, from fair settlement
to illegal and unjustified strike, from futility of negotjatiion to readi-
., ness for arbitration, from offer of full re-employment t9 partial taking
back on application by workmen in sack cloth and ashes, by picking
and choosing after a humble declaration tha1l the strike has been
• formally buried, from episodes of violence and paralysis of production B
to· backstage manoeuvres to get the factory taken over as a 'sick
mill', andi after a fnll glimpse of this scenario, holds that the Sabha
was always in the wrong, and inevitably, the Management was surely
~-,.IJ<il!'.'onable AND, ergo, every employee must individually bear the
cross of misconduct and suffer dismilisal for the sins of the Sabha C
leadership-its secretary was not an employee of the mill-by some
sub-conscious doctrine of guilt by association ! Non Sequitur.

Each link in the chain of facts has been challenged by the res-
pondents but let us assume them to be true, to. test the strength of
the legal fibre of the verdict. (We may mention by way of aside, )}
that the Company seems to be a well managed one.)

The caxdinal distinction in our punitive jurisprudence between a
commission of enquiry and a Court of Adjudication, between the
cumulative causes of a calamity and the specific guilt of a particular
person, is that speaking generally, we have rejected, as a nation, the E
thoory of community guilt and colle.:tive punishment and imstead
that no man shall be punished except for his own guilt. Its reflec-
tion in the disciplinary jurisdiction is that no worker shall be dismissed
save on proof of his individual delinquency. Blanket attainder of
a bulk of citizens on any vicarions thoory for the gross sins of· some
only, is easy to apply but obnoxious in principle. '.Here, the arbitrator
has found the Sabha Leadership perverse, held that the strikers should
have reasonably reported for work and concluded that the Manage-
ment had, for survival, to make-do with new recruits. Therefore
• what?
What, at Jong last, is the answer to the only pertinent question in G
a disciplinary proceeding viz. what is the specific misconduct against
the particular workmen who is to lose his job and what is his puni-
tive desert? Here you can't generalise any more than a . sesoons
judge can, by holding. a faction responsible for a massacre, sentence
every denizen of that factions village to death penalty. The legal
error is fundamental, aithough lay instinct may not be outraged. What H
did wrker A dP ? I)\d he join the s.trike or remain at home for
fear oX vengeance ag;linst blackleg:; in a para-violent s.itu<1,tion? Life
198 SUPREME COURT REPORTS [1980] 2 S.C.R.,
'
.A and limb are dearer than loyalty, to the common run of men, and \
discretion is the better part of valour. Surely, the Sabha complained
......
ofManagement's.goondas and the latter sought police aid against the
unruly core of strikers. . In between, the ordinary rustic workmen •
might not have desired to be branded blacklegs or become martyrs
and would not have reported for work. If not being heroic in
'B daring to break through the strike cordon-illegal though the strike
be--were misconduct, the conclusion would have been different. Not
reporting for work does not lead to an irrebuttable presumption of
active participation in the strike. More is needed to bring home the
mens rea and that burden is on the prosecntor, to. wit the Manag<:-:.----.....,
ment. Huddling together the eventful history of deteriorating indus-
trial relations and perverse leadership of the Sabha is no charge
against a single worker whose job is at stake on dismissal What
did he do ? Even when lawyers did go on strike in the higher Courts
or organize a boycott, legaJly or illegaliy, even top law officers of
j}e Central Govt. did not attend court, argued Shri Tarknnde, and
if they did not boycott but merely did not attend, could workers
beneath the bread line be made of sterner stuff. There is force in this
pragmatic approach. The strike being illegal is a non-issue at this
level. The focus is on active participation. Mere absence,_ without
more, may not compel the conclusion of involvement.

Likewise, the further blot on the strike, of being unjustified, even
if true, cuts no ice. Unjustified, let us assume; so what ? The real
question is, did the individual worker, who was to pay the penalty,
actively involve himself in this unjustified misadventure ? Or did he
merely remain a quiescent non-worker d.uring that explosive period?
Even if he was a passive striker, that did .not visit him with the vice
of activism in running an unjustified strike. In the absence of proof of
being militant participant the punishment may differ. To dismiss a
worker, in an economy cursed by massive unemployment, is a
draconian measure as a last resort. Rulings of this Court have held
that the degree of culpability and the quantnm of punishment turn •
on the level of participation in the nnjustified strike. Regrettably, no
individualised enquiry has ·been made by the Arbitrator into this
significant component of delinquency. Did any dismissed worker
instigate, sabotage or indulge in vandalism or violence?

The Management's necessity to move the mill into production for
fear of befu:tg branded a. 'sick unit' is understandable. Of course,
J
rH collective strike is economic pressure by cessation of work and not
exchange of pleasantries. It mean.< embarassing business. Such a
quandary cannot alter the law. Here the legal confusion is obvious.
I
;ARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 199

inquest into the Management's recruitment of fresh hands is be- A
; made at this stage. The inquiry is into the personal turpitudes
particular workmen in propelling an illegal and unjusl1fied sl1ike and
e proof of their separate part therein meriting dismissal;· The des-
.air of the Management cannot, by specious transformation of logic,
oe converted into the despair of each of the 853 workmen .. Sympa-
thies shall not push one into fallacies. B

We may now concretise this generalised criticism of the other~
wise well-covered award. The crowd of documents and .camping
• attitudes must have added to the strain on the Arbitrator.
"A voluminous record of documents and correspond- c
ence has been produced before me by both sides. There
have· been allegations and counter allegations made by both
sides ·not only against each other but even against the Police,
the Department of Labour and persons in Authority. 'The
history has been sought to be traced right from the inception
of the Company in 1966 or 1967, by the Company to show D
that their conduct has been always proper and above
reproach and by Sabha to establish that not only the Gujarat
l
-.1·_
Steel Tubes Ltd. · were not fair· to the employees but that
every action of theirs good or bad was ill-motivated, wasi
executed with some sinister ulterior motives."' ,
E
The Award set out the history of the Company, its vicissitudes, the
hills and. valleys, the lights and shadows, of industrial relations with
..... mob fury and lock-outs and allied episodes often ending in settlements
~nd pious pledges. Then the Arbitrator stressed Clause 6 of the
Agreement of December, 1971 which bespoke a no-strike zone for F
five years. There was reference to the Management's promise to
implement the Wage Board recommendations. The Arbitrator was
upset that despite Clause 6, a strike was launched but was not dis-
turbed that despite the Wage Board. proposals, negotiations were be-
• ing baulked and an interminable arbitral alternative was being offer-
ed by the Management. He exclaimed : "If such a settlement arriv- G
' ed at was not respected and implemented the machinery provided
:_,...by Jaw would Jose all meaning and so also the sanctity of the word
of the Management or the word. of the union. It is, therefore, essen-·
tial to ascertain who was responsible for the breach of the ·agreement
so solemnly entered into. · · ·
' Serious breach· by management is alleged and this is given as a
H

reason or is made as an excnse for getting rid of the obligations
---~-- -----,

'
200 SUPREME COURT REPORTS [1980] 2 S.l

A ;.nsing ~ut of the agreement which specifically could not be termin~
ed for five years." \
The narration continues and the following conclusion is reached '
"It is thus very clear that the company had fully dis-
charged its obligation under the agreement in respect of 64
B· discharged or dismissed workmen and the other workmen
and the allegation made by the Sabha of the company
having made a breach· thereof" is not correct."
l
\
We thus see, that at this stage, the arbitrator has merely made · __
a generalised approach as if a commission of inquiry were goiug· into
c the conduct of the Management and the Sabha to discover who was
\"

blameworthy in the imbroglio. The award then swiveled round to
a study of the case of the Sabha vis-a-vis the triple grievances, the
Sabha had:
"I shall first deal with the grievance regarding demands
D for implementation of the recommendations of the Wage
Board".
The long and sterile correspondence was set out and the arbitrator
arrived at the conclusion that the insistence on reference to arbitra-
tion as against negotiation was justified on the part of the Manage-
E =~: '
"I, therefore, have accepted the version of the Manage-
ment and disbelieved the motivated denial of the Sabha m
this respect."

F The culmination of the protracted discussion on the atmosphere
and environment, rather than on the actual chMge against each
worker, was recorded in the Award :
"I have exhaustively, perhaps more exhaustively than
even necessary, deah with the allegations made by the •
G Sabha that the Management had committed breach of agree-
ment by refusing to accede to the demand of the Sabha
for implementation of recommendations of the Wage Board ..
There appears to be no doubt that the Management had
agreed to implement the recommendation of the Wage
Board. There is also not the least doubt · the . Manage-
H ment was ready and willing to implement-the recommenda-
tions of the Wage Board it was because it was· prevented by '
the Sabha from doing so." -
ClUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.)201

An analysis of the Management's conduct in the matter of non- A
ilnplementation of the Wage Board recommendation was thereafter
made by the Arbitrator and he wound up thus :
"I am satisfied that the Company had not committed any
breach of the settlement dated 4-·8-1972 at least so far as
implementation of the recommendations of the Wage Board
is concerned."

The question of bonus for the year 1971 was also considered and
dtsmissed and the Sabha's case to that extent was negatived. Again,
-the~_ for wages for the period of the lock-out was also negatived
with the observatiotls : c
"I fail to see how the Sabha can allege breach of the
agreement dated 4-8-1972 in view of the clear unequivocal
terms contained in clause 4 of that Agreement."
In this strain the Award continued and the refrain was the same
that the Sabha was in the wrong. The Award even went to the D
exaggerated extent of morbidly holding that the workers were wearing
printed badges which, along with other circumstances, amounted to
a breach of the agreement !
nit·Award then moved on to the strike of January 27, 1973
because it led to the dismissal of all the workmen. Until this stage, E
. the arbitrator was merely painting the background and, at any rate.
did not engage himself in isolating or identifying any worker or any
misconduct. He merely denounced the Sabha, which is neither here
~ nor there, in the matter of disciplinary proceedings against each
individual workman. He missed the meat of the matter. The rele- F
vant portion of the A ward based on generalisation proved this
error :
"I am concerned herein with the question whether the
discharge or dismissal of the 400 work.men was legal and
proper or not ~nd what relief to grant to them.
G
Approached from any point of view the action of the
Company appears to me to be legal, proper and justified
·and the demands on behalf of these workmen must be reject-
ed.''

A condemnation of the Sabha and an approval of th~ Manage- H
ment's handling of the strike are miles away fromthe issue on
hand.
14-86SSCI/7!7
202 SUPREME COURT REPORTS (1980] 2 s.c.R.

