Holding

The termination of the workman's service was arbitrary and violative of natural justice, and the appeal is dismissed.

Summary

Lakshmi Precision Screws Ltd. terminated the employment of Ram Bahagat under Clause 9(f)(ii) of its Certified Standing Orders after he was absent for ten days without leave. The company sent a notice on 17 October 1990 asking him to report within 48 hours, warning that failure would be deemed disinterest and his name would be struck off, and subsequently removed his name on 25 October 1990. Bahagat submitted medical evidence of illness and sought reinstatement; the Labour Court found his absence was not intentional and ordered reinstatement with back wages. The High Court upheld that order, and the company appealed to the Supreme Court. The Court held that the management’s termination was arbitrary, violated the principles of natural justice and Articles 14 and 21, and that the notice did not constitute a proper hearing. Consequently, the appeal was dismissed.

Issues considered

The termination of service under Clause 9(f)(ii) of the Certified Standing Orders without a proper hearing violates principles of natural justice and constitutional guarantees.
Whether the Supreme Court can intervene under Article 136 to review the factual findings of the Labour Court and High Court.
Whether the notice dated 17 October 1990 provided a sufficient opportunity to be heard under the Standing Orders.
Whether the management’s action was arbitrary and therefore illegal.

Legislation cited

Constitution of Indias. Article 136, s. Article 14, s. Article 21, s. Article 226
Industrial Employment (Standing Orders) Act, 1946s. Clause 9(f)(ii)

Subjects

natural justicearbitrarinesstermination of servicestanding ordersindustrial lawArticle 14Article 21procedural fairnessemployment dispute

Judgment

A MIS. LAKSHMI PRECISION SCREWS LTD.
V,

RAM BAHAGAT

AUGUST 13, 2002

B [UMESH C. BANERJEE AND K.G. BALAKRISHNAN, JJ.]

Labour Laws :·

Industrial Employment (Standing Orders) Act, 1946-Clause 9(/)(ii) of
C Certified Standing Orders-Workman remaining absent from duty--
Management advising workman to report hack-'-Also warning that in case
he fails, his disinterestedness would be presumed arid his name would be
struck off from the rolls of the company under Certified Standing Orders-
Workman. not complying with the conditions-Management striking off his
D name ji·om the rolls-Workman making representation to ·management to
take him back--Representations rejected-Dispute-Labour Court holding
termination u1?iustified and ordering reinstatement-High Court confirming
the same--1nterference by Supreme Court--Held. action of management
arbitrwy, devoid of any justification and principles of natural justice since
workman not given any opportunity-Thus no perversity or mis-carriage of
E justice warranting intervention-Administrative Law-Principles of natural
justice-Constitution of India-Article 136.

Respondent-workman was employed in the appellant-company. He
absented from work without prior information from 13.10.1990. Management
informed respondent-workman by letter dated 17.10.1990 that as he had been
F absenting from duty without authorised leave or notice, he should report back
on duty within 48 hours of the receipt and tender his explanation for his
absence. He was also warned that in case he failed to report, his
disinterestedness would be presumed and his name would be struck off from
the rolls of the company under the Certified Standing Orders of Company.
G Respondent workman did not comply with the condition stipulated in the letter.
Management then informed respondent-workman by letter dated 25.10.1990
that his name had been removed from the rolls of the company under Clause
9(f)(ii) of the Certified Standing Orders of the Company since he remained
absent continuously for a period of 10 days. Respondent-workman made
H representation to the management to take him back on duty as he had been
512
LAKSHMI PRECISION SCREWS LTD. ''· RAM BAHAGAT 513
unwell during the period of his absence but the representation was rejected. A
Thereafter he raised a dispute. Labour Court held that termination of the
services of respondcnt-lvorkman \'Vas unjustified and thus ordered his
reinstatement. High Court upheld the order. Hence the present appeal.

