Holding

Clause 10 (and clauses 16, 30) of Standing Order 22 applies only to misconduct committed within the premises or vicinity of the establishment, and misconduct not enumerated in the order cannot be punished under S.O.23.

Summary

Glaxo Laboratories, a multinational employer, charged a striking worker and his co‑workers with misconduct under clauses 10, 16 and 30 of Standing Order 22, alleging they boarded a company bus and assaulted "loyal" workmen. The worker sought interpretation of the standing order under s.11‑C of the U.P. Industrial Disputes Act. The Labour Court and the Allahabad High Court held that the alleged acts occurred outside the premises and therefore were not covered by the standing order. The Supreme Court examined whether a penal provision like the Standing Orders must be given a strict construction and whether "misconduct" under S.O.23 could include acts not enumerated in S.O.22. It held that clause 10 (and the related clauses) must be limited to misconduct committed within the establishment or its vicinity, that the standing orders are penal statutes requiring strict interpretation, and that misconduct not listed in the order cannot be punished under S.O.23. Consequently, the charges under clauses 2(c)‑2(h) were not covered, and the appeal was dismissed.

Issues considered

The proper construction of clause 10 (and clauses 16, 30) of Standing Order 22 regarding the requirement that misconduct be committed within the premises or vicinity of the establishment.
Whether "misconduct" under Standing Order 23 includes acts not enumerated in Standing Order 22.
Whether a penal provision such as the certified standing orders must be interpreted strictly and limited to the language of the statute.

Legislation cited

Industrial Employment (Standing Orders) Act, 1946s. 10, s. 12, s. 13, s. 23, s. 3, s. 5, s. 9
U.P. Industrial Disputes Act, 1947s. 11-C, s. 33, s. 33A

Subjects

Industrial lawStanding OrdersMisconductPenal statutesStatutory interpretationEmployer‑employee relationsIndustrial disputes

Judgment

•

GLAXO LABORATORiES

~.

JI.
THE 'PRESIDING OFFICER, LABOUR
,COURT MEERUT & ORS.
B -~

'
October 6, 1983

(D. A. DESAI, 0. CHINNAPPA.REDOY AND
A. VARADARAJAN, JJ.]
c
. Industrial Employment (Standing Orders) Act, 1946-Constr.uction of
Standing Orders-Standing orders prvviding /of imposition of penalty on proof of
·'misconduct' should be construed strictly like penal Statutes .
. '~ I

The appellant-con1pany charges.heeted the.second respondent and some >
of his striking co-workmen for violation of els. IO, 16 and 30 of Standing Order
22 on the allegation that they had b_oard\!d a bus carryjng 'loyal workmen' and
manhandled them at different place'! during the journey. Clause 10 Qf S.O. 22
provided that "drunkenness, fighting, indecent or diSorderly behaviour use.of
abusive langua8:e, wrongfully interfering with the work of other employees or
E . conduct likely to cause a breach of the pc.ace or conduct endangering the life
or safety of any other person, assault or threat of assault, any act subversive of
discipline and efficiency and aily act involving moral turpitude, committ~d
within the premises of the establishment, or in the vicinity thereof". \\OUld be
treated as misconduct. Standirlg qrder 23 prescribed punishment for
misconduct. · The second respondent approached the Labour Court under .
s.11-C of the U. P. Industrial Disputes Act, 1947 for a correct interpretatioD
F of the Standing Ordei-. The Labour Court held that the acts of misconduct
were not cover'ed by the .provisions of _the S~nding Order as they
were 3.Ueged to have been committed outside the premises of the establishment
, and not in its vicinity. The High Court upheld the construction put by the
Labour Court and dismissed the writ petition filed by the appellant. :

G
Counsel f~r appellant contended that if the motivation for committing an
act of misconduCt any-where is to have an adverse eft'eCt on the peaceful
working Or the establishment, then, irre~pective of the fact where the mis-
conduct is committed, it should be deemed to have been committed within the
premises of the establiShment or in its vicinity; and, further, that since the.
H expression 'misconduct' under S.0.23 is not qua1ified as the one set outjn
S.0.22, any other act of on1ission or coinmission which would per se-be mis-
conduct would be puai~hable under S.0. 23 irrespective of the fact whether it
fin~s its enumeration in s.o._ 22 or not.
'

\ / '

GLAXO I.As. V. LABOUR coURT 231 .
..
Dismissing the appeal,

HELD : The Industrial Employment (Standing Orders) Act; 1946 ·
confers the power to prescribe conditions of service of workmen - on tbe .
employer to enable him to peacefully carry on his industrial activity and he haS
jurisdiction to regti1ate the behaviour of workmen within the premises of hiS .
establishment or in itS vicinity. This being the larger objective behind issue of
certified Standing Orders, the only construction o'ne can put on ct.10 is th3t the
'T .. various acts of miscandcct set out therein would be misconduct for 'the purpose -·D
of S.0.22 and punishable ufider S.0.23, if committed within the premises of the
establishment or in the vicinity thereof. What constitutes-establishment or its

\.
vicinity would depend upon the facts and circumstances of each case.· ·
. (240 D-E; H; 241 A-BJ

.. \ --
· (b) Standing.Order 22 is a penal staiute i~ the sense that it provide! for c
~~
imposition ·or penalty On proof of misconduct. - Foi a penalfY to bC imposC-d it
must be quite cleat that.the case falls v.ithin both the, letter and the spirit of the
statute. It is a general rUte that penal enactments are to be coastrued strictly-
' and not extended beyond their clear mcan_ing. If the·· expression- "committed
within the premises of the Cstablishment oi- in the viciniry thereof' contained in
cl 10 is given a wide construction so ai to mak_e thC clause itself meaningles!.
an.-f redundant. the penal statute would become so_ vague and would be far .D
' .
beyond the requirement of the situation as to make it a \\ eapoo, of torture. If
1

miscoadut. committed anywhere, irrespecu"e ·of. the tlln~-Place content
where and when· it is committed, is to be comprChended i.1 cI.10 merely because
it has some remotCimpact on the peaceful atmOsphere in the establishment,
there would be no justification for using the words "committed withiri the
premises of the establishment or in the vicinity -thereof' ill cl.IO. _These arc-
"- words of· 1imitation- and they must cut down the opera.don Of the clause•...., E
Clauses 16 and 30 of S.0.22 form an integral part of a Code and the setting and .
purpose underlying these two clauses must receive the same construction which
cl.10 received. [242 F-H; 243 A-q

