Holding

The Labour Commissioner must furnish reasons for concluding that an employee is not a "workman", and in the absence of such reasons the dispute must be referred to the Labour Court or Industrial Tribunal under section 12(5) of the Industrial Disputes Act, 1947.

Summary

Nirmal Singh, a Branch Manager of a cooperative bank, was dismissed after an inquiry into a fraudulent draft encashment. He challenged his dismissal, and the Government of Punjab referred his grievance to the Conciliation Officer, who recommended that the dispute be referred to a Labour Court. The Punjab Labour Commissioner refused to refer the case, stating that Singh was not a "workman" under the Industrial Disputes Act, but gave no reasons for this conclusion. The High Court dismissed Singh's writ petition, leading him to appeal to the Supreme Court. The Court held that the Commissioner must provide reasons for his finding that an employee is not a workman and, to avoid delay, directed the Commissioner to refer the dispute to either the Labour Court or an Industrial Tribunal under section 12(5) of the Industrial Disputes Act. The appeal was allowed and the matter was ordered to be referred forthwith, with no order as to costs.

Issues considered

Whether the Labour Commissioner is required to give reasons for his order refusing to refer a dispute to the Labour Court on the ground that the employee is not a "workman" under the Industrial Disputes Act, 1947.
Whether the Labour Commissioner’s refusal to refer the dispute without providing reasons is jurisdictionally valid.
Whether the dispute concerning the appellant's dismissal should be referred to the Labour Court or Industrial Tribunal under section 12(5) of the Industrial Disputes Act, 1947.

Legislation cited

Indian Penal Code, 1860s. 419, s. 420
Industrial Disputes Act, 1947s. 12(5), s. 2(s)
Punjab Co-operative Societies Act, 1961s. 55

Subjects

Industrial Disputes Actworkman definitionlabour commissionerreference to labour courtdismissalreasons for orderadministrative lawjurisdictionco-operative bankfraudulent encashment

Judgment

NIRMAL SINGH A
v.
STATE OF PUNJAB AND ORS.

August 9, 1984
B
(Y. V. CHANDRACHUD, C. J. AND A P. SEN, J.]

Jndustrtol Disputes Act, 1947, sec. 12 (5)-0rder of Labour Commis·
sioner refusing to refer dispute for adjudication to labour Court on the ground
that the employee is not a er workman" but without givlng reasons for his !indiug
- Validity of.
c
The appellant was dismissed from the post of "Branch Manager11 by
respondent No. 3, Bank, after an inquiry relati.~g to fraudulant encashment
flf a draft by one Labh sing~. His demand in regai"d to his disn1issal, was
rCferred by the Govt. of Punjab to the Conciliation Officer, who recommend-
ed that the appellant's ca!e should be forwarded for adjudication on the
D
question whether his dissmissal from service was justified. The Labour
Commissioner, exercising the powers of the State Governrnent, declined to
refer the dispute to the Labour Court for adjudication but without giviag
any reasons for his conclusion that the appellant was not a "workman".
The appellant challenged before the High Court the decision of the Labour
Commissioner in a writ petition which was dismissed summarily, Hence E
this appeal.

The grievance of the appellant is that the Labour Commissioner
.
ought to have given reasons in support of his decision.

Allowing the appeal,
F
HELD : 1. All that the Labour Commissioner has stated in the order
is that the post held by the appellant did not fall within the category of
"workman" but no reasons are given to justify that conclusion. He ought
• to have given reasons why he came to the conclusion that the appellant is
not a "workman" within the meaning of section 2(s) of the Industrial
Disputes Act, 1947. (319 D-E] G

2. In the instant case, the Court keeping in view that remanding the
matter to the Labour Commissioner for giving his reasons will entail delay,
directed the Labour Commissioner, Chandigarh to make a reference either
\o t~e Labour Co~rt or t~ the Industrial Tribunal u/s. 12(5) of the Indu•trial ff,
318 SUPREME COURT REPORTS (1985] 1 s.c.R.