Dismissing the appeal, the Court
B
HELD: I.I. Arbitrariness is an anti-thesis to rule of law, equity, fair
play and justice. There may be contract of employment but it cannot be devoid
of the basic principles of the concept of justice. Justice oriented approach as
is the present trend in Indian jurisprudence shall have to be read as an in-
built requirement of the basic of concept of justice, to wit, the doctrine of natural C
justice, fairness, equality and rule of law. (522-F-GJ

11. In the instant case, respondent-workman remained absent from duty
and within a period of four days a letter was sent lo him informing that since
he was absenting himself from duty without authorised leave he should report
back within 48 hours and also tender his explanation for his absence, D
otherwise his disinterestedness would be presumed, which is not in strict
compliance with the Certified Standing Order. Though however, the letter
dated 25.10.1990 comes within the ambit of the Certified Standing Order of
10 days' continued absence-the situation however is slightly different in the
present context since this letter was an intimation of his name being struck
off from the rolls of the company. It is an act; subsequent to the order of E
termination and if the letter dated 17.10.1990 sent after four days is an
indication for such an order of termination the same does not come within
the ambit of the Certified Standing Order. Further the letter dated 17.10.1990
cannot be treated to be an opportunity since it is only on the fourth day that
such a letter was sent-the action of appellant stands out to be devoid of any F
justification, neither it depicts acceptability of the doctrine of natural justice
or the concept of fairness-arbitrariness is written large. The finding of High
Court that the decision to terminate the respondent-workman by reason of a
presumption is purely arbitrary in nature, is confirmed. There is no perversity
or miscarriage of justice warranting intervention of this Court under Article
136 of the Constitution. (521-F-H; 522-H; 523-A, B( G

• Syed Yakoob v. K.S. Radhakrishnan and Ors., AIR (1964) SC 477; P.G.I.
of Medical Education and Research, Chandigarh v. Raj Kumar, (2001 J 2 SCC
54 and Uptron India ltd. v. Shammi Bhan and Anr., (1998) 6 SCC 538,
referred to.
H
514 SUPREME COURT REPORTS [2002] SUPP. I S.C.R.

A D.K. Yadav v. J.MA. Industries Ltd., [19931 3 SCC 259, relied on.

Punjab and Sind Bank and Ors. v. Sakattar Singh, (2001) 1 SCC 214,
distinguished

CIVIL APPELLATE JURJSDICTION: Civil Appeal No. 4964 of2002.
B
From the Judgment and Order dated 28.4.2000 of the Punjab and Haryana
High Court in W.P. Nos. 4763 of2000.

Ashok Mathur, for the Appellants.

C Mukesh Kumar Verma and R.N. Verma, for Raj Singh Rana for the
Respondent.

The Judgment of the Court was delivered by

BANERJEE, J. Leave granted.
D
Relying upon the well-accepted and settled principles of law as regards
the norm of interference with the order of inferior Tribunals, the High Court
negated the plea of the Appellant herein that Certified Standing Order being
a part of the conditions of service, ought to be strictly interpreted and there
E is no scope of reading into the same, some other element. It is in this score
the decision of this Court in Syed Yakoob (Syed Yakoob v. K.S. Radhakrishnan
and Ors., AIR (1964) SC 477) ought to be noticed. This Court in Yakoob's
decision stated:

"7. The question about the limits of the juri~diction of High
F Courts .in issuing a writ of certiorari under Art. 226 has been frequently
considered by this Court and the true legal position in that behalf is
no longer in do~bt. A writ of certiorari can be issued for correcting
errors of jurisdiction committed by inferior courts or tribunals : these
,_
are ·cases where orders are passed by inferior courts or tribunals
without jurisdiction, or is in excess of it, or as a result of failure to
G exercise jurisdiction. A writ can similarly be issued where in exercise
of jurisdiction conferred on it, the Court or Tribunal acts illegally or
improperly, as for instance, it decides a question without giving an
i
'
opportunity to be heard to the party affected by the order, or where
I-
the procedure adopted in dealing with the dispute is opposed to t

H principles of natural justice. There is, however, no doubt that the
LAKSHMI PRECISION SCREWS LTD. v. RAM BAHAGAT [BANERJEE, J.] 515