Hal~bury'• law• of England, 4th Ed., Vol. 44, paras 909, 910 at p. 560;
referred to : · F
Mulchmulanl Electrical aitd Radio Industries. l.Jd. JI. n·orkmen A. I. R.
1975 SC 212~; Central India . Coalfields v. Ram Bi/as Shobnath, A. I. R. 1961
S. C. 1189; Laila Ram v. Management of D. C. M. Chemical Works, (1978}
3 S.c: R. 82; Brit~sh India Carporalion ?· Bhak5hi Sher Singh & Ors. ,(1962-63}
· 23 Indian Factories J'!urnal, 484; cxplaine~ and distinguished.
G
Bh'a~at Iron JVorks v. Bhagubh'ai Patel, [1976] 2 5. C~ R;· 280; Sauraslitra
Salt },,fanufacturing Co. JI. Bal Valu Raja & Ors, A I. R. 1958 S. C. 881 and
General ~anager, B. E. S. T. Undertaking JI~ Mrs. Agnes~ (1964] 3 S. C.R. 930;
not relevant. -
H
(ci The Industrial Employment (Standing.Orders) Act, 1946 was enacted,
as its long title shows, to require emi:>loyers in indust)"iaJ ·establishments to
define with sufficient precision the conditi_?ns of einployment under thcm-an4
232 StJPilEME COURT REPoRTS (!984] 1 s.c.a.
to make the said conditions known to workmen employed _by them. Since the
A scheme of the Act shows that certified Standing Orders have more or less a 1
l
statutory flavour, ordinary cannons of construction of statutes have to be
applied for their il]terpretation. The purpose of interpretation is to give effect
to the intention underlying the statute and therefore_ unless the. grammatical
construction leads to !lD absurdity, it is safe to give words the.ir natural mean-
ing because the framer is presumed to use the language which conveys the

B
intention. However, if two constructions are possible, the construction .which
advances the intention of the legislation namely; to afford. protection to the
unequal partn~r in the iridustry, and remedies the mischief to thwart which it
is enacted, should be accepted. (239 C; 238 F-H]
-
(d} Even where the Standing Order is couched in a language which seeks
to extend its operation beyond the establishment,' it·. would none-the-less be
c necessary to establish causal connection between the misconduct and the
employment. The causal connection,. in order to provide linkage between the
a11eged act of misconduct and employn1ent, must be real and substantial,
immediate and proximate and not remote or tenuous.
I

Tata Oil Mills v. Workmen, (1964] 7 S .C.R. 555; explained and
D distinguished.

(e) Urider the Act~ the employer is under an obligation to specify with
precision those acts of omission and comlnission which would constitute mis·
conduct. Penalty is imposed for misconduct. The workmen must know in
advance which act or omission would constitute misconducit so as to be visited
with penalty. Upcn a ha'rmonious construction, the expression 'misconduct'
E in S.0.23 must refer to those acts of omission and commission which constitute
misconduct is enumerated in S.0.22 and non'e els.e. It is therefore difficult to
entertain the submission that some other act or omission which may be mis-
conduct though not provided for in the Standing Order would be punishable
under S.0.23. (247 D-FJ
'
F Salem Erode Electrici(y Distribution Co .. v. Salem Erode. Electricity
Distributiqn Employees ·union, [196612 S.C:R. 498; Western India Match Co. v.
Workmen, [1974] 1 S.C.R. 434; Laklieri Cement Works ·V. Associated Cement
Companies, [1970] ~O Indian Factories and Labour Reports 243; referred to.

Mahendra Singh Dhantwal v. Hindustan Motors, {1976] Supp; S.C.R, 635;
explained and distinguished.
G
CIVIL APPELLATE 1URISDICTJON Civil Appeal No. 2911 of
1981.

H Appeal by special leave from the Judgment and Order dated
the 7th May, 1981 of the Allahabad High Court in Civil Misc. Writ
Petition No. 5437 of 1979.
GLAli'.o LAli. r. LABOUR COURT (Desai,'J.) 233

Shanti Bhushan, SS Shroff, S.A. Shroff, VV Joshi and P.S. Shroff
for the Appellant. .

M.K. Ramamurthi, and_ J. Ramamurthi for the ~espondent.

The Judgment of the Court was delivered by
'B
.. DESAI, J. Appellant, a· multinational company, has set. up a
factory at Aligarh in the State of Uttar Pradesh in the year 1958•.
Appellant had declared a lockout with effect from 12 noon on May

\ \_
6, 1977•. It was notified that. as negotiations for settlement of pending
disputes between th_e appellant and the _workmen employed by \t
• were afoot, the lockout was to be lifted and. was actually lifted from c
8.00 a.m. on May 13, 1977. It is alleged that on the very day
during the second shift, some of the workmen again resorted to an
illegal strike;- gathered together near tl:ie' gate of the factory and
intimidated and obstructed other wor~en desiring to report for
duty. Appellant approached the Civil Court and obtained an ex-parte ·
injunction restraining the workmen from indulging into unfair 'and ·
D
illegal activities. On May 27, 1977 around 5.35 p.m., some of the
workmen who had not joined the strike and who have been · referred
to. in the discussion as 'loyal wprkmen• boarded bus No. UPB-6209
chartered by the appellant company exclusively for the usei of the
'loyal workmen' commuting between the city and the' factory•. It is' E
alleged that some of the· striking workmen including the second ·
respondent boarde<fthe bus and during. the journey in the bus at
different places manhandled the 'loyal workmen'. According to the
appellant company, this action of the second respondent and· his
striking colleagues 9 in number whose names. have been set out 'in'
'the chargesheet constitutes misconduct specified in clauses 10, 16.and F
30 of Standing Order 22 applicable to the workmen employed by the
appellant company. Accordingly, a, charge-sheet dated June, 6, 197i
was served upon the second respondent who in turn approached ·the
Labour Court under sec. 11·-c of the U.P. Industrial Disputes Act,
1947 inviting the Labour Courtto hold that on a correct interpreta-
G
. tion of the relev:int ·standing order, the alleged· acts of misconduct
would not be covered by clauses 10, 16 and 30 of S.O. 22.