A Disputes Act 1947 for adjudication of the question as to whether the dismls·
sai of the appellant from the service of the Bank is legal and justified.
[319 E·E)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1746 of
1980.
B
Appeal by Special leave from the Judgment and Order dated
the 4th September, 1979 of the Punjab and Haryana High Court
in Civil Writ Petition No. 2780 of 1979.

N. D. Garg, S. K. Bisaria and T. L. Garg for the appellant.
c Girish Chandra for Respondent No. 3. ••
The Judgment of the Court was delivered by

CHANDRACHUD, C. J. In April 1962, the appellant was appointed
as a clerk in the Hoshiarpur Central Co.operative Bank Ltd., which
D is respondent 3 to this appeal. On August 10, 1976 he was trans·
ferred as 'Branch Manager' of the Dholbaha branch of the Bank.
On October 22, 1977 one Labh Singh s/o Harnam Singh opened an
account in the Dholbaha Branch under an introduction given by one
Bairam Singh. Two days later, Labh Singh deposited in that
account a draft in the sum of Rs. 5,000 issued by the Royal Bank
E of Canada on the Chartered Bank, New Delhi. The amount due
on the draft was credited by the Bank in Labh Singh's account on
November 14. On that very day, Labh Singh withdrew a sum of
Rs. 2, 500 from his account. Three days hter, he withdrew the
remaining amount of Rs. 2, 500. Soon thereafter, a person claiming
to be the real Labh Singh in whose favour the draft was issued by
F the Royal Bank of Canada, complained to the Chartered Bank, New
Delhi, that the draft was stolen and that the money due thereon
was fraudulently collected by the person in whose name an account
was opened in the Dholbaha branch. On November 10, 1978, the
Executive Committee of respondent 3· Bank resolved that an enquiry
be held for fixing responsibility in the matter of the fraudulent '
encashment of the draft. The enquiry was held by the Chief Exe·
G cutive Officer, Satish Chander Dutt, who was of the rank of the
Assistant Registrar in the Co-operative department. As a result of
the report submitted by him, the appellant was dismissed from
service on December 30, 1978.

The demand raised by the appellant in regard to his dismissal
'r"as referred b) the Goverflment of Punjab to t~e Conciliation
NIRMAL siNGH v. PUNJAB (Chandrachud, CJ.) 319

Officer, who recommended that the appellant's case should be .A
forwarded for adjudication on the question whether his dismissal
from service was1justificd. The Labour Commissioner of Punjab,
exercising the powers of the State Government, declined to refer the
dispute for adjudication on the ground that the appellant was not
a workman. The appellant filed a Writ Petition in th~ High Court
of Punjab and Haryana, challenging the decision of the Labour B
Commissioner, but that Writ Petition was dismissed summarily.
The appellant has filed this appeal by special leave, challenging the
decision of the High Court and of the Labour Commissioner. The
State of Punjab and the Labour Commissioner are respondents I
• and 2 to this appeal.
c
The grievance made by Shri N. D. Garg, who appears on
behalf of the appellant, that· the Labour Commissioner ought to
have given reasons in support of his decision, is justified. All that
the Labour Commissioner has stated in the order is that the post
held by the appellant did not fall "within the category of workman".
D
This, really, is the conclusion to which the Labour Commissioner
came but no reasons are given to justify that conclusion. We are
of the opinion that the Labour Commissioner ought to have given
reasons why he came to the conclusion that the appeallant is not
a "workman" wii!lin the meaning of section 2 (s) of the Industrial
Disputes Act, 1947. E
We could have remanded the matter to the Labour Commis-
sioner asking him to state hi; reasons why the appellant is not a
workman but, th&t will entail delay. Instead, it is advisable from
the· point of view of not only tho appellant but the Bank also that a
Jeference is made either to the Labour Court or to the Industrial F
Tribunal under section 12 (5) of the Industrial Disputes Act, 1947,
for adjudication of the question as to whether the dismissal of the
appellant from the services of the Bank is legal and justified. Accor·
dingly, we direct that the 2nd respondent, the Labour Commissioner,
Chandigarh, to whom the State Governmen,!:, has delegated its
powers under section 12 of the Act shall make a reference to either
of the two authorities as he considers proper. G