jurisdiction to issue a writ of certiorari is a supervisory jurisdiction A
and the Court exercising it is not entitled to act as an appellate Court.
This limitation necessarily means that findings of fact reached by the
inferior Court or Tribunal as result of the appreciation of evidence
cannot be reopened or questioned in writ proceedings. An error of law
which is apparent on the face of the record can be corrected by a writ, B
but not an error of fact, however grave it may appear to be. In regard
to a finding of fact recorded by the Tribunal, a writ of certiorari can
be issued if it is shown that in recording the said finding, the Tribunal
had erroneously refused to admit admissible and material evidence, or
had erroneously admitted inadmissible evidence which has influenced
the impugned finding. Similarly, if a finding of fact is based on no C
evidence, that would be regarded as an error of law which can be
corrected by a writ of certiorari. Jn dealing with this category of cases,
however, we must always bear in mind that a finding of fact recorded
by the Tribunal cannot be challenged in proceedings for a writ of
certiorari on the ground that the relevant and material evidence adduced
before the Tribunal was insufficient or inadequate to sustain the D
impugned finding. The adequacy or sufficiency of evidence led on a
point and the inference of fact to be drawn from the said finding are
within the exclusive jurisdiction of the Tribunal, and the said points
cannot be agitated before a writ Court. It is within these limits that the
jurisdiction conferred on the High Courts under Art. 226 to issue a E
writ of certiorari can be legitimately exercised."

The decision in Syed Yakoob (supra) stands considered in a recent
judgment of this Court in P. G.I. of Medical Education & Research, Chandigarh
v. Raj Kumar, [2001] 2 SCC 54, wherein this Court in paragraph 9 stated as
~~: F
"9. The Labour Court being the final court offacts came to a conclusion
that payment of 60% wages would comply with the requirement of law.
The finding of perversity or being erroneous or not in accordance
with law shall have to be recorded with reasons in order to assail the
finding of the Tribunal or the Labour Court. It is not for the High G
Court to go into the factual aspects of the matter and \!Jere is an
existing limitation on the High Court to that effect. In the event,
however the finding of fact is based on any misappreciation of
evidence, that would be deemed to be an error of law which can be
corrected by a writ of certiorari. The law is well settled to the effect H
516 SUPREME COURT REPORTS [2002] SUPP. I S.C.R.

A that finding of the Labour Court cannot be challenged in a proceeding
in a writ of certiorari on the ground that the relevant and material
evidence adduced before the Labour Court was insufficient or
inadequate though, however, perversity of the order would warrant
intervention of the High Court. The observation, as above, stands
well settled since the decision of this Court in Syed Yakoob v. K.S.
B Radhakrishnan, AIR (1964) SC 4 77)"

It is at this juncture the factual matrix of the matter ought to be
adverted : The facts reveal : The petitioner company engaged Ram Bahagat,
the respondent-workman as a Helper on 8.12.1980. On 6.11.1989, he was
C promoted as Operator. For the discharge of his duties against the post of
Operator, he was deputed to work in the elector-plating unit of the factory.
He continued to work till 12.10.1990 and thereafter absented himself without
any prior information with effect from 13.10.1990. The Management waited for
some days and eventually addressed a communication dated 17 .10.1990 to the
workman informing him that he had been absenting himself from duty with
D effect from 13 .10.1990, without authorised leave or notice, he was advised to
report back on duty within 48 hours of the receipt of the aforesaid letter and
also to tender his explanation for his absence. In the letter dated 17 .10.1990,
he was warned that in case he failed to report for duty within the specified
time, it would be presumed that he was no longer interested in serving the
E management and his name would be struck off from the rolls of the company
under the Certified Standing Orders of the Company. The respondent workman
did not comply with the condition stipulated in the letter dated 17 .10.1990. He
was informed through registered post, vide letter dated 25. l 0.1990, that his
name had been removed from the muster rolls of the company. A perusal of
the aforesaid letter shows that the aforesaid action had been taken under
F Clause 9(f) (ii) of the Certified Standing Orders of the Company, in view of
the fact that the respondent-workman had remained absent from duty for a
period of 10 days continuously. Clause 9(f)(ii) of the Certified Standing Orders
of the Company is being reproduced hereunder :-

"9 (f) Any workman who,
G
xxx xxx xxx

(ii) absents himself for ten consecutive working days without leave
shall be deemed to have left the firm's service without notice, thereby
H terminating his service."
LAKSHMI PRECISION SCREWS LTD. v. RAM BAHAGAT (BANERJEE, I.] 5J7
The respondent-workman is stated to have refused to receive the A
registered communication dated 25.10.1990. He, however, addressed a letter
dated 30.1.1991 requesting the management to take him back on duty. In the
aforesaid letter, he informed the management that he had been unwell during
the period of his absence. In this behalf, he also enclosed his medical certificate
as also a fitness certificate. In the letter dated 30.l.!991 he made a reference B
of the earlier letter dated 24.10.1990 sent by him to the management, requesting
for leave on medical grounds. On the same date i.e. 30.1.1991, he was informed
that he had remained absent from duty without getting sanctioned leave and
without any notice to the management, and that his name had been struck
off from the rolls of the company under the Certified Standing Orders of the
Company, vide letter dated 25.10.1990. Accordingly, the request of the C
respondent-workman for being taken back on duty was declined.