A We observe here also an unfortunate failure to separate and
scan the evidence with specific reference to charges aaainst individual
workman. On the contrary, all that we find in lhe award is an
autops.y of the strike by the Sabha and a study of its allegedly perverse
postures. A disciplinary inquiry resulting in pun~hment of particu-
lar delinquents cannot but be illegal if the evidence is of mqss
B misconduct by ungpecified strikers led by leaders who are perhaps
not even workmen. We are constrained to state that pointed consi-
deration of facts which make any of the 400 workmen guilty, is a
search in vain. The award being ex facie blank from this v»tal angle,
the verdict must prima facie rank as void since vicarious guilt must
be brought home against the actively participatins membP)fe.ef ~
c collectivity by positive testimony, not by hunch, 11uspiciori ·· 0~· occult
intuition. The short position is this. Is there a punishment of any
workman ? If yes, has it been preceded by an enquiry ? If not,
does not the Management desire to prove the charge before the
tribunal ? If yes, what is the evidence, against whom, of what mis-
conduct ? If individuated proof be forthcoming and relates to an
D
illegal strike, the further probe is this : was the strike unjustlfied ? If
yes, was the accused worker an active participant therein ? If )'Ci,
what role. did he pfay and of what acts was he author? Then alone
the stage is set for a just punishment These exerc1'es, es an assembly-
line process are fundamental. Generalisation of a Tiolent strike of a
E vicious Union leadership, of strikers fanatically or foolishly or out of
fear, failing to report for work, are good background material. Beyond
that, these must be identified by a rational process, the workmen, the.ic
individual delirnquency and the ~ntence according to their sin. Sam
that, the dismissal is bad. Viewed from this persptctin, the Award
fails.
F
The Arbitrator comes to grips with the core qumtion of discharge
simpliciter versus diismissal as punishment but not with the identifica-
tion of delinquents and delinquency. After referring to Order 23 of
the Model Standing Orders he goes on to state the Jaw correctly · by
extracting observations from the Assam Oil Compan' case.
G

Another vital facet of industrial law is that when Bo enquiry has
been held by the Management before imposing a puoilbment (or · the '
enquiry held is defective and bad)' the whole field of delinquency and
consequent penalty is at large for the tribunal. Several rulings support
H this logic. We are constrained to bold that a certain observation made
per incuriam by lVJ.r. )ustice Vaidyalmgam, strongly Rlied on by Sri
A K. Sen, does not accurately represent the law, altho\lgh the learnei
/
<iUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 203

Judge had earlier stated the law and case-law correctly, if we may say A
so with respect.

A selective study of the case-Jaw is proper at this place. Before
we do this, a few words on the basis of the right to strike and pro-
gressive legal thinking Jed by constitutional guidelines is necessitous.
B
The right to unionise, the right to strike as part of collective bargain-
~ ing and, subject to the legality and humanity of the situation, the right
r of the weaker group, viz., labour, to pre£Sure the stronger party, viz.,
capital, to negotiate and render justice, are processes recognised by
'---ir.dum1al jtirisprudence and supported by Social Justice. While society
itself, in its basic needs of existence, may not be held to ransom in the c
name of !he right to bargain and strikers must obey civilised norms in
the battle and not be vulgar or violent hoodlums, Industry, represented
by intransigent Managements, may well be made to reel into reason by
the strike weapon and cannot then squeal or wail and complain of ]06s
of profits or other ill-effects but must negotiate or got a reference made.
The broad basis is that workers are weaker although they are the D
producers and their struggle to better their Jot has the sanction of the
rule of law. Unions and strikes are no more conspiracies than pro-
fessions and political parties are, and, being far weaker, need succour.
Part IV of the Constitution, read with Art. 19, sows the seeds of this
burgeoning jurisprudence. The Gandhian quote at the beginning of
this judgement sets the tone of economic equity in Industry. Of course, E
adventurist, extremist, extraneously inspired and puerile strikes, absurd-
ly insane persistence and violent or scorched earth policies boomerang
and are anathema for the Jaw. Within these parameters the right to
~·
strike is integral to collective bttrr;aining.

Responsible trade unionism is an mstrument of concerted actio• F
'and the IaiS$ez faire law that all strikes are ipso facto conspiracies, is
no longer current coin even in Adam Smith's English country. Lord
Chorley, in Modern Law Review, Vol. 28, 1965, p. 451, is quoted as
~aying that law must be altered as a consequence of Rookes v. Barnard,
so as to remove the effects of deci<!ions of conspiracy and intimidation. G
We goes on to state that Alkn Y. Flnod and Quinn v. Leathern taking
lite conspiratorial view must never be permitted ·10 be quoted in courts.
In contrast, reference was made to Willis on Constitutional Law, pp.
878-879, wherein the Supreme Court of America reflects the impact
61' capitalistic development and the economic views of the judges and
tlte fact that the judges are members of a social order and a social H
product and the decisions are due more to the capitalistic system and
tl!e world of ideas in which the judges Jive. Our Constitution is clear
204 SUPREME COURT REPORTS [£980] 2 s.c.tt

A in its mandate, what with Art. 39A superadded and we have to act in \
\
tune with the values enshrined therein.

The beni•gn attitude towards strike being what we have outlined,
the further question arises whether in the light of the accepted finding
that the strike as such was ililegal and, further, was unjustified, all the
B strikers should face the penalty of dismissal or whether individual cases
with special reference to active participation in the strike; should be
considered. A rapid but relevant glance at the decided cases may yield
dividends. In India General Navigation and Railway Cn . . Ltd. v.
Their Workmen, (supra) this court did observe that if a strike ls~
c illegal, it cannot be called 'perfectly justified'. But, betweeu 'perfectly
justified' and 'unjustified' the neighbourhood is distant. More illegali-
ty of the strike does not per se spell unjustifiability. For, in Crompton
. Greaves Ltd. v. Workmen (supra) thi~ Court held that even if a
strike be illegal, it cannot be castigated as unjustified, unless the reasons
for it are entirely perverse or unreasonable-an aspect which has to
D be decided on the facts and circumstances of each case. In that deci-
sion, this Court awarded wages during the strike period because the
Management failed to prove that the workmen resorted to force and
violence. Even in India General Navigation and Railway Co. Ltd.
· (supra) where the strike was illegal and affected a public utility service,
this Court observed that "the only question of practical importance
E which may arise in the case of an illegal strike, would be the kind or
quantum of punishment, and that, of course, has to be modulated in
accordance with the facts and circumstances of each case ..... There
may be reasons for distinguishing the case of those who may have
acted as mete dumb-driven cattle from those who have taken an
active part in fomenting the trouble and instigating workmen to join
F such a strike or have taken recou.rse to violence." The court after -
holding that the strike was illegal "and that it was not even justified"
made a pregnant observation :

"To determine the question of punishment, a clear dis-
G tinction has to be made between those workmen who are
· only joined in such a strike, but also took part in obstruct-
ing the loyal workmen from carrying on their work, or took
part in violent demonstrations, or acteC. in defiance of law
and order, on the one hand, and those workmen who were
more or less silent participators in such a strike, on the
H other hand. It is not in the interest of the industry that
there should be a wholesale dismissal of all the workmen who
merely participated in such a strike. It is certainly not in the
'(;UJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 205

interest of the ·Workmen themselves. .An Industrial Tribunal, A.
·therefore, has to consider the question of punishment, keep-
ing in view the overriding consideration of the full and effi-
cient working of the Industry as a whole. The punishment
of dismissal or termination of services, has, therefore, to be
imposed on sucli workmen as had not only patricipated in
the illegal strike, but had fomented it, and had been guilty B
•
·of violence or doing acts detrimental to the maintenance of
law and order in the locality where work had to be carried
r! .on."
~ After noticing 'the distinction between peaceful strikers and violent
. -1 strikers, Sinha, J., .in that case, observed "it must be clearly under- c
stood by those who take part in an illegal strike that thereby they
make themselves liable to be dealt with by their employers, There
may be reasons for distinguishing the case of those who may have
acted as mere dumb driven catlle from those who have taken an active
part in fomenting the trouble and instigating workmen to join such a
D
strike, or have taken recourse to violence." The same lice of dicho-
tomy is kept up :
"Both the types of workmen may have been equally
guilty df participation in the illegal strike, but it is manifest
that both are not liable to the same kind of punishment."
E
Significantly, the Court stressed the need for individual charge-
sheet being delivered to individual workmen so that the degree of
misconduct of each and the punitive deserts of each may be separa-
tely considered. We may as well refer to a few more rulings since
considerable argument was expended on this point.
F
This Court in M/s. Burn & Co. Ltd. v. Their Workmen &
Ors.(') clearly laid down that mere participation in the strike would
not justify ,,the suspension or dismissal of workmen particularly where
no clear distinction can be made between those persons and the very
large number of workmen who had been taken back into service
although they had participated in the strike. After referring to the G
ratio iu M/s. Burn & Co. Ltd. case, this Court in Bata Shoe Co.
,. (P) Ltd. v. D. N. Ganguly & Ors.(') observed that there i~ no doubt
,_ __ __.
that if an employer makes an unreasonable discrimination in the
matter of taking back employees there may in certain circumstances
1Je reason for the industrial tribunal to interfere; but the circwnstances
B
' (I) A.l.R. 1959 S.C. 529.
~2) [1961] 3 S.C.R. 308.

T
206 SUPREME COURT REPORTS [1980] 2 S;C.R.

A of each case have to be examined before the tribunal can inter-
fere with the order of the employer in a properly held managerial
inquiry on the ground of discrimination. The Court then pro-
ceeded to determine the facts placed before it Sri Sen specifi-
cally pointed out that in the Bala Shoe Co.'s ca.se this Court distin-
guished the decision in India General Navigation & Railway Ca
B Ltd.'s and observed that the decision in that case was on the facts
placei:I before the Court. In fact, Bata Shoe Co.'s case does not lay
Jown any distinct proposition about the treatment to be meted out to ,
participants in strike and actually it is a decision on its own facts. J~

The Swadeshi Industries Ltd. v. Its Workmen(!), the Manage-
c ment,In after holding that the strike was illegal, terminated the servic-
es of 230 workmen without framing any chargesheet or holding any
enquiry. It was contended that the strike was not legal. The Court
observed that collective bargaining for securing improvement on
matters like basic pay, dearness allowance, bonus, provident fund and
D gratuity leave and holidays was the primary object of a trade union
and when demands like these were put forward and thereafter a strike
was resorted to in an attempt to induce the company to agree to the
demands or at least to open negotiations the strike must prima facie
be considered jn~tified. As the order of termination was found to be
illegal it was held that reinstatement with back wages must follow as
E a matter of course, not necessarily because new hands had not been
inducted.

In I. M. H. Press, Delhi v. Additional Industrial Tribunal Delhi &
Ors.,(') this Court was called upon to examine the ratio in Moder
Mills(') case and lndi.2 General Navigation & Railway Co. Ltd.
F case and this Court in terms affirmed the ratio in India General Navi-
gation & Railway Co. Ltd. case observing that mere taking part in an
illegal strike without anything further would not justify the dismissal
of all the workmen taking part in the strike.