At one stage, we wanted to decide for ourselves the question as
to whether the appellant is a workman within the meaning of section
2(s) of the Industrial Disputes Act. Considering the time that has
gone by, we wish that we could have decided that question but, on
the material before us, we find it difficult to do so. The case of the
appellant is that he is a m're matric1late who now pv3sesses a some· H
320 SUPREME COURT REPORTS (1985) 1 S.C.R.
A- what exalted and misleading designation of a 'Branch Manager.'
According to him, there are 58 Branches of the Bank in the District
of Hoshiarpur, in 29 out of which there are only tiyo officers, one of
whom is called the Branch Manager and the other the Cashier. He
contends that the Branch Manager has no administrative or discre-
tionary powers to exercise and is not employed in a supervisory
B
capacity. His case is that he is a clerk mis-called the Branch
Manager.

The contention of respondent 3-Bank, on the other hand, is
that not only was the appellant's remuneration in excess of Rs. 500
c per mensem but, being employed in a supervisory capacity, he exer-
cised functions mainly of a managerial nature. It is alleged that he
was vested with the power of superintending the working of the
office, maintaining registers, sanctioning loans, receiving deposits,
borrowing within the limits sanctioned by the Registar, incurring
contingent expenditure, attending meetings of the Board of Directors,
D the Executive Committee and other Committees constituted under
the bye-Jaws and certifying copies of entries in the banker's books.

The grievance of the appellant is that the Bank did not raise any
contention before the Labour Commissioner that he was not a work-
man within the meaning of the Act with the result that, he had no
E opportunity to meet that case. The parties have included in the
paper-book before us some material bearing on that question but it
will be unsatisfactory to decide that question without proper evi-
dence. After all, the question as to whether the appellant is a 'work-
man' is basically a question of fact. That is why, on the basis of the
stray material before us, we do not consider it advisable to decide
F that question.

When this appeal was argued before us, a prosecution was pend-
ing in the Court of the learned Judicial Magistrate, Hoshiarpur, in
which three persons were charged for impersonation and cheating in
connection with the fraudulent encashment of the draft which led to
G the dismissal of the appellant. The appellant was not only not
included in the array of the accused in that prosecution but the
judgment of the learned Magistrate dated August 19, 1981 shows that
during the course of investigation, it was found that the appellant
' was not responsibl~ for the fraud. In fact, the appellant was exami-
ned as prosecution witness No. 4 in that case. Two out of the three
accused were discharged by the learned Magistrate while accused
No. I, Sham Lal, was convicted unqer se.;tions 419 and 420 of th~
NiRMAL SiNGH v. PUNJAB (Chandrachud, C.J.) 321

- Penal Code and was sentenced to undergo rigorous imprisonment for
two years and to pay a fine of Rs. 500.

At the instance of the Bank, a reference was made to an Arbit-
rator under section 55 of the Punjab Co-operative Societies Act,
1961, for deciding the question whether the appellant is liable to
repay the amount of Rs. 5,000 to the Bank, which was fraudulently B
withdrawn by Labh Singh. By an Award dated November 23, 1982
the Arbitrator dismissed the referenci;, holding that the appellant
was not responsible for the fraudulent encashment of the draft. The
Arbitrator observed that the Bank could recover the amount from
Sham Lal, who was convicted in the criminal proceedings, but not
from the appellant. C

We have referred to these two matters, the prosecution and the
arbitration proceedings, in order that the Bank may examine whether
it is not possible to drop the proceedings against the appellant and
take him back in employment. If the Bank finds that the appellant
was merely negligent in the discharge of his duties as a Branch D
Manager, it may consider whether the appellant could be taken back
in employment without the payment of full back wages.

For these reasons, we allow the appeal and direct respondent
• No. 2, the Labour Commissioner, Chandigarh, to make a Reference
under section 12 of the Industrial Disputes Act, 1947, as directed by E
us. The reference shall be make forthwith and it shall be disposed
of within two months after its receipt.

There will b.e no order as to costs.

M.L.A. Appeal allowed. F