The Labour Court framed as many as 8 issues' out of" which
Issue Nos. 4, 5 and 8 engaged the attention of theHigh Court held
that the construction put by the Labour Court on the relevant clauses
H
of the standing order 1s a reasonable one and accordingly dismissed.
the writ petition. Hence this appeal by special leave.
'
siil>itiiME CgiJRT REPoRTS tt984l i s.c.a.
At the outset, it is necessary to administer a caution that in
A this appeal the only question that falls for consideration is : whether
. the misconduct as alleged in the chargesheet drawn-up against the
second respondent.and others, taking them for the present purpose
to be true would squarely fall within clauses JO, I 6 and 30 of S.O.
22. This caution has become necessary as upon a reading of the
·B decision of the Labour. Court and the judgment of the High Court,
an impression was formed· that the controversy was sought to he
expanded far beyond its legitimate sphere by advancing hypothetical
illustrations and then inviting the Labour Court and High Court and
then this Court ~o consider whether the construction put on the
.C various clauses of standing order 22 by the Labour Court .and tM
High Court is reasonable or is self-defeating. It is not necessary at
all to examine 'the ambit and the scope of clauses I 0, 16 and 30 of
S.O. 22 with reference to hypothetical cas_es but a limited question
which this Court is called upon to examine is whether the charges
imputing misconduct as fr~med by the appellant company would be
D eovered by clauses 10, 16 and 30 of S.O. 22.? While parties. They
read as -under :

"4. Can the opeosite party take disciplinary action
· against the aJli:ilicant f9r acts of misconduct, said to
have been committed at the places, referred· to in _,
_
E the chargesheet issued _to ·him ?

5. Whether the Point, where the bus in question is said
to have started is part of the premises of the opposite
party or is situated in the vicfoity of the aforesaid
premises?
F
6. Is the place, where the bus is said to have started,
situated on the public road?"

All · these three issues were considered together by the Labour
G Court.· The Labour Court held that upon a true construction of
clauses 10, 16 and 30 of S.0. 22, the appellant company is not
entitled to charge-sheet the second respondent and his co-workers
for alleged acts of misconduct said to have been committed by the.m
outside ihe premises of the establishment and not in the vicinity
thereof: It further held that it was open to the appellant company
H
to held an enquiry into the alleged act of misconduct of the second
respondent and his co-workers in respect of. charges 2 (a) and 2 (b)
of the charge-sheet drawn-up by the appellant. There· are other
G~AXO_LAB. V: LABOUR COURT (Desai, J.)

finding of the Labour Court with 'which we are not concerned in
this appeal.

The appellant moved the Allahabad High Court under Arts. 226
and 227 of the Constitution ·in Civil Misc. Writ Petition No. 5437
of 1979. A Division Bench of the ascertaining whether the constru-
ction put on these three clauses both by the Labbur Court and the B
High Court is fair, re.asonable' and serves· the purpose (or which
these clause; were framed, • none the less we would strictly confine
ourselv~s to find out whether the misconduct as alleged in the charge-
. sheet as on demur is such as would squarely fall within the aforemen-
. tioned three. clauses, and every hypothetical case would be excluded
from further consideration. c
The appellant company has in all framed 8 independent charges
divided into clauses 2 (a) to 2 (hl of the charge-sheet dated JJ1ne 6
1977. The Labour Court has permitted the appellant company to
hold an enquiry in respect of charges under heads 2 (a) and 2 (b). D
Therefore, they need no consideration . at our hands. Under the
head 2 (c), the misconduct attributed to the second respondent and
his co-workmen was that when the bus reached Anupshahr-Aligarh .
road, all of them shouted in a violent manner, abused in filthy langu-
age and beat M/s U.S Misra, R.S. Kaushik, Prahlad, C.B. Agarwal,
E
.. M.K. Wadhwa, V.K. ~harma, A.C Saxena, Nilrriony Bhakta and
Chaitanya Kumar and other loyal workmen with shoes, chappals
and sticks. Under head 2 (d), the same misconduct is attributed
when the bus reached the approach road to Cenfral Dairy Farm,
further adding that the clothes of loyal workmen were tom. Under
head 2(e), it is alleged that at the same place, Mr. A.K. Patro and
Mr. G.S. Haldia who ·were ahead of the bus travelling in a car and
F
who on seeing the incident alighted from the car, but they were
surrounded and forced to drive away from the scene. Under heads
2(f) and 2(g), the misconduct alleged is that some property was
snatched from the workmen travelling in the bus and they were
threatened with dire consequences if they returned to work dnring G
the period of strike. Under head 2(h), the misconduct attributed is
that loyal workmen were forced to give promise that they will not go
to work during '.he period of strike and repeatedly holding out
threats of murdermg them and their families.
H
The question is : even if uncontroverted the allegations of
111isconduct set out in the chargesheet extracted above would lie
,

StJPR.flMI! CotlRT li.l!PoRTS !1984) 1 s.c.R.
'covered by clauses 10, 16 and 30 of S.O. 22. In other words, upon
A their construction what is the scope and ambit so far as time-place
aspect is concerned of the clauses 10, 16 and 30 of S.O. 22.

Clauses 10, 16 and 30 of the S.O. 22 read as under:-

8 "22. The following acts or omissions will be treated as n:iiscon-
ducts·~-

(JO) Drunkenness, fighting, indecent or disorderly
,behaviour, use of abusive language, wrongfully interfer-
c ing with the work of other employees or conduct likely to
cause a breach of the peace or· conduct endangering
the life. or safety of any other person, assault or threat
of assault any act subversive of discipline and efficiency
. and any act involving moral turpitude, committed within
the premises of the establishment, or in the vicinity
D thereof'·
, ·

(16) Conduct of a workmen singly or in combination

E
with others endangering the lives of the . safety of other
workmen or endangering the safety of the company's
premises, machinery or equipment;
--~
(30) Being rude towards officers, employees, custom,
ers of and visitors to the company."