In Indian Iron & Steel Co. Ltd. & Anr. v. Their Workmen('),.
G this Court observed that the management of a concern has power to·
direct its own internal administration and discipline but the power
is not unlimited and when a dispute ari·ses, Industrial Tribunals- '
~-~\
.·•
. have been given the power to see whether the termination of service .,

(!) ]U.R. 1960 S.C. 1258.
B (2) A.I.R. 1961 s.c. 1162.
(3) A.l.R. 1958 S.C. 311.
(4) [1958] S.c,R. 667 at 685.
GUJARAT STP.EL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 207

-< of a workman is ju•tified and to give appropriate relief. It may be A
noticed that the decision is prior to · introduction of . s. 1 lA. It
would thus appear that the important effect of. omission to hold an
enquicy was merely this that the tribunal .would have to consider
not only whether there was a prima fade 'case but would decide for
ii.elf on the oYidence adduced whether the charge• have been made
out. A defective enquiry in this connection stood on the. ·Same B
footing as no enquiry and in either case the tribunal would have .
/ jurisdiction to ::;o into the entire matter and.· the employ~r would
have to satisfy the tribunal that on tho facts the order of dismissal

f \
eir discharge was proper. (see Workmen of Motipur Sugar Factory
(Pvt.) Ltd. v. Motipur Sugar Factory('), and Provincial Transport c
Service v. State Industrial Court) ( 2 ). Once, . therefore, it was held
that the enquicy was not proper, it wao irrelevant whether the workman
withdrew from the enquiry or participated in it, the decision had
to be on appraisal of evidence, and if it was found that the enquiry
_was not proper the whole case was open before the labour court to
decide for it.elf whether the charge of misconduct wao proved and D
what punishment •hould be awarded (see Imperial Tabacco Company
of India Ltd. v. Its Workmen) ( 3 }. '
As again•t the above propositions, Sri Sen relied upon the obser-
'
vations of this Court in Oriental Textile Finishing Mills, Amritsar
v. Labour Court, Jullundur & Ors.('). We fail to see how it runs E
counter to the e.tablished principle. The Court, in fact, held that
even where the •trike is illegal, before any action was taken with a

r view to punishing the strikers a domestic enquicy must be held .
._..... Even though the Standing Orders prescribing enquicy before punish-
ment did not provide for any such cnquicy the Court held that .
nonetheless a domestic enquicy should have been held in order to F
entitle the management to dispense with the servi<ce of the workmen
on the ground of misconduct, viz., participation in the illegal strike. ·
After so saying, the Court agreed with the view of the Court in
• Indian General Navigation & .Railway Co. Ltd. case and reaffirmed
the principle that mere taking part in an illegal strike without any-
. thing further would not necessarily justify the dismissal of all the G
workers taking part in the strike and that if the employer, before
' • dismissing a workman, gave him sufficient opportunity of explain-
ing his conduct and no question of mala /ides or victimisation arose,
(I) [1965J3 $.CR. 588 at 597.
(2) [1963) 3 5.C.R 650.
(3) A.I.R. 1962 S.C. 1348.
(4) [1972] 1 S.C.R. 490.
208 SUPREME COURT. REPORTS [1980] 2 S.C.Jt.

A it was not for the tribunal in adjudicating the propriety of such dis-
missal to look into the sufficiency or otherwise of the evidence led
before the enquiry officer or insist ou the same degree of proof as
·was required in a court of law, as if it were sitting in appeal over
the decision of the employer.

.B Another aspect of this case emphasised that it could not be
dogmatised as a matter of law that an overt act such as intimidation
·or instigation or violence was necessary in order to justify termination
of service for participating in an illegal strike. On the facts of that case, \
even though ij was found that no dome~tic enquiry was held, reinstate~
ment was refused on the grotind that misconduct was made out. ·
c
Sri Sen, of course, relied on this judgment to show that where
a strike was resorted to and the workers were called upon to join
service within the stipulated time, on their failure it was open to
the company to employ new hands. This is reading more into the
D ruling than is warranted.

We cannot agree that ,mere failure to report for duty, when
a strike is on, necessarily means misconduct Many a workman,
as a matter of prudence, may not take the risk of facing the · mili-
tant workmen or the Management's hirelings for fear, especially
E when there is evidence in the case from the Sabha that the Manage-
ment had hired goondas and from the Management that the strik-
ing vanguard was violent. It is also possible, in the absence of
evidence to the contrary, that several workmen might not be posted
with the Management's notice of recall or the terms on which they ~
were being recalled. In this view, we are not able to uphold the -J
F . conclusion of the arbitrator that the punishment of dismissal was
appropriate for the entire mass of workmen whose only guilt, as
proved was nothing more than passive participation in the ·illegal
and unjustified strike by not reporting for duty. ·The verdict is
inevitable that the discharge is wrongful. ·

G _ The only comment we reluctantly make about .the otherwise
thorough award of the Arbitrator is that omnibus rhetoric about the
obnoxious behavi<Jur of a class may not make-do for hard proof of '41 -
specific acts of particular persons where a punitive jurisdiction is
exercised.

H What, then, is the normal rule in the. case. of wrongful dismissal
when the workmen claim reinstatement with full back wages? The
High Court has held the discharge wrongful and directed restoration

'
.GUJARAT STEEL TUBES v. MAZPoOR SABHA (Krishna Iyer, !.) 2 09

with an equitable amount of back wages. The following rulings of A
this Court, ot al, deal with this subject :
The recent case of Hindustan Tin Works v. Its Employees(') sets
out the rule on reinstatement and back wages when the order of
thii Court, et al, deal with this subject :
"It is no more open to debate that in the field of B
industrial jurisprudence a declaration can be given that
the termination of service is bad and the workman conti-
nues to be in service. The spectre of common law doctr-
ine that contract of personal service cannot be specifically
enforced or the doctrine of mitigation of damages does
not haunt this branch of law. The relief of reinstatement
c
with continuity of service can be granted where termina-
tion of service is found to be invalid. It would mean that
the employer bas taken away illegally the right to work of the
workman contrary to the relevant law or in breach of con-
tract and simultaneously deprived the workman of his D
·earnilllgs. If thus the employer is found to be in the. wrong
as a result of which the workman is directed to be
reinstated, the employer could not shirk his responsibility
of paying the wages which the workmen has been depriv-
ed of by the illegal or invalid action of the employer.
Speaking realistically, where termination of service is E
.questioned as invalid or illegal and the workman has to
go through the gamut of litigation, his capacity to sustain
himself throughout the protracted litigation is itself such an
awesome factor that he may not survive to see the day
when law's proverbial delay has become stupefying. If
after such a protracted time and energy consuming litiga- F
tion during which period the workman just sustains him-
self, ultimately he is to be told that though he will be rein-
stated, he will be denied the back wages which would be
due to him, the workman would be subjected to a sort of
penalty for no fault of his and it is wholly undeserved.
Ordinarily therefore, a workman whose service has been G
illegally terminated would he entitled to full back wages
• except to the extent he was gainfully employed during the
enforced idleness. That is the normal rule. Any other
view would be a premium on the unwarranted litigative acti-
vity ·of the employer. If the employer terminates the 1! 1 H
se_rvice illegally and the termination is motivated as in this
(!) A.!.R. 1979 S.C. 75 at 77-78.
210 SUPREME COURT REPORTS (1980] 2 S.C.R.

.~' case, viz., to resist the workmen's demand for revision of
wages, the termination may well amount to unfair labour
practice. In such circumstances reinstatement being the
normal rule it should be followed with full back wages.
Articles 41 and 43 of the Constitution would assist us in.
reaching a just conclusion in this respect ........... .
B In the very nature of things there cannot be a strait-jacket
formula for awarding relief of back wages. All relevant
considerations will enter the verdict. More or less, it would
be a motion addressed to the discretion of the TribunaL
Full back wages would be th.e normal rule and the party
objecting to it must establish the circumstances necessitat-
c ing departure. At that stage the Tribunal will exercise its
discretion keeping in view all the relevant circumstances."
Dealing with the complex of considerations bearing on payment
of back wages the new perspective e.merging from Art. 43A cannot
be missed, as explained in Hindustan Tin Works, Labour is no more
D a mere factor in production but a partner in Industry, conceptually
speaking, and less than full back wages is a sacrifice by those who
can best afford and cannot be demanded by those, who least sacrifice
their large 'wages' though can best afford, if financial constraint is
the ground urged by tho latter (Management) as inability to pay
full back pay to the former. The morality of law and the constitu-
E.
tional mutation implied in Art. 43A bring about a new equation in
industrial relations. Anyway, in t:he Hindustan Tin Works" teas•,
75 per cent of the past wages was directed to be paid. Travelling
over the same ground by going through every precedent is superero-
gl!tory and we hold the rule is' simple that the discretion 'to de11y
F reinstatement or pare down the quantum of back wages is absent
save for exceptional reasons.
It must be added howeVer that particular circumstances of each
case may induce the court to modify the direction in regard to the
quantum of back wages payable as happened in the India General
Navigation and Railway Co. Ltd. vs. Their Workmen (Supra). We
G
may, therefore, ·have to consider, when finally moulding the relief,
what, in this case, we should do regarding reinstatement and back
wages.
A Sum-up
B We may now crystallise our conclusions in the light of the Jong
discussion. The basic assumption we make is that the strike wiis.
not only illegal but also unjustified. On the latter part, a contrary
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna [yer, !.) 211 •

view cannot be ruled out in the circumstances present but we do not
remvestigate the issue since the High Court has proceeded on what
both sides have taken for granted. The Management, in our view,
did punish its 853 workmen when it disch:irged them for reasons of
misconduct set out in separate bnt integrated proceedings, even
though, with legal finesse, the formal order was phrased in harmless
verbalism. But fine words butter no parsnips, and law, in its intelli- B
l gent honesty, mu~t be blunt and when it sees a spade, must call it
L
r a spade. The action taken under the general law or the standing
orders, was illegal in the ab.sence of individualised chargesheets, pro-
~per bearing and personalised punishment, if found guilty. None of
these steps having been taken, the discharge orders were still born.
But the Management could, as in this case it did, offer to make out
c
the delinquency of the employees and the arbitrator had, :n such cases,
the full jurisdiction to adjudge de novo both guilt and punish-
ment. We hold that sec. l lA does take in an arbitrator too, and,
in this .case, the arbitral reference, apart from sec. l lA, is plenary
in scope.

