THE MANAGEMENT OF SRI RAMNARAYAN MILLS LTD.versusSECRETARY COIMBATORE DISTRICT TEXTILE WORKERS UNION (HMS) AND ORS

1198                     [2018] 13
                SUPREME COURT      S.C.R. 1198
                                REPORTS                    [2018] 13 S.C.R.


 A       THE MANAGEMENT OF SRI RAMNARAYAN MILLS LTD.
                                        v.
        SECRETARY COIMBATORE DISTRICT TEXTILE WORKERS
                     UNION (HMS) AND ORS.
 B                       (Civil Appeal No. 1977 of 2010)
                              NOVEMBER 02, 2018
       [ABHAY MANOHAR SAPRE AND INDU MALHOTRA, JJ.]
              Labour Law: Certified Standing Orders – Application filed
       by the appellant (employer) to the Joint Commissioner of Labour
 C
       (certifying officer) seeking permission to add new ground i.e. “break
       in service” in Clause 16 of the Chapter of Punishment in Certified
       Standing Orders – Labour court and High Court dismissed the
       application – On appeal, held: A “break in service” cannot be
       allowed as a ground by way of punishment in Clause 16 of the
 D     Chapter of Punishment in Certified Standing Orders – Such a ground
       will defeat the very object of the Payment of Gratuity Act which is a
       beneficial legislation enacted for the benefit of the employees –
       The proposed ground, if allowed, is likely to be misused by the
       employers against its employees for their own benefit and detrimental
       to the employees’ interest – No interference with the order of High
 E
       Court called for – Payment of Gratuity Act.
             Dismissing the appeal, the Court
             HELD: The existing grounds enumerated in Clause 16 by
       way of punishment are sufficient to take care of any misconduct
 F     committed by any employee and there is no reason to introduce
       one more new ground in the existing grounds specified in Clause
       16 for imposing a new punishment. Secondly, the proposed
       ground, if allowed, would likely to be misused by the employer
       against its employees for their own benefit and detrimental to
       the employees’ interest. Thirdly, it would enable the employer
 G     to take action against its employees even in a situation where an
       employee is found absent even for a day and such absence will be
       treated as “break in service” under the Certified Standing Orders
       and also under the Payment of Gratuity Act. It will, therefore, be
       in conflict with the definition of the expression “continuous
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                                    1198
  THE MGMNT. OF SRI RAMNARAYAN MILLS v. SECR. COIMBATORE                      1199
 DISTRICT TEXTILE WORKERS UNION [ABHAY MANOHAR SAPRE, J.]


service” defined under the Payment of Gratuity Act which gives                A
different modes of calculation for determining the continuous
service for payment of gratuity amount. Fourthly, such ground
will, therefore, defeat the very object of the Payment of Gratuity
Act which is a beneficial legislation enacted for the benefit of the
employees and lastly, it is neither bona fide nor reasonable and
                                                                              B
nor required and hence it cannot be allowed. [Paras 13-16]
[1202-G-H; 1203-A-D]
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1977
of 2010
      From the Judgment and Order dated 13.08.2007 of the High                C
Court of Judicature at Madras in W.A. No. 2675 of 2002.
       Ashish Kumar Upadhyay, Manohar Gupta, Gopal Singh Chauhan,
P. V. Yogeswaran, Advs. for the Appellant.
      T. R. B. Sivakumar, Adv. for the Respondents.
                                                                              D
      The Judgment of the Court was delivered by
       ABHAY MANOHAR SAPRE, J. 1. This appeal is filed against
the final judgment and order dated 13.08.2007 passed by the High Court
of Judicature at Madras in W.A. No. 2675 of 2002 whereby the Division
Bench of the High Court dismissed the Writ Appeal and affirmed the
                                                                              E
order of the Labour Court and Single Judge.
      2. Facts of the case lie in a narrow compass. They, however,
need mention in brief infra to appreciate the short controversy.
       3. The appellant is a limited company having its mill in Coimbatore.
The appellant being an employer applied to the Joint Commissioner of          F
Labour (Respondent No.3) praying in their application that they be allowed
to add one more new ground namely “break in service” in Clause 16 of
the Chapter of Punishment in Certified Standing Orders in addition to
the existing grounds specified therein.
       4. In other words, the appellant’s prayer was that if any employee     G
commits “break in service” in any year, then it should be regarded as
one of the ground for punishment enabling the employer (appellant) to
take action against such employee under their certified standing order.
They, therefore, prayed that they may be allowed to add this new ground
in Clause 16 of the Chapter of Punishment in Certified Standing Orders.
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1200             SUPREME COURT REPORTS                          [2018] 13 S.C.R.