The submission which found favour with the High Court is
that all these various acts of misconduct collocated in clause 10 in
order to be a misconduct punishable under S.O. 23 must be commit-
ted within the premises of the establishment or in the vicinity thereof,
and that the situs of misconduct as set ·out in. the chargesheet will
show that alleged acts of misc.onduct occurred far away from the
G establishment of the appellant company and therefore, clause 10 of
S. 0. 22 would not be attracied. Undoubtedly, looking to the
language, of clause IO of S.O. 22 of the certified Standing Orders
applicable to the company framed in English, the High Court found
some difficulty in holding that the expression 'committed within the
H premises ofJhe establishment, or irr the vicinity thereof' would only
qualify the expression 'any act subversive of discipline and efficiency
!Ind any act involving moral turpitude' but not the earlier portion of
GLAXO LAB. v. LABOUR COURT (Desai, J.) 237

clause 10 which sets out various acts of misconduct such as drunken·
ness, fighting, indecent or disorderly behaviour etc. Says the
High Court:

"We agree that in sub-clause 10 of clause 22 the
word 'commijted' must be held to govern only to 'an act
subversive of discipline and efficiency' and 'any act D
involving inoral turpitude' and does not apply to conduct
of the character mentioned in the earlier part of sub·
clause."

But the High Court got over the difficulty by referring to the Hindi
version of clause IO of S.O. 22, which starts with the recital:
c
"Within the premises of the establishment. or in the
vicinity thereof, such acts as drunkenness, fighting ......... "

After reading the Hindi version, the High Court proceeded to D
hold that Sec. 9 of the Industrial Employment (Standing Orders) Act,
1946 ('Act' for ,,short) requires the posting of standing ord,ers in
English and in the language understood by the majority of the
workmen 'on special boards to be maintained for the purpose at or
near the entrance through which the majority of the workmen enter
the industrial establishment and in all departments thereof where the E
workmen are employed, and therefore, the Hindi version of the
standing order which the workmen must have read and understood
must on the principle of contemporanee expositio deserves acceptance.
In reaching this conclusion, the High Court relied upon. the decision
of this Court in D.B. Gupta & Co. & Ors. v. Delhi Stock Exchange F
Association Ltd.(') While questioning the correctness of the decision
of the High Court, that clause 10 would comprehend misconduct
therein mentioned committed within the premises of the establishment
or in the vicinity thereof, it was not only not disputed but in fact
conceded that in view of the provision contained in sec. 9 of the Act
the High Court was perfectly justified in looking at the Hindi version G
of the certified Standing Orders.
'Therefore, the primary question that needs consideration is
whether the various acts of misconduct collocated in clause 10
would constitute misconduct punishable under S.O, 23, if committed H

(I} (197913 $.C.R. 373,
238 SUPREME COURT REPORTS (1984) 1 S.C.R,

within the premises of the establishment or in the vicinity thereof or
A irrespective of the time-place content, they are per se such acts of
misconduct that they would b~ punishable notwithstanding where
and when they were committed.

Every industrial establishment to which the Act applies is under
n a statutory obligation to draw up and submit to the Certifying
Officer five copies of the draft standing orders for adoption in the
· industrial establishment (Sec. 3). Sec. 5 requires the Certifying

.. Officer to forward the copy of the draft standing order to the trade
union, if any, of the workmen, or where there is no such trade union,
1--~

c as
to the workmen in such manner may be prescribed: together with
a notice in the .prescribed form requiring them to suomit their
objections,· if any. Sub-sec: (2) of sec. 5 . requires the Certifying
Officer to decide after hearing the representatives of the emloyer
and the trade.union 0r the workmen: whether or not any modifica'.
tion of or addition to the draft submitted by the employer is
necessary. Such certified standing orders shall be filed by the
Certifying Officer in a register in the pre,cribed foim maintained for
the purpose and the Certifying Officer shall furnish a copy thereof
to any person applying therefor on payment . of the prescribed fee.
Sec. 12 exC!udes oral evidence having the effect of adding to or .
·otherwise varying or contradicting standing orders as finally certified
E under the Act. Sec. 13C. which is in.part pari materia with Sec. llA
of the U.P. Ind.ustrial Disputes Act, 1947 confers jurisdiction on the
Labour Court constituted undr the Industrial Disputes Act, 1947 to
entertain an application for interpretation of a standing .order certi·
fied under the Act. The scheme of the Act would show that the
F certified standing orders have more or less a statutory flavour .. If that
be so ' ordinary canon' of construction of a' statute
-
would
..
be attracted
where a dispute arises about the construction or interpretation of a
certified standing order.

G No canon of construction of a statute is more firmly established
than this that the purpose of·interpretation is to give effect to the
intention underlying the statute and therefore unless the grammatical
construction leads to an absurdity, it is safe to give words their.
natural meaning because the framer is presumed to use the language
H which conveys the intention. If two ·constructions are possible, it
is equally well-established that the construction . which advances the
intention of the fog;slation, remedies the mischief to thwart which it
l$ ena.cte<! should l;>c accept~cj.
OLAXO LAB v. LABOUR COURT (Desai, J.) 239

•
'
In .the days of laissez-faire when industrial relation was
governed by the harsh weighted law of hire and fire the management
was the supreme master, the relationship being referable to contract
between unequals and the action of the management treated almost
A

sacrosanct. The developing notions of social justice and the
expanding horizon of socio-economic justice necessitated statutory
protection to the unequal partner in the industry namely, those who
invest blood arid flesh against those who bring in capital. Moving-
B
from the days when whim of the employer was suprema /~x, the Act
took a modest step to compel by statute the employer to prescribe
minimum conditions of service subject to which employment is given.
The Act was enacted as its long title shows to _require employers in
industrial establishments to define with sufficient precision the c
conditions of employment -under them and to make the said
conditions known to workmen employed by them. The movement
was from status to contract, the contract being not left to be
negotiated by two unequal persons but statutorily imposed. If this
socially beneficial act was enacted for ameliorating the conditions of
the weaker partner, conditions of service prescribed thereunder must D
receive such interpretation as to advance the intendment underlying
the Act and defeanhe mischief.