In the second chapter of our sum-up, the first thing we decide
is that Art. 226, however restrictive in practice, is a power wide
enough, in all conscience, to be a friend in need when the summons
comes in a crisis from a victim of injustice; and, more importantly,
this extraordinary reserve power is unsheathed to grant final relief E
without necessary recourse to a remand, What the tribunal may,
in its discretion, do, the High Court too, under Art. 226, can, if
facts compel, do. Secondly, we hold that the Award suffers from a
~ fundamental flaw that it equates an ill,gal and unjustified strike with
brazen misconduct by every workman without 'o much as identifi-
f cation of the charge against each, the part of each, the punishment F
/ for each, after adverting to the gravemen of his misconduct meriting
, dismissal. Passive participation in a strike which is both illegal and
unjustified does not ipso facto invite dismissal or punitive discharge.
There must be active individual excess such as master-minding the
unjustified aspects of the strike, e.g., violence, sabotage or other re- G
prehensible role. Absent such gravamen in the accusation, the ex-
treme e9onomic penalty of discharge is wrong. An indicator of the
·~ absence of such grievous guilt is that the Management, after stating
in strong terms all the sins of the workmen, took back over 400 of
!Item as they trickled. back slowly and beyond the time set, with
continuity of service, suggestive of the dubiety of the inflated accusa- R
tions and awareness of the minor role of the mass of workmen in
the lingering strike. Furthermore, even though all sanctions short of
y 212 SUPREME COURT REPORTS [1980] 2 S.C.R.

punitive discharge may be employed by a Management, in our
current conditions of massive unemployment, low wages and high
cost of living, dismissal of several hundreds, with disastrous impact
on numerous families, is of such sensitive social concern that, save
in exceptional situations, the law will inhibit such a lethal step for
the peace of the Industry, the welfare of the workmen and the
• broader justice that transcends transcient disputes. The human
dimensions have decisional relevance. We hold the discharge orders,
though approved by the Atbitrator, invalid.
·~
The last part of our conclusions relates to the relief which must
be fashioned with an eye on mutual equities. We cannot ignore a___...-
'C few raw realities since law is not dogmatics but pragmatics, without
temporising on principle. The Management's limitations in absorb-
ing all the large number of discharged employees all at once when,
steel, the raw material, is scarce, is a problem. Likewise, their
inability to pay huge sums by way of back wages or otherwise, with-
out crippling the progress of the industry, cannot be overlooked
but cannot be overplayed after Hindustan Tin Works. Another
factor which cannot be wished away is the presence of over a couple
of hundred workmen, with varying lengths of service, who may have
to be sacked if the old workmen are to be brought back. It is a
problem of humanist justice. Lastly, the rugged fact of life must
E not be missed that some of the workmen during the long years of
desperate litigation, might have sought jobs elsewhere and most of
them perhaps have, for sheer survival, made at least a starving wage
during the prolonged idle interval. This factor too is a weak con-
sideration, tested by the reasoning in Hindustan Tin Works. More-
over, rationalisation of re-absorption of the removed workmen re- _J
quires attention to the classification of permanent workmen and
their casual counterparts. Every proposal must be bottomed on the
basic economic fact that the beneficiaries are from the many below
the destitution line. This Court has, in a very different context
though, has drawn attention to the Gandhian guideline :
"Whenever you are in doubt. . , . apply the following test,
Recall the face of the. poorest and the weakest man whom
you may have seen, and ask yourself, if the step you con-
template is going to be of any use of him." ·
It is apt here.
JI This perspective informs our decision. What did the High Court
do regarding reinstatement and should we modify and why ? If the
discharge is bad, reinstatement is the rule. In India General Navi-
GUJARAT STEEL. TUBES v. MAZDOOR SABHA (Krish11a Iyer, !.) 213

gation, Punjab National Bank and Swadeshi Industries, et al, resto- A.
ration, despite large numbers, was directed. But most rules have
exceptions wrought by the pressure of life and Oriental was relied
on to contend that reinstatement must be denied. There is force in
the High Court's reasoning to distinguish Oriental, as we hinted
earlier and we quote :
g.
'There were only 22 workmen involved in that case. The

l management had made genuine and persistent efforts to
persuade the concerned workmen to call of the strike and
join work. Those efforts were made at three different stages,
namely, (1) immediately after the workers went on the
c
lightening strike and before chargesheets were issued,
(2) after the charges were dropped and individual notices
were sent to the workmen asking them to resume work by
specified dates and (3) after the orders of termination were
served and conciliation proceedings were commenced pur-
suant to the demand notice. But this is not all. Even i>
the Labour Officer and Labour Inspector had tried to per-
suade the concerned workmen to joint duty before the
.:barge-sheet came to be issued. As against these repeated
bona fide attempts on the part of the management and an
O\Itside agency to persuade the erring workmen, they not only
did not resume work but 'also failed td acknowledge or E
send a reply to the individual notices served upon them
requesting them to resume work and they appear to have
made it a condition precedent to their joining duty that the
suspended workmen should also be taken · back. Even
under such circumstances, the management did not straight-
away terminate their services hut gave individual notices
requiring the concerned workmen to show cause why their
names should not he struck off and asked them to suhmlt
their reply by a certain date. Even those notices were not
replied. It is only thereafter that the services of the con-
cerned workmen came to be terminated. It is against this G
• background that the Supreme Court held that there was
,,A "a persistent and obdurate refusal by the workmen to joint
duty" notwithstanding the fact that "the management has
done everything possible to persuade them and give them
opportunities to come back to work" and that they had
without any sufficient cause refused to do so which con- B
stituted "misconduct" so as to 'justify the termination of
their services". ~r,
214 SUPREME COURT REPORTS [1980] 2 S.C.R.

.A " .... If the workmen had been approached individually,
not only those amongst them who were unwilling to join
strike but were prevented from joining work would have
taken courage to resume duty but even those amongst them
who were undecided could also have been won over. That
apart, those notices, as their contents disclose, were hardly
persuasive efforts. They were a mixture of ultimatums,
threats, complaints and indictment of the workmen and the
Sabha. Was it, therefore, a genuine effort on the part of
a keenly desirous employer to offer an olive branch ? In
Oriental, orders of termination were passed only after giving
.c individual notices to the concerned workmen to showcause
why their names should not be struck off. Besides, those
notic~ were given after charges formally served upon each
workmen earlier were dropped and persuasive efforts made
in the meantime had failed. None of. those steps was taken
herein. All that happened was that in one of the notices
meant for mass consumption and circulation, such intima-
tion \vas given."

Even so, during the several years of the pendency of the dispute,
surely some workmen would have secured employment ·elsewhere
as was conceded by counsel at a certain stage, and it is not equitable
to recall them merely to vindicate the law especially when new work-
men already in precarious service may have to be evicted to ac-
commodate them· In the course of the debate at the Bar we gained
the impression that somewhere around a hundred workmen are likely
to be alternatively employed. Hopefully, there is no hazard in this
IUCSS.

Another, facet of the relief turns on the demand for full back
wages. Certainly, the normal rule, on reinstatement, is full back
wages since thei order of termination is non est. [see Lad's case( 1) and
Panitole Tea Estate's case(')]. Even so, the industrial oourt may well
•lice off a part if the workmen are not wholly blameless or the
·G strike is illegal and unjustified. To what extent wages for the long
interregnum should be paid is, therefore, a variable dependent on a
complex of circumstances. [See for e.g. 1967 (15) F.L.R. 395 paras ·~
3 and 4].
We are mindful of the submission of Sri Tarkunde, urged in the
connected appeal by the Sabha, that where no enquiry has preceded
(1) G.T. Ladv. Chemicals and Fibres India Ltd., [197911 S.C.C. 590.
(2) Management of Panitole Tea Estaie v. Workmen [1971] 3 S.C.R. 774.
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 215

a punitive discharge and the tribunal, for the first time, upholds the A
punishment this Court has in D. C. Roy v. The presiding Officer,
Madhya Pradesh Industrial Court, Indore & Ors.(') taken the view
that full wages must be paid until the date of the award. There
cannot be any relation back of' the date of dismissal to when the
Management passed the void order.
B
Kalyani( 2 ) was cited to support the view of relation back
of the Award to the date of the employer's termination orders. We
do not agree that the ratio of Kalyani corroborates the proposition
propounded. Jurisprudentially, approval is not creative but confir-
11.1atory and therefore relates back. A void dismissal is just void
and does not exist. If the Tribunal, for the first time, passes an
c
order recording a finding of misconduct and thus breaU1es life into the
dead shall of the Management's order, predating of the nativity does
llot a~ise. The reference to Sasa Musa in Kalyani enlightens this
position. The latter case of D. C. Roy v. The Presiding Officer,
Madhya Pradesh Industrial Court, Indore & Ors. (supra) specifically D
r~fers to Kalyani's case and Sasa Musa's case and holds that where
the Management discharges a workmen by an order which is void for
want of an enquiry or for blatant violation of rules of natural justice,
the relation-back doctrine cannot be invoked. The jurisprudential
difference between a void order, which by a subsequent judicial resus-
citation comes into being de novo, and an order, which may suffer E
from some defects but is not still born or void and all that is needed
in the law to make it good is a subsequent approval by a tribunal
!'1Ilch is granted, cannot be obfuscated.

We agree that the law stated in D. C. Roy (supra) is correct but
llOIW that the termination orders are being set aside, the problem F
does not present itself directly. Even the other alternative submission
oi. Sri Tarkunde that if the plea of the Management that the order is
a discharge simpliciter were to be accepted, the result is a retrenchment •
within the meaning of s. 2( oo) which, in this case, is in violation
al_ s. 25F and therefore bad, is not a point urged earlier. We are
dillposed to stand by the view that discharge, even where it is not G
occasioned by a surplus of hands, will be retrenchment, having regard
to the breadth of the definition and its annotation in 1977 1 SCR
586. But the milieu "in which the order was passed in February
1973 is not fully available, viewed from this new angle. So we
decline to go into that contention. H
(1) [1976] 3 S.C.R. 801.
,(2) (1963]1L.L.J.679.
216 SUPREME COURT REPORTS [1980) 2 S.C.R.