 A           5. On 02.04.1992 the third respondent (Joint Commissioner of
       Labour) allowed the said application of appellant and permitted them to
       amend their certified standing orders by adding “brake in service” as
       one new ground in Clause 16 of the Chapter of Punishment in Certified
       Standing Orders.
 B            6. The Workers’ Union (Respondent No.1) felt aggrieved by the
       order dated 02.04.1992 filed appeal in the Labour Court. By order dated
       06.02.1995, the Labour Court allowing the appeal and setting aside the
       order dated 02.04.1992 held that if the proposed amendment is allowed,
       it would cause immense prejudice to the rights of the workmen and
       further the employer would likely to misuse this new ground of punishment
 C     mostly for their benefit. It was also held that apart from these two
       reasons, it would also defeat the object of the Payment of Gratuity Act
       while calculating the employee’s continuous service as defined under
       the Payment of Gratuity Act which provides for different modes of
       calculation.
 D            7. The appellant felt aggrieved of the order of the Labour Court
       and filed the writ petition in the High Court at Madras questioning therein
       the legality and correctness of the order of the Labour Court. By order
       dated 19.07.2002, the learned Single Judge dismissed the appellant’s
       writ petition which gave rise to filing of the intra court appeal by the
 E     appellant (employer) before the Division Bench of the High Court.
              8. By impugned order, the Division Bench dismissed the appeal
       and affirmed the order of the Labour Court and Single Judge. It is against
       this order; the appellant (employer) has felt aggrieved and filed the present
       special leave to appeal in this Court.
 F           9. So the short question which arises for consideration in this appeal
       is whether the Courts below (Labour Court, Single Judge and the Division
       Bench) were justified in rejecting the application filed by the appellant
       (employer) to the Joint Commissioner of Labour (certifying officer)
       seeking therein a permission to add one more new ground i.e. “break in
 G     service” in Clause 16 of the Chapter of Punishment in Certified Standing
       Orders.
               10. Having heard the learned counsel for the parties and on perusal
       of the record of the case and the written submissions, we find no merit
       in this appeal.
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  THE MGMNT. OF SRI RAMNARAYAN MILLS v. SECR. COIMBATORE               1201
 DISTRICT TEXTILE WORKERS UNION [ABHAY MANOHAR SAPRE, J.]


     11. The Division Bench dealt with this issue in Para 6 of the     A
impugned order which reads as under:
     “We have considered the above submission of the learned
     counsel for the appellant. In fact, what is sought for is to
     include ‘break in service’ as one of the punishment under
     Clause 16 of the Standing Orders. To say in other words, if       B
     the workman does not come for duty, for any reason, break
     in service will be effected for such period of absent. By
     permitting the appellant to modify the Standing Order so
     as to include the break in service as one of the punishment,
     in fact, will enable the appellant to exercise the power to
     impose the punishment in an arbitrary manner i.e., if an          C
     employee is punished for the absence in accordance with
     the existing Standing Order, continuity of service of the
     employee is not disrupted whereas, if the appellant is
     permitted to modify the Standing Order so as to include
     the break in service as also one of the punishment, even a        D
     half day absent from duty in a year of 12 months, will give
     an opportunity to the appellant to take disciplinary action
     against an employee concerned at the end of the year and
     to impose a punishment of break in service, which will have
     a consequence of depriving the employee’s right to get
     gratuity for that particular year. When so many other             E
     punishments have been enumerated under Clause 16 of
     the said Standing Order, there is no need to include the
     punishment of break in service as one of the punishments.
     In fact, permitting the appellant to include ‘break in service’
     as one of the punishment, defects the object of the Payment       F
     of Gratuity, that is to say, as per Gratuity Act, on completion
     of every continuous service of 5 years, an employee is
     eligible to get the gratuity. As referred above, if for a
     particular period of absents, to say for a day also, this
     proposed modification enables an employer to impose a
     punishment of break in service. Consequently, for that            G
     particular year, an employee will not get gratuity inspite of
     the fact that he had worked for 12 calendar months. Now,
     only 240 days shall be taken into account and not 240 days
     attendance shall be taken into account. As such, if the
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1202            SUPREME COURT REPORTS                         [2018] 13 S.C.R.