After reading clause 10, Mr. Shanti Bhushan contended that
the expression 'committed within the , premises of the establishment
E

-
or in the vicinity thereof' can qualify only the expression 'any act
subver.sive of discipline ~nd efficiency and any act involving moral
turpitude' but not the earlier portiqn of the · clause. Numerous ac.ts
of misconduct have been collected in clause 10 such as tlrunkenness,
fighting, indecent or disorderly behaviour, use of abusive language,
wrongfully interfering with the work of, other employees etc. - Says F
' Mr. Shanti Bhushan t!iat these acts of misconduct are per se miscon-
duct that each one of them cannot have any correlation to the time
or place where it i• committed and each one of it is an act of miscon-
duct irrespective Of the time and plaee where it is committed.
Expanding the-submission, it was urged that drunkenness is such a
socially reprehensible action that if it is committed within the
G
premises of the establishme!)t or in the vicinity · thereof or
anywhere else at any point of time it would none the Jess
be an act of misconduct comprehended in clause 10 and punishable
under standing order 23. If this construction were even to be
accepted the employer will have more power than the almighty State
H
because State chooses to punish drunkenness in public place.
But on !lie construction canvassed for if a man. consumes liquor in
240 SUPREMI! COURT REPORTS (1984) 1 s.c.it.
his own house with the doors closed and gets drunk, the employer
A can still fire him. If a man uses abusive language towards
his close relation in his own house whith closed door, the employer
would be entitled to fire him, and this approach overlooks the
purpose of prescribing conditions of service by a statute. To enable an
employer to peacefully carry on his industrial activity, the Act confers
powers on him to prescribe conditions of service including enumerat·
B
ing acts of misconduct when committed within the premises of the
establishment. The employer has hardly any extra territorial jurisdi·
ction. He is not the custodian of general law and order situation
nor the Guru or mentor of his workmen for iheir well regulated
cultural advancement. If the power to regulate the behaviour of the
c workmen outside the duty hours and at any place wherever they may
be was conferred upon the employer, contract of service may be
reduced to contract of slavery. The employer is entitled to prescribe
conditions of Service more or less specifying the acts of misconduct
to be enforced within the premises where the worknien gather to-
gether for rendering service. The employer has both power and
D jurisdiction to regulate the behaviour of workmen within ·the pre-
mises of the establishment, or for peacefully carrying the industrial
activity in the vicinity of the establishment. When the broad purpose
for conferring power on the employer to prescribe. act' of misconduct
that may be committed by his workmen is kept in view, it is not
E difficult to ascertain whether the expression 'committed' witJiin the
premises of the establishment or in the vicinity thereof' would
qualify each and every act of misconduct ci;>llocated in clause IO or
the last two only, namely, 'any act subversive of discipline and ....
offi.ciency and any act involving moral turpitude'. To buttress. this
conclusion, one illustration would suffice. Drunkenness even from
F the point of view of prohibitionist can at best be said to be an act
involving moral turpitude. If the misconduct_ alleging drunkenness
as an act involving moral turpitude is charged, it. would have to be
shown that it was committed within the premises of the establishment
or vicinity thereof but if the misconduct charged would be drunken-
ness the limitation of its being committed within the premises of the
G
establishe.ment can be disregarded. This J!!akes no sense. And it
may be remembered that the power to prescribe conditions of service
is not unilateral but the workmen have right to object and to be
heard and a statutory authori\Y namely, Certifying Officer has to
H certify the same.

Therefore, keeping in view the. larger objective sought to be
achjeved hy prescribing conditions of employement' in certifie<I ·
GLAXO LAB. v. LABOUR COURT (Desai, J.) 241'

standing orders, the only construction one can put on clause 10 is
that the various acts of misconduct therein set out would be misc0n- A
duct for the purpose of S.O. 22 punishable S.O. 23, if committed
within the premises of the establishment or in the vicinity thereof.

What constitutes establishment or its vicinity would depend
upon the facts and circumstances of each case.
8
Mr. Shanti Bhushan, however, urged that the trend of decisions

r indicates that the expression 'committed in the premises of the
establishment or in the vicinity thereof' indicates not the situs of the
place where the misconduct is committed but where the consequence
of such misconduct manifests o'r ensues. It was submitted that if
the motivation for committing an act of misconduct anywhere was
c
to have an adverse effect on the peaceful working· in the industrial
establishment, then irrespective of the fact where the misconduct was
committed, it would be deemed to have been committed within the
· premises of the establishment or in the vicinity thereof. Reliance
was placed oil Mulchandani Elec1rical and Radio lndustrietL Ltd. v. D
· The Workmen,(') wherein the lai\guage in which the relevant standing
order was couched read as under :

"(I) Commission of any act subversive of discipline

-
or good behaviour whithin the premises or precincts of
the establishment." · E
The misconduct alleged was that the delinquent workmen while
travelling in a train between Thana and Mulund assaulted another
workman who was on his way home after· day's work. And this
ied to a com~laint by some of the colleagues of the victim submitting
a memorandum to the management of protest against the assault
on the colleague. Repelling the contention on behalf of the workmen,
this Court held as under :
•
"In our opinion, on a plain reading of the clause, the
words "within the premises or precincts of the establish- G
ment" refer not to tbe place where· the act which is
subversive of discipline or good behaviour is committed
but where the consequence of such an act manifests itself.
In orther words, an act wherever committed, if it has the
one effect of subverting <)iseirHne or ~ood behaviol)r ff

(I) A.I.R. l97S S.C. 2125.,
242 SUPREME COURT REPORTS iI984) I s.c.R.

within the premises or precincts of the establishment, will
A amount to misconduct under Standing Order 24 (!).
We are unable to agree that Standing Order 24 (1) leaves
out of its scope an act committed outside though it may
resuli in subversion of discipline or good behaviour with-
in the premises or precincts of the establiShment in
question. Such , a construction in our view would be
B
quite unreasonable."