.t. Final Relief
We are concerned with 400 workmen, some of whom have been
claimed by death or other irreversible causes-casualties of litigative
longevity ! are 370 workmen are left behind, of whom 239 are admit-
tedly permanent. We have already stated that 100, out of them,
1
are probably fixed up elsewhere. So, we exclude them and direct
B that the remaining 139 alone will be reinstated. A list of the afore-
said 100 workmen will be furnished to the Management by the Sabha
within two weeks from today. That shall be accepted as correct and
final.
While reinstatement is refused for these 100 workmen, when __,.
c
shall they be deemed to have ceased to be in service for drawal of
te1minal benefits? Their discharge orders having been quashed,
they remain in service until today. We concluded the arguments on
August 3, 1979 and on the eve of the closure of counsel's submissions
certain inconclusive settlement proposals were discussed. We, there-
fore, consider August 3, 1979 as a pivotal point in the calender with
D reference to which the final relief may be moulded. We direct that
the 100 workmen for whom reinstatement is being refused will be
treated as in service until August 3, 1979 on which date they will be
deemed to have been retrenched. We direct this <itep with a view
to pragmatise the situation in working out the equities. These 100
will draw all terminal benefits plus 75 per cent of the back wages.
E This scaling down of back pay is consistent with the assumption
that somewhere in the past they had secured alternative employment.
The long years and the large sum paybale also persuade us to make
this minor cut. Of course, in addition, they will be entitled to re-
trenchment benefits under s. 25F of the Act, and one month's notice
F pay.
The remaining 139 will be awarded 50 per cent of the back wages
since we are restoring them. The High Court has adopted this
• measure and so we do not depart from it. The case of the hundred
stands on a slightly different footing, because some compensation
in lieu of refusal of reinstatement is due to them and that also has
G entered our reckoning while fixing 75 per cent for them. The com-
putation of the wages will be such as they would have drawn had
I
they continued in service and on that the cut directed will be --.J
applied.
We have disposed of the case of the permanent workmen except
R to clarify that in their case ·continuity of service will be maintained
and accrual of benefits on that footing reckoned. The next category
relates to casual employees, 131 in number of whom 57 have loss
I

GUJAltAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 217

than nine months' service. The policy of the Act draws a distinction A
between those with service of 240 days and more und others with
less. The casuals with less than nine months service are 57 in
number and we do not think that this fugitive service should qualify
for reinstatement especially when we find a number of intermediate
recruits, with longer though untenable service, have to be baled out.
( We decline reinstatement of these 57 hands. The other 74 must be I
reinstated although notionally but wrongly they are shown as casual.
Jn the 'life' sense, all mortals are casuals but in the legal sense,
, those with a record of 240 days on the rolls, are a class who have
.... ~ rights under industrial law. We direct the 74 long-te,rm casuals
y aforesaid to be reinstated but not the 57 short-term ones. To this
c
extent, we vary the High Court's order.

\_. ~e adopt the directive of the High Court regarding the back
£11' wages to both categories of casuals except that for th.e lesser class
{ of 57 casuals, a fiat sum of 1000/- more will be paid as a token
. COl1Jpensation in lien of re-instatement. The reinstated casuals (74 D
of them) will be put back as casuals but will be confirmed within
six months from the date of rejoining since it is meaningless to keep
them as casual labourers when they are, by sheer length of service,
on tl1e regular rolls.

Two issues remain When are the workmen to be retaken and E
what is to happen in the meanwhile ? How is the amount payable
by the Management to be discharged and on what term'\ ? Many
). years have flowed by, thanks to the long-drawn-out litigation.
_/'- Further delay in putting back the workers will be unfair. But the
Management pleads that steel shortage cuts into the llcsh of the fac-
F
tory's expansion, without which additi2nal intake of worker; is beyond
their budget unless considerable time for reabsorption were given.
But the lot of the workmen is unspeakable while the overall assets ·
and outlook of the Company are commendable enough to bear an
increased wage bill. Divas cannot complain when Lazarus asks for
more crumbs. Eve!JI if a slight slant be made in favour of the Manage- G
1 ment, the direction to them to take back, in order of seniority, the first
, _.: 70 out o.f the 139 permanent workmen on or before December 31, I
1979 and the rest on or before March 31, 1980 is the least that is just.
Until those dates the workmen will be paid 2/3(d of their wages
as nD1t> due. Of course, if any workmen fails to report for work
within 15 days of service ofwritten notice to him, with siniultaneous R
copy to the Sabha, he will not be eligible for any more reinstatement
I
or wages.
15-lf68SCl.(19
(

218, SUPREME COURT REPORTS [1980] 2 S.C.ll.

,\ The back wages run into a larg~ sum but a good part has been
paid under the stay order of this Court. We make it clear that the
payments made will be given credit and the balance if paid as direct-
ed below and within the \ime specified will not carry interest. If
default is made, the sums in default will carry 10 per cent interest.

8 The figures of amounts due will be worked out by both sides and
· put into Court in 10 days from now. Half the amount determined l
by the Court, after perusing both statements, will be paid directly to
the workmen or deposited with the Industrial Tribunal who will givi:
notice and make disbursements, on or before 31-3-1980 and the other ~ ·

c
half on or before 30-9-1980. , '1
/
The conclusions may be capsulated for easier consumption.
1. Out of 370 .workmen directed to be reinstated by the High
Court, 239 are permanent. It is assumed that 100 have found.
\',,• alternative employment and are not interested any more in re-·
·instatement and they are to be excluded from the direction of
!.-
0 reinstatement. The Company must, therefore, reinstate 139 per-
~; manent workmen and the list of 100 workmen who are not to

l' be reinstated would be supplied by the Sabha within two weeks from
the date of this judgment. The discharge order in respect of 100
workmen herein-before mentioned would be set aside and they ·ru:e
deemed to be in service till August 3, 1979, when they will be
E retrenched and they will be paid retrenchment compensation as pro-
vided in s. 25F plus one month's pay in lieu of notice, the compen-
sation to be worked out' on the basis of the wages that will be ad~
missible under the recommendations of the Engineering Wage Board /
as applicable to the Company. This amount will be paid in lien of ~
reinstatement and they will also be paid 75 per cent of the back
F
wages.
2. The remaining 139 permanent employees would be paid 50
per cent of the back wages as directed by the High Court.
· 3. 70 out of 139 permanent workmen directed to be reinstated
G should be provided actual employment on or before December 31,
1979, and the re.st on or before March 31, 1980. During this period
and till the actual reinstatement each one of these 139 workmen I
should be· paid 2/3 of the monthly wages from August 9, f979, \.4_.., •
when the hearing in this case concluded. 50 per cent of the amount
that becomes payable to each workmen under the directions hereinc
B above given will be paid on or before March 31, 1980, and ·the
balance on or before September 30, 1980, and till then the amount
will carry interest at the rate of 10 per cent.
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, !.) 219

4. In respect of casual workmen whose service was less than 9 A
months on the date of dismisswl it would not be proper to grant
reinstatement. They are 57 in number. The remaining casual workmen
74 in number shall be reinstated. In case of 57 casual workmen
to whom reinstatement is refused, the direction of the High Court is
~onfirmed with the further addition that each one will be paid
Rs.. 1,000/- over and above the amount payable under the direction B
· of the High Court and this would be in lieu of reinstatement. Casual
workmen 74 in number and having service of more than 9 months on
the date. of dismissal will be treated as confirmed within six months
~ of the date of their rejoining and they will be offered reinstatement
'1y March 31, 1980, and the High Court's direction for back wages C-
in tb.eir respect is confirmed.
With. these modifications, we. dismiss both the appeals. The
Management-app'ellant will pay the costs of the Sabha-respondent,
advocates fee being fixed at Rs. 5,000/-.
An Afterword D
This litigation, involving many workmen living precariously on
post-wages amidst agonising inflation and a Management whose young
budget, what with steel scarcity, may well be shaken by the burden
of arrears, points t<? the chronic pathology of our Justice System-
the intractable and escalating backl<?g in the Forensic Assembly E
Line that slowly spins Injustice out of Justice and effectually wears
down or keeps out the weaker sector of Indian life. This trauma is
felt more poignantly in Labour litigation and the legislature fails
functionally if it dawdles to radicalise, streamline and simplify the
conflict resolution procedures so as to be credibly avaifable to the
common people who make up the lower bracket of the nation. The F
stakes are large, the peril is grave, the evils are worse than the pro-
gnostics. of Prof. Laurence Tribe (of the Harvard Law School) :
"If court backlogs grow at their present rate, our children
may not be able to bring a lawsuit to a concluslon within
their lifetime. Legal claims might then be willed on, G
gereration to generation like hillbilly feuds; and the burdens
of pressing them would be contracted like a hereditary
disease."
Law may be gnilty of pouble injustice when it is too late and too
costly for it holds out remedial hopes which peter out into ~our ff
dupes and bleeds the anaemic litigant of his little cash only to ':antalise
1-im into a system equal in form but unequal in fact. The price of
220 SUPREME COURT REPORTS, [ 1'9ROJ 2 s.C.ll.

A this promise of unreality may be the search by tile lowly for the
reality of revolutionary alternatives. Compelled lJy the crisis in the
Justice System, we sound this sombre judicial irote:
We direct payments and reinstatements as spelt out earlier, within
the speciftcated time, and, hopefully, leave tl\e case with the thought
B that, given better rapport between the partners in production, the
galvanic Gujarat Steel Tubes Ltd., will forge ahead as a paradigm
for the rest.
KosHAL, J.-I have had the advantage of going thrnugh the judg-
ment of my learned brother Iyer, J., but after giving the same my
c most serious consideration I regret that I find myself unalile to endorse
it as I hold a different opinion in relation to three important findings
anived at by him, namely,
(a) that the discharge of workmen amounted' really to
their dismissal because the motivation for it was
D their alleged misconduct.
(b) that an arbitrator would faIT within the . ambit of
the term "Tribunal" as used hr suli'-sectfon (2) of
section l lA of the Industrial Disputes Act ·(herein-
after called the 1947 Act), arrd
E (c) that the High Court acted within the four corners
or its jurisdiction under article 227 of the Constitu-
tion of India while interfereing with tile finding of
the arbitrator that the workmen were correctly
punished with dismissal if the orders of discharge
could be construed as such.
F
I am therefore appending this note which may lie· read in conti-
nuation of that judgment.
2. The parties are admittedly governed by tl're' Industrial Employ-
ment (Standing Orders Act, 1946 (hereafter referred to as the
G "S.O. Act" section 15(2) of which empowers the appropriate Qo-
verrunent to make rules. inter alia setting out model standing orders . I_
for the purposes of that· Act. The· expression 'standing orders' is ~
defined iu section 2(g) of the S.O. Act to mean rules relating to the
matters set out in the schedule thereto, items 8 and 9 _of which
run thus :
H
· ."8. Termination of employment, and the notice there-.
for to be given by the emplover and workmen..
\\ .
GUJARAT STEEL TUBES v. MAZOOOR SABHA (Kasha!, J.) 221

"9. Suspension or dismissal for misconduct and acts or A
omissiens \Vhich'fcmstitute misconduct."