Having failed to persuade the management to take him back into service,
the respondent-workman served a demand notice dated 29.3.1991. On failure
of conciliation proceedings, the State Government made a reference of the
dispute raised by the respondent-workman to the Presiding Officer, Labour D
Court, Rohtak (hereinafter referred to as the 'Labour Court').

On the basis of the evidence produced by the respondent-workman, the
Labour Court concluded that almost the whole period of alleged absence of
the respondent-workman was proved to be on account of his illness and the E
respondent-workman's absence from duty was not intentional. Having arrived
at the aforesaid conclusion, the Labour Court considered the validity of the
order of the management on the basis of clause 9(t)(ii) of the Certified
Standing Orders of the Company and held that the action of the management
in terminating the services of the respondent-workman was not justified and
thus ordered his reinstatement with continuity in service along with 67% back F
wages and being aggrieved by the award of the Labour Court dated 1.2.1999,
the management approached the High Court through a writ petition under
Article 226 of the Constitution.

Significantly, the High Court did not, however, in the matter under G
consideration find any misreading or mis-appreciation of evidence resulting
into perversity as regards the order of the Tribunal and thus concurred upon
the conclusion of the Tribunal The issue thus raised - Can it be said to be
within the jurisdiction of this Court under Article 136 of the Constitution to
intervene or interfere with an appraisal of evidence on record ?
H
518 SUPREME COURT REPORTS (2002] SUPP. I S.C.R.

A A further question also in consequence thereof arises that in the event
the High Court records a finding in terms of the order of the Tribunal and in
the event of a party being aggrieved, would there be an inevitable refusal of
this Court to entertain Can it be said to be the true purport of our justice
delivery system ? It is again answered in the negative by reason of the fact
B that in the event of there being a misreading of law or applicability of law
wrongly, the intervention cannot but be said to be the correct approach to
the matter.

Let us, therefore, analyse as to whether this particular Standing Order
in fact warrant a conclusion without anything further on record or to put it
C differently - does it survive on its own and that being a part of the contract
of employment ought to govern the situation as is covered in the contextual
facts. This Court in DK Yadav 's case D.K. Yadav v. JMA. Industries Ltd
[ 1993] 3 SCC 259 strictly speaking did not answer the same in a categorical
fashion though undoubtedly read into Certified Standing Order compliance
D with the doctrine of natural justice as also the principles underlying in Article
14 of the Constitution. The observations in Yadav (supra) seems to be rather
apposite on this score. As such the same is set out hereinbelow:

"8.The cardinal point that has to be borne in mind, in every case, is
whether the person concerned should have a reasonable opportunity
E of presenting his case and the authority should act fairly, justly,
reasonably and impartially. It is not so much to act judicially but is
to act fairly, namely, the procedure adopted must be just, fair and
reasonable in the particular circumstances of the case. In other words
application of the principles of natural justice that no man should be
condemned unheard intends to prevent the authority from acting
F arbitrarily affecting the rights of the concerned person.

9. It is a fundamental rule of law that no decision must be taken which
will affect the right of any person without first being informed of the
case and giving him/her an opportunity of putting forward his/her
case. An order involving civil consequences must be made consistently
G
with the rules of natural justice .............................. "

It is on the basis of the aforesaid however, this Court in Yadav (supra)
upon consideration of the entire gamut of judicial precedents since Anwar Ali
State of West Bengal v. Anwar Ali Sarkar, [1952] SCR 284 came to the
H conclusion as below.
LAKSHMI PRECISION SCREWS LTD. v. RAM BAHAGAT [BANERJEE, J.] 5 J9

11. The law must therefore be now taken to be well-settled that A
procedure prescribed for depriving a person of livelihood must meet
the challenge of Article I 4 and such law would be liable to be tested
on the anvil of Article 14 and the procedure prescribed by a statute
or statutory rule or rules or orders affecting the civil rights or result
in civil consequences would have to answer the requirement of Article B
14. So it must be right, just and fair and not arbitrary, fanciful or
oppressive.