The decision proceeds on the language of the standing order
which came for interpreation before this Court, There is a marked
difference between the language of clause 10 of S.O. 22 under which
action is proposed to be taken by the appellant in this case and
S.0. 24 (I) that came for interpretation in that case. Clause (1) of'
S.O. 24 which was before the Court in that case did not refer to
such specific acts of misconduct as drunkenness, fighting, indecent
or disorderly behaviour, use of abusive language etc. If a workman
is involved in a riot or indulge in fighting somewhere far away from
D the premises of the estadlishment, it has no causal,. connection with
his performance of duty in the industrial establishment in which he·
is employed. Further in that case, the Court put a wide construction
on a penal measure but did not choose to set out its reasons for
departing from the well·established principle that penal statutes
E generally receive a strict construction. 'A statute is regarded as penal

-
for the purpose of construction if it imposes fine, penalty or
forfeiture other than penalty in the nature of liquidation of damages
or other penalties which are in the nature of civil remedies. It is a
general rule that.penal enactments are to be construed strictly and
not extended beyond their clear meaning.'(1) It cannot be seriously
F questioned that S.O, 22 is a penal statute in the sense that it provides
that on proof of misconduct penalty can b~ imposed. It cannot be
disputed that it is a penal statute. It m:ust therefore, receive strict
construction, because for a penalty to be enforced, it must be quite •
" clear that the case is within both the· letter and the spirit of the
statute. If the expression 'committed within the premises of. the
G establishment or in the vicinity thereof' is given a wide '.construction
so as to make the clause itself meaningl,ess and redundant, the penal
statute would become so vague and would be far beyond the
requirement of the situation as to make it a weapon of torture.
H A clause with a statutory flavour 'like iegislation must at all costs

(1) See Halsbury's Laws of England, 4th edition· Vol. 44 paragraphs 909>
~IO_at pa~e ~60,
(;i.AXo LAB. v. LABOUR COURT (Desai, J.) 243
be interpreted in such a manner that it could not operate as a rogue's
charter.'(') If any misconduct committed anywhere irrespective of A
the time-place content where and when it is committed is to be
comprehended in clause 10 merely because it has wme remote impact
on the peaceful atmosphere in the establishment, there was no justi-
fication for using the words of limitation such as 'committed within
premises of the establishment or in the vicinity thereof'. 'These are
B
words of limitation and they must cut down the operatio_n of the
clause. Therefore, these words of limitation must receive their due
share in the interpretation of clause IO and clause 10 cannot receive
such a construction as to make the words of limitation wholly
redundant.
c
Reference was. also made to Central India Coalfields Ltd.
Calcutta v. Ram Bi/as Shobnarh( 1) in which scope and ambit of S.0.
29(5) came up for consideration before this. Court. . The ,Industrial
Tr.banal had held that the alleged misconduct had taken place
outside the working hours as we)! as outside the pit where the res- D
pondent had to discharge his duties and accordingly h_e could not be
punished under S.O. 37. This Court while allowing the appeal of
the employer observed that 'normally this standing order would
apply to the behaviour on the premises where the workmen discharge
their duties and during the hours of their work." It was further
observed that 'it may also be c'onceded that if a quarrel takes place E

-
between workmen outside working hours and away from the coal
premises that would be a private matter which may not fall within
Standing Order No. 29(5)." This Court then observed that in the
special circumstances of this case it is clear that the incident took
place in the quarters at a short distance from the coal-hearing·. area,
If the incident occurred in the quarters occupied by the workmen
who were working in a nearby coal bearing area, one can safely
conclude that the incident occurred in the vicinity of the establish-
ment and that was the governing factor which swayed the decision,
And the decision was reached as specifically stated in the special
circumstances of the case while leaving no trace of doubt about the G
normal approach in law to the construction of a standing order that
it wonld apply to the behaviour 011 the premises where the workmen
discharge their duties and during working hours of their work. This ·
clearly imports time-place content in .the matter of construction.
H
(!) Davis and Sons vs. Aikin [!9'77] I.C.R. 66.
(2) A.I.R. 196! S.C. 1189,
SUPREME COURT REPORTS [i984] i s.c.R..

This decision would rather clearly indicate that the misconduct pres-
A cribed in a standing ord'er which would attract a penalty.has a causal
connection with the place of work as well as the time at which it is
committed which would ordinarily be within the establishment and
during duty hours.

B Reference next was made to Lalla Ram v. Management of
· D.C.M. Chemical Works Ltd. & Anr.( 1) In that case one· Shyam
Singh, who was Assistant Security Officer of the respondent-company
in discharge of his official duty attempted to prevent an encroach·
ment and unauthorised construction on the immovable property
belonging to the co,mpany by appellant Lalla Ram, who in turn
c manhandled the Assistant Security Officer, hurled highly provocative
invectives at him and his companions, and bade them to quit on pain
of dire consequences. The facts have their own tale to tell. •
Assistant Security Officer while performing his duty preventing
unauthorised encroachment of the property belonging to the company
was manhandled. There should be no doubt in the mind of anyone
D
that the incident occurred on the premises of the establishmerit or
in the.vicinity thereof. It may, however, be mentioned that in this
decision, there is no reference to the dedsion of ·this Court in
Molchandani Electrical and Radio Industries Ltd. case.
.J.. -
E Reference was also made to Tata Oil Mills Co. Ltd. v. Its
Workmen.(') This case shonld not detain us for a moment because
the standing order with which the court was concerned with in ·that
case in terms provided 'that without prejudice to the general meaning
~f the term 'misconduct', it shall be deemed to mean and include,
inter alia, drunkenness, fighting, riotous or disorderly or indecent
behaviour within· or .without the 1 factory.' Mr. Shanti Bhushan, ·
however, urged that the judgment does not proceed on the construe-
tion 'of the expression 'without' in the relevant st.anding order but
the ratio of the decision is that purely private and individual dispute
\
unconnected with employment between the workmen cannot ·be the
G subject matter of enquiry under the standing order but in order that
the relevant standing order may be attracted it must be shown that
the disorderly or riotous behaviour had some . rational connection
with the employment of the assailant and the victim. Approaching
the matter from this angfe, it was urged that in the°' present case the
H
(I) [1978] 3 S.C.R. 82.
(2) [1964) 1 s.c.R. 555. '
GLAXO LAil. v. LABOUR COURT (Desai, J.)