The appropriate Government (in this case the Government of
Gujarat) has prescribed Model Standing Orders (M.S.Os. for short)
under section 15(2) of the S.0. Act. The relevant part of M.S.0. 23
is extracted below : B
'.'23. ('1') · Subject to the provisions of the Industrial
I disputes AGt; 1947,' the employment of a permanent work-
, man employed on ..rates other than the monthly rates of
~--- wages may he terminated .by giving him fourteen days'
notice or by payment of thirteen days' wages (including c
all admissible allowances) in lieu of notice.
"(2') ....................................
"(3) .................... '. , ............ .
" ( 4) The employment of a permanent workman em-
ployed on the monthly rates of wages may be terminated D
·by giving him one month's notice or on payment of one
month's wages (including all admissible allowances) in lieu
of notice.
"(4-A) The reasons for the' termination of service of a
permanent workman shall be recorded in writing and com- E
municated to 'him, 'if be so desires, at the time of disch~rge,
unless such communi,ation, in the opinion of the Manager,
is likely directly or indirectly to lay any person open to
civil or criminal procedings at the instance of the work-
man.
F
"(5)
"(6)

·"(7) All Classes of workmen other than those 'appointed
on a permanent basis may leave their service or their
service may b{l terminated without or pay in lieu of 'G
notice : Provided that services of a temporary workman
•. .t..- shall not be terminated as a punishment unless he has been
given an opportunity of explaining the charges of misconduct
alleged against him in the manner prescribed in Standing
Order 25.
B
"(8) ... ······· .•. •.·• .......................... .
·~(9) ..... -· .................... ' ........ ."
I

~----------__,_________ ,..!,_/_______
222 SUPREME COURT REPORTS {.1980] 2 &C.R.

A M.S.O. 24 enumerates 25 kinds of actS or omissions on the part
\
of a workman which amount to miSconduct. Clause8 (a) and (b) of
the M.S.O. describe two of such acts thus :
"(a) wilful insubordination or disobedience, whether or
not iill combination with another, of any lawful and
B reasonable order of a superior;
(b) going on illegal strike or abetting, inciting, instigating
or acting in furtherance thereof;" ·. ·· \
M.S.O .. 25 lays down the manner in which a workman guilty ot~
misconduct may be dealt with. It states :
c~T "25. (1) A workman guilty of misconduct may be -
(a) .................................... .
(b) ...................................... .
(c)
D (d)
(e)
(f) discharged under Order 23;
(g) dismissed without notice.
"(2)
.E
" ( 3) No order of dismis~l under sub-clause (g)
of clause (1) shall be made except after holding an inquiry
against the workman concerned in respect of the alleged
misconduct in the manner set forth in clause ( 4).
"( 4) A workman against whom an inquiry has been held
F shall be gitven a charge-sheet clearly setting forth the cir-
cumstances appearing against him and reqniring explanation.
He shall be given an opportunity to answer the charge and
permitted to be defended by a workman working in the
same department as himself. Except for reasons to be
G recorded in writing by the officer holdillg the inquiry, the
workman shall be permitted to produce wi~nesses in his
defence and cross-examine any witnesses on whose evidence
the charge rests. · A coilcise summary of the evidence led
on either side and the workman's plea shall be recorded .
.'.'(5) ... ' .. ' ............... ' .... ' ' .. " . . . . . ."
H
Clauses (3) and ( 4) of M.S.0. 25 speak of an inquiry only in
the case of an order falling under sub-clause (g) of clause (1) of
\
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Kmhul, J.) 223

that M.S.O. It is thus quite clear (and this is not disputed) that A
the only sub-clause of clause (1) of M.S.0. 25 to which the provi-
sions! of clauses (3) and (4) of that M.S.O. would be attracted is
sub-clause (g) and that if ari order of discharge falls under M.S.O. 23
• an inquiry under clauses (3) and ( 4) of M.S.O. 25 would not be a
· • prerequisite thereto even though such an order is mentioned in sub-
I clause (f) of clause (1) of that M.S.0. And that is why it has been ••
vehemently urged on behalf of the workmen who were discharged
en masse and who were not taken back by the Management that the
orders of discharge made in relation to them amount really to orders
of dismissal and are bad in law by reason of the fact that no inquiry
of the type above mentioned was held before they were passed.
c
3. Under M.S.Os. 23 and 25 the Management has the power ·
,to effect termination of the. services of an employee by having re-
,'couise to either of them. In action .taken under M:S.O. 23 no
element of punishinent · is involved and . tl)e dj~charge is ,a discharge
simpliciter; and that is why no opportunity to the concerned employee ·D
to show cause against the termination is provided for. Dismissal,
however, which .an emp!Oyer may order, is, in its very nature, a
punisbment, the infiictiorr of which therefore has been made subject
to the· result of an inquiry (having the semblance of a trial in a
criminal proceeding) . Exercise of ea.ch of the two powers has the
effect of the termination of the services of the concerned employee E
but must. be regarded, because of the manner in which each has been
dealt with by the M.S.Os., as separate and distinct from the other.