 A           modification is allowed, the future right of the employee to
             get a gratuity for a particular year will get affected. Apart
             from this, if an employee, for certain reasons beyond his
             control, was forced to be absent even for a day, he can be
             imposed with the punishment of break in service which will
             have consequence on his gratuity. That apart, if an employee
 B
             has to be punished for the absent as referred above. The
             punishment of either censure, reduction in rank or payment
             cut etc. may be imposed and continuity of service of that
             employee is not disrupted. If the appellant is permitted to
             include break in service also as one of the punishment,
 C           even for one day or half a day absent from duty in a year of
             12 months, will give power to the appellant to impose the
             punishment of break in continuity of service in order to
             deprive the employee’s right to get the gratuity for that
             particular year. In fact, this proposed amendment is against
             the welfare of the employee and as rightly held by the
 D
             learned Single Judge, besides, this can be exercised in an
             arbitrary manner, consequently, the employees will be
             penalized. That apart, as rightly held by the learned Single
             Judge, on the appreciation of the entire materials, the
             Labour Court has arrived at a factual conclusion that the
 E           amendment sought for, namely, inclusion of break in service
             in Clause 16 is unreasonable and it would be possible for
             the Management to act arbitrarily. That apart, by including
             the break in service as one of the punishment, in fact, what
             the appellant intends to do is only to get an opportunity to
             impose punishment which will have an impact in the gratuity
 F
             of the employee of the concerned year.”
              12. The Division Bench, in our considered opinion, rightly concluded
       that a “break in service” cannot be allowed as a ground by way of
       punishment in Clause 16 of the Chapter of Punishment in Certified
       Standing Orders for the following reasons:
 G
             13. Firstly, the existing grounds enumerated in Clause 16 by way
       of punishment are sufficient to take care of any misconduct committed
       by any employee and there appears no reason to introduce one more
       new ground in the existing grounds specified in Clause 16 for imposing a
       new punishment.
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  THE MGMNT. OF SRI RAMNARAYAN MILLS v. SECR. COIMBATORE                          1203
 DISTRICT TEXTILE WORKERS UNION [ABHAY MANOHAR SAPRE, J.]


      14. Secondly, the proposed ground, if allowed, would likely to be           A
misused by the employer against its employees for their own benefit and
detrimental to the employees’ interest.
        15. Thirdly, it would enable the employer to take action against its
employees even in a situation where an employee is found absent even
for a day and such absence will be treated as “break in service” under            B
the Certified Standing Orders and also under the Payment of Gratuity
Act. It will, therefore, be in conflict with the definition of the expression
“continuous service” defined under the Payment of Gratuity Act which
gives different modes of calculation for determining the continuous
service for payment of gratuity amount.
                                                                                  C
      16. Fourthly, such ground will, therefore, defeat the very object of
the Payment of Gratuity Act which is a beneficial legislation enacted for
the benefit of the employees and lastly, it is neither bona fide nor
reasonable and nor required and hence it cannot be allowed.
       17. In our opinion, we find no good ground to differ with the              D
reasoning assigned by the Division Bench mentioned above for rejecting
the application made by the appellant (employer) for adding, “break in
service” as a new ground for punishment in the Certified Standing Orders.
The reasons given by the Division Bench, in our view, deserve to be
upheld.
                                                                                  E
      18. In the light of the foregoing discussion, we find no merit in this
appeal. The appeal thus fails and is accordingly dismissed.


Devika Gujral                                                 Appeal dismissed.
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