chargesheet under clauses 2(c) to 2(h) clearly and unmistakably
alleged that the 'loyal workmen' were threatened with dire conse- A
quences with a view to frightening them away from responding to the
duty and this provides the necessary link between the_ disorderly beha-
viour and the employment both of the assailant and victim. Even
where a disorderly or riotous behaviour without the premises of the
factory constitutes misconduct, every such behaviour unconnected
with employment'would not constitute misconduct within the rele- B
vant standing order. Therefore, even where the standing order is
couched in a language which seeks to extend its operation far beyond
the establishment, it would none the less be necessary to establish
causal connection be(1Veen the misconduct and the employment,
And that is -the ratin ·of the decision, and not that wherever the
misconduct is committed ignoring the· language of the standing
c
order if it has some impact on the employment, it would be covered
by the relevant standing -~rdcr. In order to avoid any ambiguity
being raised in future and a controvertial interpretation question
being raised, who must make it abundantly clear and incontrovertible
that the causal connection in order to provide linkage been the alleged D
act of miscond11ct and employment must be real and substantial,
immediate and proximate and not remote or tenuous. An illustra-
tion would succinctly bring out the difference. One workman sevrely
belaboured another.for duty on the next day. Would this absence
permit the employer to charge the assailant for misconduct as it had
on the working in the industry. The answer is in the nagative. The E
employer cannot take advantage to weed out workmen for incidents
that occurred far away from his establishment.

Reference was next made to Bharat Iron Works v. Bhagubhai
Ba/ubhai Patel & Ors.( 1) The allegation was of vicitimisation which p
found favour with the Tribunal and the High Court. This Court
while allowing the appeal of the employer held that the Tribunal
committed a manifest error of law in reaching the conclusion that
the management was guilty of victimisation. We fail to see how this
decision has any relevance to the . point under discussion in this
case. G

In British lndia Corporation' Ltd v. Bhakshi Sher Singh and
Ors.('), the respondent-workmen entered tlie club set up by the
appellant and misbehaved with all and sundry present there, He was
H
(it A.I.R. 1958 S.C. 881.
(2) [1964) 3 S.C.R. 930.
.
SUBREME c6URT RBi>ORTS t1984) ! s.c.a.
persuaded to leave.and when he went out, he kept on abusing 'the
A official of the club. He was charge-sheeted. An enquiry followed
and he was dismissed. The order of dismissal was set aside
by the Tribunal but was restored by this Coµrt in appeal by
the Company. There iv'as no suggestion that the club premises did
not form part of the establishment of the Company. The decision
B appears to be on the facts of the case only without the slightest
referenee to the question whether the place where misconduct w~
committed had any relevance.

Mr. Shanti Bhushan also relied upon Saurashtrri Salt
Manufacturing Co. v. Bai Valu Raja and Ors.( 1) and General Manager,
c B.E.S.T. Undertaking, Bombay v. Mts. Agnes('), both of which are
cases concerned with Sec. 3 of the Workmen's Compensation Act,
1923 and are of no assistance for the present purpose.

. Having examined the matter both on principle and precedent,
D it would clearly emerge that clause 10 of S. O. 22 which
collects various heads of. misconduct must be strictly construed
being a penal provision in the sense that on the proof a
misconduct therein enumerated, pen1Jty upto and iuclusive of
dismissal from service can ·be imposed. We see no reason for
·departing from the well-established canon of construct.ion that penal
E provisions must receive strict construction, and not extended beyond
their normal requirement. The framer's intention in using the
expression 'committed within the premises of the estsblishment or in
the vicfo.ity thereof' 11re the words of limitation and they must
receive due attention at the hands of the interpreter and the clause
should not receive such broad construction as to render the last ..
clause redundant.

It·was next contended that while misconduct is enumerated
in S.O. 22. the punishment is prescribed in S.0. 23, and the expres-
sion 'misconduct' in S.O. · 23 would comprehend any misconduct
G irrespective of the fact whether it is enumerated in . S.O. 22 or not.
The preamble of S.O. 23 reads !\S under :

"23 (a) Any workman who is adjudged by the
H manager on examtnation of the workman, if present, and

(I) A.I.R. 1958 S.C. 881.
(2) [1964) 3 S.c.R, 930.
GLAXO LAB. v. LABOUR COURT (Desai, J.) 247

of the facts to be guilty of misconduct is liable to
be ...... " A
The submission is that the expression 'misconduct' under S.O. 23
is not qualified as the one ·set out in S.O. 22 and therefore, any
other act of omission or commission which would per se be miscon--
duct would be punishable under S.O. 23 irrespective of the fact
whether it finds its enumeration in S.O. 22. The Act makes it B
obligatory to frame standing orders and get them certified. Sec.
3 (2) requires the employers in an industrial establishment while
preparing draft' standing orders to make provision in such draft
for every matter set out in the Schedule which may be applicable to
the industrial establishment, and where model standing orders have
been prescribed, shall be, so far as is practicable, in conformity with
c
such modcL Item 9 of the Schedule provides 'suspension or dismis-
sal for misconduct, and acts or omissions which constitute
misconduct'. It is therefore, obligatory upon the employer to draw
up with precision those acts of omission ·and commission which_
in his industrial establishment would constitute misconduct. Penalty D
is imposed ·for misconduct. The workmen must therefore, know in
advance which act or omission would constitute misconduct as to
be visited with penalty. The statutory obligation is to prescribe
with precision in the standing order all those acts of omission or
commission which would constitute misconduct. In the fact of the
statutory provision it would be difficult to enteration the submission E
that some other act or omission which may be misconduct though
not provided for in the standing order would be punishable under
standing order 23. Upon a harmonious construction, the expression
'misconanct' in S.O. 23 must refer to those acts of omission or
commission which constitute miscouduct as enumerated in standing
order 22 and none else. However, in this connection, Mr. Shanti
Bhushan drew our attention to Mahendra Singh Dhantwal v.
'
Hindustan Motors Ltd. & Ors.( 1) _ In that case in a second ro~nd of
' litigation between the parties the. Industrial Tribunal set aside the
order of dismissal of the workmen and ordered reinstatement with full
back wages. In a writ petition filed by the Company under Art. G
226 of the Constitution, a learned Single Judge of the High Court
declined to interfere with the award holding that 'the reason might
have been the old reason of dismissal' and that the "circumstances
relied on by t)le Tribunal cannot be characterised as unreasonable."
The Company carried the matter to the Division Bench of the H

(I) [1976) Suppl. S.C.R. 635.
248 SUPREME COURT REPORTS (1984l 1 s.c.a.

