Holding

The Labour Court should not interfere with a lawful disciplinary discharge that is not shockingly disproportionate; therefore, the order of reinstatement with 40% back wages was unwarranted.

Summary

New Sharrock Mills terminated Badli workman Maheshbhai T. Rao after a departmental inquiry found him guilty of serious misconduct for abusing a senior officer. Rao challenged the discharge before the Labour Court under Section 78 of the Bombay Industrial Relations Act, 1946, seeking reinstatement and back wages. The Labour Court upheld the legality of the inquiry but set aside the discharge, ordering reinstatement with 40% back wages, deeming the punishment excessive. The High Court dismissed Rao's writ petition, prompting an appeal to the Supreme Court. The Supreme Court held that the Labour Court exceeded its jurisdiction by interfering with a punishment that was not shockingly disproportionate to the misconduct. It emphasized that when a disciplinary inquiry is lawful and the employer's sanction is within the range of permissible penalties, the Labour Court should not substitute its own remedy. Consequently, the Supreme Court set aside the Labour Court's order and allowed the appeal.

Issues considered

Whether the Labour Court can set aside a discharge ordered by an employer after a lawful disciplinary inquiry and order reinstatement with back wages under Section 78 of the Bombay Industrial Relations Act, 1946.

Legislation cited

Bombay Industrial Relations Act, 1946s. 78, s. 79

Subjects

labour lawdisciplinary actiondischargereinstatementback wagesproportionalitystanding ordersBombay Industrial Relations Act

Judgment

A NEW SHARROCK MILLS
v.
MAHESHBHAI T. RAO.

OCTOBER 25, 1996

B [J.S. VERMA AND B.N. KIRPAL, JJ.)

Labour Law :

Bombay Industrial Relations Act, 1946-Section 78-Jwisdictio11
C 1111der-Labour 'Court inspite of co11cludi11g that the discipli11ary i11qui1y
against the workman was legal & proper, set-aside the punishment awarded
by the ma11agement-Held, in view of its conclusion, the Labour Court ought
not have inteifered with the punishment, since it has jurisdiction, 011ly to
decide legality and propriety of the order of employer under the standing
orders.
D
Charge of misconduct agai11st workman-Punishment of discharge in-
stead of dismissal, after disciplinary i11quiry-I11teifere11ce by Labour Court by
ordering rei11statement of w01'kman with 40% back wages-Held, pu11ishment
not dispropo1tio11ate, hence does not waJTant inteiference of Labour Cowt.
E
Respondent, a Badli Workman, was held guilty of misbehaviour with
superior officials, in disciplinary inquiry, under the standing orders and
was discharged from service with payment of 30 days salary in lieu of
notice. Prior to this incident, the respondent had misbehaved on several
occasions and had failed to improve despite his assurances.
F
Respondent moved labour court under Section 78 of Bombay In-
dustrial Relations Act, 1946. Labour Court came to the conclusion that
finding of the departmental enquiry was legal & proper and that the
respondent was guilty of the misconduct. Notwithstanding the conclusion,
G the Labour Court set aside the order of discharge and ordered reinstate-
ment of the respondent with 40% back wages.

Writ Petition by the appellant Mills before the High Court was
dismissed in limine. Hence this appeal.

H Allowing the appeal, this Court
762
NEWSHARROCKMILLSv. M.T.RAO[KIRPAL,J.] 763

HELD : 1.1. The direction of the Labour Court ordering reinstate· A
ment of the respondent with forty percent back wages was clearly unwar-
,._,..,. ranted. The Labour Court was exercising jurisdiction under Section 78 of
the Bombay Industrial Relations Act, 1946. It had the jurisdiction interalia
to decide the disputes regarding propriety and legality of an order passed
by an employer acting or purporting to act under the standing orders. The
Labour Court, in the present case, having come to the conclusion against
B
the respondent, ought not to have interfered with the punishment which was
awarded, in the manner it did. This is not a case where the court could come
to the conclusion that the punishment which was awarded was shockingly
disproportionate to the employee's conduct and his past record. [766-B-C]

1.2. The punishment imposed by the management was in no way
c
disproportionate to warrant interference by the Labour Court. It was over·
looked by the Labour Court that on the finding of the Inquiry Officer that
the respondent had misbehaved with his superior officer and was guilty of
misconduct, the appellant could have dismissed the respondent from ser·
vice. The appellant chose not to do so. Instead it passed an order of D
discharging the respondent from service. Lesser punishment having been
given by the management itself, there was no justifiable reason for the
Labour Court to have set aside the punishment so awarded. [766-D-F]
r

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1959 of
1992.
E

From the Judgment and Order dated 9.1.92 of the Gujarat High
Court in S.A. No. 7423 of 1991.

Dushyant Dave, Pratap Venogopal, (K.J. John) Adv. (NP) for the
F
Appellant.

S.C. Patel for the Respondent.

The Judgment of the Court was delivered by
G
KIRPAL, J. The only question which arises for consideration in this
~ appeal is whether the Labour Court, having found that the employee was
guilty of miscondud in an inquiry held in accordance with law and in
compliance with principles of natural justice, can set aside the order of his
discharge and substitute the same with an order of reinstatement with forty
per cent back wages. H
764 SUPREME COURT REPORTS (1996] SUPP. 7 S.C.R.
A The respondent was engaged as a Badli workman, by the appellant,
some time in October, 1971. On 29th December, 1976 the respondent
entered the office of the Deputy Manager and started abusing him and
threatened that the mill officers will not be safe outside the mill and that
he did not care if he had to go to jail for murder of four to five officers.