12. Therefore, fair play in action requires that the procedure adopted C
must be just, fair and reasonable. The manner of exercise of the power
and its impact on the rights of the person affected would be in
conformity with the principles of natural justice. Article 21 clubs life
with liberty, dignity of person with means of livelihood without which
the glorious content of dignity of person would be reduced to animal
existence. When it is interpreted that the colour and content of D
procedure established by law must be in conformity with the minimum
fairness and processual justice, it would relieve legislative callousness
despising opportunity of being heard and fair opportunities of defence.
Article 14 has a pervasive processual potency and versatile quality,
equalitarian in its soul and allergic to discriminatory dictates. Equality E
is the antithesis of arbitrariness. It is thereby, conclusively held by
this Court that the principles of natural justice are part of Article 14
and the procedure prescribed by law must be just, fair and reasonable."

Subsequently as well in Uptron India ltd. v. Shammi Bhan and Anr.
[1998] 6 SCC 538 upon reliance on Yadav (supra) this Court stated: p
"9. The general principles of the Contract Act, 1872 applicable to an
agreement between two persons having capacity to contract, are also
applicable to a contract of industrial employment, but the relationship
so created is partly contractual, in the sense that the agreement of
service may give rise to mutual obligations, for example, the obligation G
of the employer to pay wages and the corresponding obligation of the
workman to render services, and partly non-contractual, as the States
have already by legislation, prescribed positive obligations for the
employer towards his workmen, as, for example, terms, conditions and
obligations prescribed by the Payment of Wages Act, 1936; Industrial H
•
520 SUPREME COURT REPORTS [2002) SUPP. 1 S.C.R.

A Employment (Standing Orders) Act, 1946; Minimum Wages Act, 1948;
Payment of Bonus Act, 1965; Payment of Gratuity Act, 1972 etc.

10. Prior to the enactment of these laws, the situation, as it prevailed
in many industrial establishments, was that even terms and conditions
of services were often not reduced to writing nor were they uniform
B in nature, though applicable to a set of similar employees. This position
was wholly incompatible to the notions of social justice, inasmuch as
there being no statutory protection available to the workmen, the
contract of service was often so unilateral in character that it could
be described as mere manifestation of subdued wish of the workmen
c to sustain their living at any cost. An agreement of this nature was
an agreement between two unequals, namely those who invested their
labour and toil, flesh and blood, as against those who brought in
capital. The necessary corollary of such an agreement was the
generation of conflicts at various levels disturbing industrial peace
and resulting necessarily in loss of production and sometimes even
D closure or lockout of the industrial establishment. In order to overcome
this difficulty and achieve industrial harmony and peace, the Industrial
Employment (Standing Orders) Act, 1946 was enacted requiring the
management to define with sufficient precision and clarity, the
conditions of employment under which the workmen were working in
E their establishments. The underlying object of the Act was to introduce
uniformity in conditions of employment of workmen discharging similar
functions in the same industrial establishment under the same
management and to make those terms and conditions widely known
to all the workmen before they could be asked to express their
willingness to accept the employment.
F
11. The Act also aimed at achieving a transition from mere contract
between unequals to the conferment of "status" on workmen through
conditions statutorily imposed upon the employers by requiring every
industrial establishment to frame "Standing Orders" in respect of
matters enumerated in the Schedule appended to the Act. The Standing
G Orders so made are to be submitted to the Certifying Officer who is
required to make an enquiry whether they have been framed in
accordance with the Act and on being satisfied that they are in
consonance with the provisions of the Act to certify them. Once the
Standing Orders are so certified, they become binding upon both the
H parties, namely, the employer and the employees. The Certified Standing
LAKSHMI PRECISION SCREWS LTD. v. RAM BAHAGAT [BANERJEE, J.] 52 J
Orders are also required to be published in the manner indicated by A
the Act which also sets out the Model Standing Orders. Originally, the
jurisdiction of the Certifying Officer was limited to examining the Draft
Standing Orders and comparing them with the Model Standing Orders.
But in 1956, the Act was radically amended and Section 4 gave
jurisdiction to the Certifying Officer, as also the appellate authority, B
to adjudicate and decide the questions, if raised, relating to the fairness
or reasonableness of any provision of the Standing Orders."