4. It was vehemently argued on behalf of the workmen that
.mice it was proved that tlie order of discharge of a workman was
passed by reason of a misconduct attributed to him by the manage- F
ment, . the order cannot but amount to an order of dismissal. But
this argiiment, to my mind, is 'wholly without substance, and th~t
for: two reasons. For one thing, clause (1) of M.S.O. 25 specifically
$!ales in sub-clause (f) that a workman guiliy of misconduct may
be discharged under M.S.O. 23. This clearly means that when the
G
employer is satisfied that a workman has been guilty of misconduct,
.. ~
j
he may (apart from visiting the. workman with any of the punish-
ments specified in sub-clauses (a), (b), (c), (d) and (e) of
clause (1) of M.S.0. 25) either pass against him an order of dis-
charge for which no inquiry· preced~nt as provided for in clauses ( 3) i
and ·( 4) ol M.S.O. 25 would be necessary, or, may dismiss him H r'
after holding such an inquiry. Which of the two kinds of order tlie
employer shall pass is left entirely to his own discretion.

~~~------ ......................................... - ...........................__,.
224 SUPREME COURT REPORTS [1980] 2 s.c.R.

A
in t~~ i~:;~e0~h~~~h:f e:J~~~;~e~an~~~ ~:~ ~~~a~: di~mis~~
!t )( ,
order of termination of services of an employee is in reality inte~d
to punish an employee and not merely to get rid of him because he
is considered useless, inconvenient or troublesome, the order, even •
though specified to be an order of discharge, would be deemed to be .
B an order of dismissal covered by sub-clause (g) of clause (1) of \
M.S.O. 25. On the other hand if no such intention is made out, the
order would remain one of discharge simpliciter even though it h11s
•
been passe.d for the ~ole reason that a misconduct is imputed to the em- ~
ployee. That is how, in my opinion, M.S.O>. 23 and 25 have to
c be interpreted. The argument that onoe an alleged misconduct is
shown to .have been the moti!ve for the passage of an order of dis-
charge, the same would immediately aud without more, amount to
an order of dismissal, is not warranted by the language used in
M.S.O. 25 which specifically gives to the employer the power to
get rid of "a workman guilty of misconduct" by passing an <;>rder of
D his diseharge under M.S.O. 23.

5. Secondly, the reasons for the termination of service of a
permanent workman under M.S.O. 23 have to be recorded i!Il writing
and communicated to him, if he so desires, under clause 4-A) there-
of. Such reasons must obviously consist of an opinion derogatory
E to the workman in relation to the performance of his duties; and
1Vhether such reasons consist of negligence, work-~hirking or of
serious overt acts like theft or embezzlement, they would in any
case amount to misconduct for which he may be punished under

_,. M.S.O. 25. It is difficult to conceive of a case in which such
reasons would not amount . to misconduct. The result is thitt
M.S.0. 23 would be •endered otiose if termination of service there-
under for misconduct could be regarded as a dismissal and such a
result strikes ;tt the very root of accepted canons of interpretation.
If it was open to the Court to "lift the veil"· and to hold an order
of discharge to amount to a dismissal merely because the motive •
'
G behind it was a misconduct attributed to the employee, the services
of no employee could be terminated without holding against him an ~
inquiry such as is contemplated by clauses (3) and (4) of
M.S.O. 25.
J ..
6. The interpretation placed by me on M.S.Os. 23 and 25 finds
H
ample support in Bombay Corporation v. Malvankar(') of which the

(I) [1978] 3 S.C.R. 1000.

\
I
GUJARAT STEEL TUBES v. MAWOOR SABHA (Koshal, /.)
.
225

facts are on alll fours with those in the present case. Miss P. S. A
MalvaBkar, respondent No. l in that case, was a clerk in the employ-
ment or the Bombay Electric Supply and Transport Undertakinll
which was being run by the Bo,mbay Corporation. Her services were
• terminated on the grounc! that her record of service was unsatisfac-
tory. It was however stated .in the order of termination of her
I service8 that she would be paid one month's wages in lieu of notice
and would also be eligible for all the benefits as might be admissible
•
under the Standing Orders and Service Regnlations of the Under-
/ taking. Those Standing Orders correspond to the standing orders
,. -~-with which we are here concerned. Thereuuder, two powers were
t conferred on the empoyer, one being a power to impose punishment
c
for misconduct following a disciplinary inquiry under clause (2) of
Standing Order 21 read with Standing Order 23 and the other one
to terminate the service of the employee by one calendar month's
written notice or pay in lieu thereof under Standing Order 26. The
question arose as to which power had been exercised by the employer
in the case of Miss Malvankar and J as want Singh, J., delivering the D
judgment of the .Court on behalf of himself and Bhagwati, J., was
answering that question when he made the observations reproduced
from his decision. by my learned brother Iyer, J. This Court was
then clearly of the opinion that~-

(a) the power to terminate the services by an order of E
di&charge simpliciter .is distinct from and indepen-
dent of the power to punish for misconduct and the
Standing Orders cannot be construed so as to render
_)~ either of these j:>Owers ineffective; and
. '
(b) reasons ,for termination have to be communicated to F
the employee and those reasons cannot be arbitrary,
capricious or irrelevant bnt that would not mean
··"" that the order of termination becomes punitive in
character just because good reasons are its basis .
•
The Court further remarked that if the misconduct of the employee G
, constituted the foundation for terminating his service then it might be
• ... liable to be regarded as punitive but this proposition was doubted
'• inasmuch as "even in such case it may be argned that the manage-
ment has not punished the employee but has merely terminated . his
service nnder Standing ·Order 26".
' H
7. So all that re.mains to be determined in this connection is as
to when would misconduct be the 'foundation' of an order of dis-
226 SUPREME COURT REPORTS [1980] 2 S.C.R.
,
A charge. Merely because it is the reason which weighed with
the employer in effecting the termination ·of services would not make
the order of such tennination as one founded on misconduct, for,
such a proposition would run counter to the plain meaning of clause
(1) of M.S.O. 25. For an order to be 'founded' on misconduct, it •
must, in my opinion, be intended to have been passed by way of
B punishment, that is, it must be intended to chastise or cause pain in \
body or mind or harm or loss in reputation or money to the cori-
cerned worker. If such .an intention cannot be spelled out of the
oprevailing circumstances, the order of discharge or. the reasons· for~
which it was ostensibly passed, it cannot be regarded as an orde;
of dismissal. Sach would be the ci"lse when the employer orders dis- ·
c charge in the interests of the factory or of the general body of
workers themselves.· That this is what was re311y meant by the
judicial precedents which use the word 'foundation' in con~on
with the present controversy finds support from a number of decisiona
of this Court. In The Chart~red Bank, Bombay v. The Chartered
D Blink Employees' Union(') thk Court held that if the termination bf
seITice is a colourable exercise of the power vested ill the manage-
ment or is a result of victimization or unfair labour practice, the
Industrial Tribunal will have jurisdiction to intervene and set aside
such termination. Applying this pri11ciple to the facts of the case
before it, thi~ Court ruled :
"We are satisfied that the management has passed the
order of tennination simpliciter and the order doe\'! not
amount to one of dismissal as and by way of punishment''
(emphasis supplied) .

This case was followed in The Tata Oil Mills Co., Ltd., v. Work-
fl men(") where Gajendragadkar, C.J., who delivered the judgment of
the Court, stated the law thus : ·
"The true legal position about the Industrial Courts'
jurisdiction and authority in dealing with cases of this kind
is no longer in doubt. It is true that in several cases,
G contract of employment or provisions in Standing Orders
authorise an industrial employer to terminate the service of
his employees after giving notice for one month on paying J. '
salary for one month in lieu of notice, and normally, an
·employer may, in a proper case, be entitled to ·exercise the
said power. But where ~n order of discharge passed by an
B
(1) [1960] 3 S.C.R. 441.
(2) [1964] 2 S.C.R. 125
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Kosf:al, J.) 227

•
emloyer gives rise to an industrial dispute, the form of the
order by which the employees' services are terminated,
would not be decisive; industrial adjudication · would be
entitled to examine the substance of the matter and decide
whether the termination is in fact discharge simpliciter or
it amounts to di5missal which has put on the cloak of a
discharge simpliciter. If the Industrial Court is satisfied that
B
the order of discharge is punitive, that it is mala fide, or
that it amounts to victimization or unfai<r labour practice,
it is competent to the Industrial Court to set aside the
order an.d in a proper case, direct the reinstatement of the
employee. In some cases, ~he termination of the employee's c
services may appear to the Industrial Court to be caprici-
ous or so unreasonably severe that an inference may legiti-
mately and reasonably be drawn that in terminating the
services, the employer was not acting bona fide. The test'
always has to· be whether the act of the employer is bona-.
fide or not. If the act is mala fide, or appears to be a D
colourable exercise of the powers conferred on the employer
either by the terms of the contract ·or by the standing
orders, then notwithstanding the form of the order, indus-
trial adjudication would examine the substance and would
direct reinstatement in a fit case .. ".

The same test was laid down for determinil)g whether an order of
dischargy could be construed as one ordering dismissal in The Tata
Engineering and Locomotive Co., Ltd., v. S. C. Prasad(') by Shelat
and Bhargava, JJ. :
p
"No doubt, the fact that the order was couched in the
language of a discharge simpliciter iG not conclusive.. Where
rnch an order gives rise to an industrial dispute its form
is not decisive and the tribunal which adjudicates that. dis-
pute can, of course, examine the substance of the matter
and decide whether the termination is in fact discharge G
simpliciter or dismissal though the language of the order is
one of simple termination of service. If it is satisfied that
the order is punitive or mala fide or is made to victimise the
workmen or amounts to unfair labour practice, it is CDmpe-
tent to set it aside. The test is whether the act of
. the employer is bona fide. If it js not, and is a colourable R -
(!) [1967] 3 s.c.c. 372.
228 SUPl\EME COURT REPORTS [1980] 2 S.C.R.

A exercise of the power nuder the contract of service or stand-
ing orders, the Tribunal can discard it and in a proper
case direct reinstatement."
The Chartered Bank, Bomba>' v. The Chartered Bank Employees'
Union (supra) was followed by this Court in Workmen of Sudder
B Office, Cinnamore v. Management(I) ' and therein stress was laid on
the employer's right to terminate the services of a workman by an
order of discharge simpliciter uniter the terms of the contract where
there was no lack of bona {ides, unfair labour practice or victimiza-
tion. '-/

c So the real criterion which formed the touchstone of a test to
determine whether an order of temiination of services is an order
of discharge simpliciter or amounts to dismissal is the real nature of
the order, that is, the intention with which it was passed. H the
intention was to punish, that is, to chastise, the on:ler may be
.regarded as an order of dismissal; and for judging the intention, the
D question of mala {ides (which is the same thing as a colourable exer-
cise of power) becomes all-important. If no ma/a {ides can be
attributed to the management, the order of discharge must be regarded
as one having been caused under M.S.O. 23 even though the reason
for its passage is serious misconduct.
8. It is in light of the conclusion just above arrived at that the
discharge of the workmen in the instant case has to be judged. The
question of intention or mala {ides is really one of fact (of which
the arbitrator was, in my opinion, the sole judge, unless his finding on
the point was vitiated by perversity in which case alone it was liable
to be reviewed by the High Court). The discussion of the €\vidence
F by the arbitrator in his award is not only full and logical but, in my
opinion, also eminently just. At all material times the Management
was out to placate the Sabha (and therefore, the workmen) and gave
to it a Jong rope throughout. The attitude of the Sabha on the other
hancl was one of intransigence and obduracy. According to the
settlement of the 4th of August, 1972, it was not open to the work-
men to resort to a strike till the. expiry of a period of five years; nor
could the Management declare a lock out till then. Any disputes I
arising between the parties, according to the terms arrived at, were ~
to be sorted out through negotiations or, failing that, by recourse to
arl;litrati'Cln. A dispute was raised by the Sabha soon thereafter over
the implementation of the recommendations of the Central Engineer-
H•
ing Wage Board (hereinafter called the Board), the payment of.bonus
(I) (1970) II L.L.J. 620.
r GUJARAT STEEL TUBES v. MAZDOOR SABHA (Koshd, J.) 229

for t1le year 1971 and wages for an earlier lock out. In paragraph &
7.47 of its award the Board had made the following recommenda-
tions :
·'7.47. After considering the problem in its entirety, we
agreed to divide the industry into five regions or areas as
under and in doing so, we have also considered the prevail- a:
.iµig wage levels at different places and the cost of living at
important centres in these places.
''1. Bombay City and Greater Bombay including Thana
Ambarnath & Kalyan Industrial Areas.
.. ~2. Calcutta, Greater Calcutta, Howrah Industrial ar91, c
Jamshedpur Industrial area, Durgapur, Asansol and
Ranchi industrial areas.
"3. Madras industrial area, Bangalore industrial area,
Hyderabad industrial area, Poonit-Chinchwad indus-
trial area, Delhi industrial area and Ahmedabad. D•
•
"4. Coimbatore; Nagpur, Bhopal, Kanpur, Baroda and
Faridabad industrioal areas.
"5. The rest of the country."

This classification was made for tbe purpose of granting 'area allow-
ance' which varied witb the category in which the area of the situa-
tion of a factory fell. No allowance was to be paid to the factories
falling in category 5 and on tbe basis of the phraseology used by the
Board the Management contended that Ahmedabad industrial area
- (in which its facliory was 'situated) fell within that category. This
inteqiretat.ion of the categorisation made by the Board was not~ F··
acceplable to .the Sabha who claimed that. the factory was covered by
cate[#Jry 3; and this was an issu~ qn which the Sabha was' not
prepared to climb down. Similarly, the Sabha was adamant on the
question of bonus fur the year 1971 which it claimed at 16 per cent'
over and above 8.33 per cent allowed by statute with the plea that
bonllS at that rate had been paid in the earlier year. This being Jhe
position and negotiations between the parties held at two ll!eetings
, convened on 14-12-1972 and 20-1-1973 having ended in a fiasco,
the Management offered to have the disputes resolved by arbitration
bnt that again was a course not acceptable to the Sabha which, how-