High Court which accepted the appeal observing that unless
contravention of Sec. 33 of the Industrial Disputes Act is established,
the Industrial Tribunal would have no jurisdiction' to entertain an
application under Sec. 33A. In terms it was held that unless it is
established that there has been discharge. for misconduct, the
Industrial Tribun~l had no jurisdiction to set ,aside the order ("' .

of termination in an application under Sec. 33A. In the appeal by
B
certificate granted by the High Court, the workman contended. that
Sec. 33 may be contravened in varieties of ways and the· only'
•
question that needs to be . examined is whether there was a contn\.- I
· vention by the employer in that it did not make any application to
the Tribunal for. the approval of the order of termination of service
c of the workman. It is in this context that while allowing the appeal
of the workman this Court observed as under :

"Standing orders of a company only describe certain
dases of misconduct and the same cannot )le exhaustive
of all the species of misconduct which a workman may
D commit. Even though a given conduct may not come •
within the specific terms of misconduct described in the
standing orders, it may still be a misconduct, in the
. special facts of a case, which it may not be possib.Ie to
condone and for which the employer may take appro·
E priate action. Ordinarily, the standing orders may limit
the concept but not invariably so."

Relying on these observations, Mr. Shanti Bhushan urged that this
Court has in terms held that there can be some other misconduct·
not enumerated in ~e standing order and for which .the employer
F may take appropriate action This observation cannot tie viewed
divorced from the facts of the case. What stared in the face of the
court in that case was tl:tat the employer had raised· a technical
objection ignoring the past history of litigation between the parties
that application under Sec. 33A was not maintainable. It is in this
context that this Court observed that the previous. action might have
G
been the outcome of some ;nisconduCt not enumerated in the
standing order. But the extracted observation cannot be elevated
to a·proposition of law that some misconduct neither defined nor
enumerated and which may be believed by the employer to be
H misconduct ex post facto would expose the . workman to a penalty.
The law will have to move two centuries backward to accept such a
construction.. But it is not necessary to go so far because in
GLAXO LAB. v. LABOUR COURT (Desai, J.) 249

Salem Erode Electricity Distribution Co. Ltd. v. Salem Erode
Electricity Distribution Co. Ltd. Employees Union(') this Court in
terms held that the object underlying the Act was to introduce
uniformity of terms and conditions of employment in respect of
workmen belonging to the same category and discharging the same
or similar work under an industrial establishment, and that these
terms and conditions of industrial employment should be well- B
established and should be known to employees before they accept the
employment. If such is the object, no vague undefined notion about
any act, may be innocuous, which from the employer's point of view
may be .misconduct but not provided for in the standing oider for which
a penalty can be imposed, cannot be incorporated in the' standing
orders. From certainty of conditions of employment, we would have c
to return to the days of hire and fire which reverse movement is hard-
ly justified. 1n· this connection, we may also refer to Western India
· Match Company Ltd. v. Workmen(') in which this Court held that
any condition of service if inconsistent with certified standing orders,
the same would not prevail and the certified standing orders wopld
D
have precedence over all such agreements. There is really one interes-
ting observation in this which deserves noticing. Says the Court :
'
"In the sunny days of the market economy ' theory
people sincerely believed that the economic Jaw of demand
an<l supply in the labour market would settle a mutually E
beneficial dargain between the employer and the workman.
Such a bargain, they took it for ·granted, would secure
~ fair terms and conditions of employment to the work-
I' man. This law they venerated as natural law. They
I had an abiding faith in the verity of this law. But the
\ F
experience of the working of this law over a long period
has belied their faith."

Lastly we may refer to Workmen of Lakheri Cement Works Ltd. v.
4ssociated Cement Companies Ltd. (9) This Court repelled the con-
tention that the Act must prescribe the minimum which.has· to be G
prescribed in an industrial establishnient, but it does not exclude
the extension otherwise. Relying upon the eaflier decision of
this Court in Rohtak Hissar · Dis trier' Electricity Supply Co. Ltd.
v. State of Uttar Pradesh & Ors. the Court held that
R
(1) [1966) 2 S.C.R. 498.
(2) [197411 S.C.R. 434.
(3) [1970] 20 Indian Factories & Labour Reports 243 .....
'.

250 SUPREME COURT REPORTS (1984) J S.C.R.

everything which is required . to be prescribed with precision and
A no argument can be entertained that something not prescribed
can yet be taken into accou_nt as varying· what is prescribed.
In short it cannot be left to the vagaries of management to say
ex post facto that some acts of omission or commission nowhere
found to be enumerated in the relevant standing order is .nonethe
B less a miconduct not- strictly falling within the enumerated miscon-
duct. in the . relevant standing order but yet a misconduct for the
purpose of imposing a penalty. Accordingly, the contention o~ :·\llr.
Shanti Bushan that some oth'er act of misconduct which wouitrper
se be an act of misconduct though not enumerated in s.o. 22
can be punished under S.O. 23 must lle rejected.·
c
That leaves for our ~onsideration clauses 16 and 30 .. They
from an integral part of a code and the setting and purpose under-
lying these two clauses 16 and 30 must receive the same construction
which clauses 1O received. Therefore, for the reasons herein indica-
ted, the heads of charges 2(c) ·to 2(h) would not be comprehended
in clause 10, 16 and 30 of the S.O. 22 applicable to the appellant-
Company. We broadly agree except for one aspect specifically.
mentioned with the conclusion of the High Court. Accordingly,
. no case is made out for interfering with the int_erpretation put by
the Labour Court and confirmed by the High Court on relevant
E standing. order. The appeal therefore, fails and is dismissed with
costs quantified at Rs. 5,000.

H.L.C. Appeal dismissed.

(