This Court further in fine in paragraph 25 of the report stated as below:

"25. In view of the above, we are of the positive opinion that any C
clause in the Certified Standing Orders providing for automatic
termination of service of a permanent employee, not directly related
to "production" in a factory or industrial establishment, would be bad
if it does not purport to provide an opportunity of hearing to the
employee whose services are treated to have cone to an end
automatically." D

While it is true that a later Three Judge Bench decision of this Court
in Punjab and Sind Bank and Ors. v. Sakattar Singh, [2001] 1 SCC 214
sounded a different note but the same should not detain us any further, since
the factual context differs in material particulars and even the bi-partite E
settlement involved therein was of much accommodative in nature.

It is thus in this context one ought to read the doctrine of natural justice
being an in-built requirement on the Standing Orders. Signi.ficantly, the facts
depict that the respondent-workman remained absent from duty from 13th
October 1990 and it is within a period of four days that a letter was sent to p
the workman informing him that since he was absenting himself from duty
without authorised leave he was advised to report back within 48 hours and
also to tender his explanation for his absence, otherwise his disinterestedness
would thus be presumed. ls this in strict compliance with the Certified Standing
Order the answer possibly cannot be in the affirmative. Though however, if
the letter dated 25th October, 1990 as noticed above is to be taken note of, G
then and in that event the same thus come within the ambit of the Certified
Standing Order of 10 days' continued absence the situation however is
slightly different in the present context since the letter of 25th October is an
intimation of his name being struck off the rolls of the company. It is an act;
subsequent to the order of termination and if the letter of 17th October is an H
522 SUPREME COURT REPORTS [2002] SUPP. l S.C.R.

A indication for such an order of termination the same does not come within the
ambit of the Certified Standing Order. The High Court on this score stated as
below:

"Even if it presumed that the petitioner-management may have
afforded an opportunity to the respondent-workman to tender his
B explanation and as such complied with the principles of natural justice
in term_s of the decision rendered by the Apex Court in Hindustan
Paper Corporation's case (supra), yet the question remains, whether
the determination of the petitioner management was arbitrary and
without application of mind?"
c
In our considered view, the rejection of the claim of the respondent-
workman is absolutely arbitrary and without consideration of the
material placed on record by the respondent-workman (as discussed
D in the foregoing paragraph). The Labour Court examined in detail the
factual position and returned a finding that the respondent workman
had not absented himself from service deliberately or intentionally
and also that he had not abandoned his service. It was further
concluded that his absence was based on account of his illness which
could be affirmed from the medical certificates produced by him. In the
E aforesaid view of the matter, in our considered view, the action of the
petitioner-management in rejecting the representation of the
respondent-workman dated 30.1.1991 was clearly arbitrary and as such
it is not sustainable in law."

p Having regard to the well settled principle of law as in Yadav (supra),
the decision to terminate by reason of a presumption as noticed above, we
cannot but lend concurrence to the conclusion of the High Court that the
action is purely and surely arbitrary in nature. Arbitrariness is an anti-thesis
to rule of law: equity: fair play and justice contract of employment there may
be but it cannot be devoid of the basic principles of the concept of justice.
G Justice oriented approach as is the present trend in Indian jurisprudence shall
have to read as an in-built requirement of the basic of concept of justice, to
wit, the doctrine of natural justice, fairness, equality and rule of law : The
letter dated 17th October cannot by any stretch be treated to be an opportunity
since it is only on the fourth day that such a letter was sent the action of
H the appellant herein stands out to be devoid of any justification, neither it
LAKSHMI PRECISION SCREWS LTD. v. RAM BAHAGAT [BANERJEE, J.] 523
depicts acceptability of the doctrine of natural justice or the concept of A
fairness arbitrariness is written large and we confirm the finding of the High
Court as also that of the learned Trial Judge and the Tribunal as regards issue
as noticed above.

In that view of the matter, there cannot thus be any perversity or any
miscarriage of justice warranting intervention of this Court under Article 136 B
of the Constitution. The appeal therefore fails and is dismissed.

N.J. Appeal dismissed.