B In view of the aforesaid abusive behaviour of the respondent a show
cause notice under clause 22 (1] of the Standing Orders was served on him.
This notice was based on the complaint dated 31st December, 1976 which
was made by the said Deputy Manager to the management of the appellant
mill.

C Thereafter, a domestic inquiry was held, witnesses were examined
and full opportunity was given to the respondent to defend himself. After
the inquiry proceedings concluded the respondent .was served with a notice
by the Inquiry Officer to show cause why he should not be discharged from
the service of the mill. A reply dated 30th July, 1977 was filed by the
D respondent. The Inquiry Officer, afte~ considering the entire material on
record and also after taking into account the explanation offered by the
workman, came to the conclusion that the respondent was in fact. guilty of
misconduct. By order dated 2nd August, 1977 the respondent was dis-
charged from the service as Badli worker with immediate effect. He
however, was given thirty days salary in lieu of the notice period.
E
The respondent then moved the Labour Court under Section 79 of
the Bombay Industrial Relations Act, 1946, inter alia, praying that the order
of discharge dated 2nd August, 1977 be declared as illegal and he should
be reinstated with continuity in service and be paid the back wages. No
oral or documentary evidence was led before the Labour Court which
F considered the entire material relating to the matter as had been placed
before the Inquiry Officer.

The Labour Court passed an order dated 22nd June, 1990 and, inter
alia, held as follows :-

G (a) That the charge against the respondent was neither vague nor
unclear:

(b) That the finding of the Departmental Enquiry was legal and
proper;

H (c) That the order of discharge was not passed by way of victimisa-

)
NEW SHARROCK MILLS v. M.T. RAO [KIRPAL, J.] 765
tion; A
( d) That the Departmental Enquiry had been conducted legally
and properly and the respondent was afforded reasonable oppor-
tunity of hearing;

( e) That in passing the order of discharge, the appellant manage- B
ment had not acted outside the scope of the enquiry;

(t) That the respondent workman had seriously misbehaved with
his superior officers and was thus guilty of misconduct;

(g) That the finding of misconduct reached in the enquiry was C
neither perverse nor baseless but was proved on the basis of
evidence on record.

Notwithstanding the fact that it had arrived at the aforesaid con-
clusion the Labour Court interfered with the punishment which was
awarded by observing as follows :- D
"Looking to the facts of this case and the facts of the evidence of
the witnesses produced in this case, on the basis of the departmen-
tal inquiry against the applicant, the allegations levelled against the
applicant are proved. But as discussed hereinabove having regard E
to the decisions, the punishment of discharging the applicant from
the service imposed by the opponent mills company is excessive
and harsh and it leads the applicant to economic destruction. On
account of this the family members of the applicant may also have
to suffer. The punishment of discharging from service may only be
imposed when there is no alternative except to discharge the F
applicant. The hon'ble High Court and the Hon'ble Supreme Court
have in many cases adopted the course that in cases of such a
nature, harsh punishment of dismissal of the applicant should not
be imposed. The applicant of this matter also on the· basis of the
decisions stated hereinabove, · the applicant is entitled to be G
reinstated in the opponent mill company in his original post with .
continuity of service.'

The appellant filed a writ petition before the Gujarat High Court but
the same was dismissed in limine by observing that the impugned judgment
was just and proper and did not require to be interfered with under H
766 SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R.
A Articles 226 and 227 of the Constitution. This appeal arises on the special
leave having been granted against the said decision of the High Court.

It appears to us that the Labour Court completely misdirected itself
in ordering the respondent's reinstatement with forty percent back wages.
The Labour Court was exercising jurisdiction under Section 78 of the
B Bombay Industrial Relations Act, 1946. It had the jurisdiction, inter alia, to
decide the disputes regarding the propriety and legality of an order passed
by an employer acting or purporting to act under the Standing Orders. The
Labour Court, in the present case, having come to the conclusion that the
binding of the departmental inquiry was legal and proper, respondent's
C order of discharge was not by way of victimisation and that the respondent
workman had seriously misbehaved and was thus guilty of misconduct,
ought not to have interfered with the punishment which was awarded, in
the manner it did. This is not a case where the court could come to the
conclusion that the punishment which was awarded was shockingly dis-
proportionate to the employee's conduct and his past record. The Labour
D Court completely overlooked the fact that ever prior to the incident in
question the respondent had misconducted himself on several occasions
and had been punished. According to the appellant there were atleast three
other instances where the respondent had misconducted himself and that
he had failed to improve his conduct despite his assurances from time to
time. Another aspect which was overlooked by the Labour Court was that
E on the finding of the Inquiry Officer that the respondent had misbehaved
with his superior officer and was guilty of misconduct, the appellant could
have dismissed the respondent from service. The appellant chose not to do
so. Instead it passed an order of discharging the respondent from service.
Lesser punishment having been given by the management itself there was,
F in our opinion, no justifiable reason for the Labour Court to have set aside
the punishment so awarded. We are unable to accept that the punishment
imposed by the management was in any way disproportionate to warrant
interference by the Labour Court. The direction of the Labour Court
ordering reinstatement of the respondent with forty per cent back wages
was clearly unwarranted.
G
For the aforesaid reasons while allowing this appeal the order dated
22nd June, 1990 of the Labour Court, Nadiad, in so far as the order of
reinstatment of the respondent is concerned, is set aside. There will be no
order as to costs.

K.K.T. Appeal allowed.

.I