ever, accused the Management of flouting the settlement dated the
4th of August, 1972, by not coming to the negotiating table. The
attitude adopted by the Sabha was, to say the least, most unreason-
230 SUPREME WURT REPORTS [1980] 2 s.c.R. ~
A able. It could not have its own way in taking certain matters . as
final and non-negotiable. Nor can it be said that stand taken· by
the .management was unreasonable. Paragraph 7.47 of the award
of- the Board categorized various factories with reference to the areas
which were either described by the names of the cities in which
they were situated or by the names of certain industrial areas.
Ahmedabad was mentioned as such and so was Calcutta while the
other areas were mentioned as such and such industrial areas. It
was thus a very reasonable plea put forward on behalf of the Manage-
ment tl1at only Ahmedabad city and not Ahmedabad .industrial area
was included in category 3 and that that industrial area fell within)-
category 5. On the other hand, the Sabha interpreted the wo.¢
'Ahmedabad' occurring in category 3 to include 'Ahmedabad iutlus-
trial area (in which lay the factory in question) and demanded area
allowance for its workers on that score. · The reasonableness of the
plea of the Management is obvious and it was the attitude of the
Sabha which lacked reason in that on the failure of the negotiations
·n they spurned the offer of the Management for arbitration on the
question of interpretation of the categorisation. It• can also not be
said that the objection regarding payment of bonus 'raised by the
Management was not a reasonable one. The argument that the stand
of the Management that· the negotiatiQns between them and the
Sabha on the questions of interpretation of the Board's award and
bonus having f.ailed as there was no meeting ground on either of·
them, they could be referred to arbitration, lacked reason, is wholly·
unacceptable. The attitude of the Sabha in insisting on negotiations
being held only on the basi~ of certain propositions formulated by it
amounted really to a refusal to negoliate. the points in dispute and
the Management was therefore not left with any alternative except
to suggest an arbitration as envisaged in the settlement dated the 4th
of August, 1972.

9. Later developments reveal a similar state of affairs in so far
as the attitude of the Sabha is concerned. Over and over again ·it
·G was asked not to precipitate a strike and to act within the terms· of
the settlement but the advice foll on deaf ears. Even after the strike
which, it is admitted pn all hands, was illegal and certainly not en-
visaged, by the settlement of the 4th of August, 1972, the Manage- '4
mcnt continued to make requests to the Sabha to send back 'the
workers, but again no heed was paid to those requests. On the ot'her
'H hand, the Sabha began making suggestions to the Government to
take over the factory. Ultimately, when the Management wa~ faced,
to adopt means to rehabilitate the factory by reports to fresh
-~
GUJARAT STEEL TUBES v. MAZDOOR SABHA (Koshal, J.) l 231

'l'ecroitment, they had no optron except to terminate the services of A
its workmen. Each one of the orders of termination of services
which were actually passed, was on the face of it wholly innocuous
inasmuch as it did not stigmatise in any manner whatsoever the con-
cerned workman. The Management had however to record reasons.
for the discharge in pursuance of the provisions of clause ( 4A) of
M.S.0. 25 and those reasons .did charge each worker with misconduct B
.inasmuch as he had taken part in the illegal strike and had refusedr
to resume duty inspite of repeated demands made By the Management
in that behalf. All ,the same, the Management made it clear that
"'\. inspite of such misconduct it had no intention of punishing the
\ ·workers who were given not only the benefit of an order of discharge
' ·simpliciter but also the option to come back to work within a speci-
c
1fied period in which case they would be reinstated with full benefits.
An intention not to punish could not be expressed in clearer terms
. ·and is _further made out from the fact that more than 400 workers
·who ·resumed duty were reinstated without break in service. In
passing the orders of discharge, therefore, the Management did D
;nothing more than act under M.S.O. 23 and its acfam cannot be
regarded as amounting to dismissal in the case of any of the workers.
They ·had the right to choose between ·a discharge simpliciter and a
-dismissal and, in the interests of the factory and the members of the
Sabha and perhaps on compassionate grounds also, they chose the
former in unequivocal terms. The intention to punish being absent, E
the finding of the High Court that the order of discharge amounted
to one of dismissal cannot be sustained. ·
10. I ·now turn to the interpretation of sub-section (2) of sec-
-. tion llA of the 1947 1\ct. It is a well settled canon of interpretation
of statutes that the language used by the legislature must be regarded p
as. the only source of its intention unless such language is ambi-
:guous, in which situation the preamble to the Act the Statement
· of Obj~ts of and Reasons for bringing it on thei Statute book and
the purpose underlying the legislation may be taken into' consi-
-deration for ascertaining such intention. That the purpose of
the legislation is to fulfil a socio'-economic need, or the ~xpress_ G
·object underlying. it, does not come into the picture till an ambiguity
~ is detected in the language and the court must steer clear t>f, the
· temptat~n to piould the written word according to its own concept
of what should have been enacted. That is how I propose to approach
the exercise in hand.
D
11. For the sake of convenien~ of reference I may set out the
'Provisions of clauses (aa) and (r) u"'f section 2, of sub-sections (1)
'
232 SUPREME COURT REPORTS [1980} 2 S.C.lt.
I
l A and (2) and the opening clause of sub-section (3) of section 11, and
of the whole of section llA of the 1947 Act:
"2. (aa) 'arbitrator' includes an umpire;"
"2. (r) 'Tribunal' means an Industrial Tribunal consti-
tuted under section 7A and includes an Indus-
B trial Tribunal constituted before the 10th of
March, 1957, under this Act;"
"11. (1) Subject to any rules that may be made in this
behalf, an arbitrator, a Board, Court, Labour Court, Tribu-
nal or National Tribunal shall follow such procedure as the [
arbitrator or other authority concerned may think fit.
c I

"(2) A conciliation officer or a member of a Board, or
Court or the presiding officer of a Labour Court, Tribooal
or National Tribunal may for the purpose of inquiry into
any existing or apprehended industrial dispute, after giving
reasonable notice, enter the premises occupied by any esta-
J) blishment to which the dispute relates.
" ( 3) Every Board, Court, Labour Court, Tribunal and
National Tribunal shall have the same powers as are vested
in a Civil Court under the Code of CM! Procedure, l 90S,
when trying a suit, in respect of the following matters,
E namely:- ........ "
"11A. Where an industrial dispute; relating to the dis-
charge or dismissal of a workman has been referred to a
Labour Court, Tribunal or National Tribunal for adjudica-
tion and, in the course of the adjudication proceedings, the r
Labour Court, Tribunal or National Tribunal, as the case
F may be, is satisfied that the order of discharge or dismissal
was not justified, it may, by its award, set aside the order
of discharge or dismissal and direct reinstatement of the
workman on such terms and conditions, if any, as it thinks
fit, or give such other relief to the workman including the
award of any lesser punishment in lieu of discharge or dis-
missal as the circumstances of the case may require :
Provided that in any proceeding under this section the

!
f
B
Labour Court, Tribunal or National Tribunal, as the case
may be, shall rely only on the materials on record and shall
not take any fresh evidence in relation to the matter."
Section 2 of the Act specifically lays down that unless there is
anything repugnant in the subject or context, the expressions defined
,.. GUJARAT STEEL TUBES v. MAZDOOR SABHA (Koshal. J.) 233

. therein would have the meanings attributed to them. Throughout the A'
Act therefore, while 'arbitrator' would include an umpire, a 'Tribunal'
, \ would not include an arbitrator but would mean only an Industrial
Tribunal constituted under the Act, unless the context makes it nee~
sary to give the word a different connotation. In sub-section (1) 0£
section 11, it is conceded, the word 'Tribunal' has been used in
accordance with the definition appearing in clause (r) of section 2 B
because an arbitrator is separately mentioned in that sub-section. In
sub-sections (2) and 3) of that section a Board, a Labour Court, a
Tribunal and a National Tribunal have been invested with certain:
powers. Would a Tribunal as contemplated by sub-sections (2) and
"""(3) then include an arbitrator? My reply to the question is an c
emphatic 'no'. It is well settled that if a term or expression is used
in a particular piece of legislation in one sense. at one place, the same
sense will pervade the entire legislation wherever the te~m is used
unless an intention to the contrary is expressed, Here the word
'Tribunal' has been used in three sub-sections of the same section and
no reason at all is fathomable for the proposition that it means one D
thing in sub-section (1) and something different in sub-sections (2)
and (3). It may also be mentioned here that in all the three sub-
sections the word 'Tribunal' has a capital 'T' which is also part of the
expression 'Tribunal' as occurring in clause (r) of section 2 and thu~
connotes a proper noun rather than the generic WQrd 'tribunal' a•
embracing all institutions adjudicating upon rights of contendina E
partieio. A third and perhaps a clinching reason for this interpreta-
tion is available in the nse of the expression "National Tribunal" alon11
with the word "Tribunal" in all the three sub-sections which militate~
"-. against the argument th_at ~e _word "Tribunal" as used in sub-s_ectioos
· ( 2) and ( 3) means an institution of that type. If the word "Tnbunal"
F
as used in sub-sections (2) and (3) means such an institution, then
the use of the expression "National Tribunal" would be redundant
and redundancy is not one of the qualities easily attributable to a legi5-
lative product. In that case, in fact, other words used in the two
sob-sections last mentioned, namely, 'Court' and 'Labour Court' wOllld
also become redundant. In this view of the matter, the word. G
"Tribunal" as used in all the first three sub-sections of section 11:
. must be held to have been used in the sense of the definition occurring
...... in clause (r) of section 2.

12. Section llA is just the next succeeding section and therein -3 , H
part of the a~gement adopted is the same as in sub-sections (2)
and (3) of section 11 so that powers are conferred by it on a "Labour
16-S68SCl~79
234 SUPREME COURT REPORTS [1980] 2 S.C.lt.

A Court, Tribunal or National Tribunal" which iirriingement is repeated
in the section thrice over. That the word "Tribunal" as ,used in
section 1 lA has the samei meaning as it carries in the three sub-secti~
Qf section 11 is obvoius and I need not repeat the reasons in tlnd
behali; for, they are practically the same as have been set out by mo '
in relation to section 11. '
B
13. In my opinion the l'allguage employed ib. section llA suJieni
from no ambiguity whatever and is capable only o~ one meaning, i.e.,
that the word 'Tribunal' occurring therein is used in the sense of thtj •
definition given in clause (r) of section 2. It iSI thus not permiSsiblei
for this Court to take the Statement of Objects and Reasons or the ~
c purpose underlying the enactmen~ into consideration while interpreting
section 1lA.
I may mention here however that a perusal of the Statement od!
Objects and Reasons forming the backgro1.md to the enactment of
section llA leads me to the same conclusion. In that Statement ai
D reference was specifically made to tribunals as well as arbitrators in,
terms of the recommendations of the International Labour Ocganiza-
tion. But inspite of that the word 'arbitrator' is conspicuqus by its
absence from the section. What is the reason fo~ the omission? Was
it consciously and deliberately made or was it due to carelessness ~
the part of the draftsmen and a consequent failure on the part of tho
E legislature ? In my ,opinion the Court would step beyond the field
of interpretation and enter upon the area of legislation if it resorts to
guess work thowever intelligently the same may be carried out) and
attributes the omission to the latter cause in a situation like this which
po6tulates that the pointed attention of the legislature was drawn to
the desirability of clothing an arbitrator with the same powers as were
sought to be conferred on certain courts and tribunals by section llA
and it did not accept the recommendation. I would hold, in the
circumstances, that the omission was deliberately made.
It follows that the powers given to a Tribunal under section 1 lA
are not exercisable by an arbitrator who. therefore, cannot interfere
G with the punishment (awarded by the employer) in case he finds
misconduct proved. . 1

14. The last point op which I differ with the finding of my -.t_ •
learned brother relates to the exercise by the High Court of its powers
under article 227 of the Constitution of India. As pointed out by
H him the High Court, while discharging its functions as envisaged by
that a.rticle, does not sit as a court of appeal over the award of tho
arbitrator but exercises limited jurisdiction which extends oaly to
!/ GUJARAT STEEL TUBES v. MAZDOOR SABHA (Ko;hal, J.) 235

seeing that the arbitrator has functioned within the scope of his leg~
authority. This proposition finds full support from Nagendra Nath

r Bora and Another v. The Commissioner of Hills Division an~ AppeizlS,
Assam and Others('), P.H. Kalyani v. M/s. Air France, Calcutta('),
State of Andhra Pradesh v. S. Sree Rama Rao('") and Navinchandra
Shakerchand Shah v. Manager, Ahmedabad Cooperative Department
Stores Ltd.(4), all of which have ben discussed at length by him and B
require no further consideration at my hands. In this view of the
matter it was not open to the High Court to revise the punishment
(if the cjisclrarge is regarded as such) meted out by the Managemenl
~ to the delinquent workinen and left in tact by the arbitrator wh~
authority in doing so has not been shown to have been exercised c
beyond the limits of his jurisdiction:
15. I need not go into the other aspects qf the case. In view
of my findings -
(a) that the orders oi discharge of the workmen could
not be regarded as orders of their dismissal and were,
on the other hand, orders of dischllrge simpliciter D
nroperly passed under M.S.0. 23;
( b) that the arbitrator could not exercise the powers
conferred on a Tribunal under section llA of the
1947 Act and could not therefqre interfere with the
punishment awarded by the Management to the E
workmen (even if the discharge could be regarded
a punishment), and
( c) that in any case the High Court exceeded the limits
of its jurisdiction in interfering with the said punish-
ment purporting to act in the exercise of its powers
under article 227 of the Constitution qf India, F

the judgment of the High Court must be reversed and the order of the
arbitrator restored. The three appeals ~ decided accordingly, the
parties being left to bear their own costs throughout.
ORDER
G
The appeals are dismissed substantially with such modifications as
are indicated in the decretal part of the judgment of the majority.

V.D.K. Appeals dismissed.
(1) (1958] S.C.R. 1240.
(2) (1964] 2 S.C.R. l~
(3) (1964] 3 S.C.R. 25.
(4) (1978) 19 G.L.R. !08.