Equitable Coal Co. Ltd. vs Algu Singh And Anr.

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 11 September, 1957

Coram: N.H. Bhagwati, S.K. Das, P.B. Gajendragadkar

In this case, the Court observed that the appeal before the Supreme Court was filed under special leave against an order issued by the Labour Appellate Tribunal of India at Calcutta. The Tribunal’s order had been made against Equitable Coal Co. Ltd., the appellant, pursuant to Section 23 of the Industrial Disputes (Appellate Tribunal) Act, 1950. The respondents, who were employees of the appellant, had applied to the Tribunal alleging that the appellant had dismissed them without lawful authority while an appeal, numbered Cal. 167/53, was pending before the same Tribunal.

The respondents contended that the dismissals were illegal and unjustified because the appellant had failed to obtain the express written permission of the Appellate Tribunal as mandated by Section 22 of the Act. They further asserted that the dismissals were motivated by victimisation arising from their participation in trade union activities. The appellant, for its part, argued that the dismissals were fully justified under Clause 27(5) of the Certified Standing Orders of the collieries operated by the company.

According to the record, before the dismissals took effect on 11 March 1954, the appellant’s Group Personnel Officer, Mr H W Briggs, conducted a regular domestic enquiry. The enquiry was initiated after a formal charge‑sheet had been served on both respondents. The enquiry was held in the presence of the respondents, and they were afforded a full opportunity to cross‑examine the witnesses who had testified against them and, if they wished, to present their own evidence. After hearing the evidence, the enquiring officer concluded that the charges of riotous and disorderly conduct and of assault leveled against the respondents were substantiated.

The appellant denied any allegation of victimisation and rejected the claim that the respondents had been punished for their trade‑union involvement. Subsequently, the incidents that formed the basis of the charge‑sheet gave rise to criminal proceedings. In those proceedings, each of the two respondents was convicted under Section 147 of the Indian Penal Code, sentenced to two months of rigorous imprisonment, and ordered to pay a fine of Rs 20 each, with a default provision that failure to pay the fine would attract an additional month of rigorous imprisonment.

Regarding the alleged breach of Section 22, the appellant contended that the failure to obtain the required written permission was a purely technical violation that should not give rise to any compensation claim under Section 23 of the Act. The Labour Appellate Tribunal, after examining the evidence, held that the domestic enquiry conducted by the appellant was fair and satisfactory and that the enquiring officer’s view was not an “impossible view.” Nevertheless, the Tribunal concluded that because the appellant had not secured the mandatory permission under Section 22, the respondents were entitled to compensation. Consequently, the Tribunal directed the appellant to pay compensation to the respondents.

The Labour Appellate Tribunal ordered that each of the two respondents be paid two‑thirds of his basic wages together with the dear‑ness allowance for the entire period beginning on the date of his dismissal and ending on the date when the Tribunal’s order becomes enforceable. In addition, the Tribunal directed that the respondents receive all other statutory benefits to which they were entitled at the time of their dismissal, including amounts due under the provident fund, gratuity and any other similar obligations. The appellant has challenged this order before this Court, asserting that the directions of the Tribunal should be set aside.

The appellant’s counsel acknowledged that the appellant did not obtain the required written permission from the Appellate Tribunal before dismissing the respondents. However, the counsel argued that this omission constitutes only a technical breach of Section 22 of the Act and therefore does not give rise to any entitlement for the respondents under Section 23. The counsel submitted that the Court may at most declare that a technical breach of Section 22 occurred, but should not grant any consequential relief in favour of the respondents or impose any liability on the appellant in the present proceedings. The counsel further contended that even if proceedings could be initiated against the appellant under Section 29 of the Act, such proceedings would not justify the compensation award that the Tribunal had made in favour of the respondents.

The Court has previously examined the scope and effect of Sections 22 and 23 of the Act in the case of Automobile Products of India Ltd. v. Rukmaji Bala. In that decision, Justice Das observed that the purpose of Section 22, much like Section 33 of the 1917 Act as amended, is to protect workmen who are involved in industrial disputes that are the subject of pending proceedings from victimisation by their employer because of their participation in those disputes. The judgment explained that the employee’s grievance under Section 22 is two‑fold: first, the employer has taken action against the employee without complying with the procedural requirement of obtaining permission; second, the employee suffers a substantive grievance of unfair treatment that seriously prejudices his interests. The right granted to the workman to lodge a complaint with the authority is therefore a distinct benefit. Under ordinary master‑servant law, a master could dismiss a servant without any statutory permission, but Section 22 imposes a restriction on that right for as long as an industrial dispute remains pending between the employer and his employees.

While an industrial dispute is pending between an employer and his employees, the employer is prohibited from dismissing or otherwise punishing any employee who is involved in the dispute unless the employer first obtains the required permission from the Appellate Tribunal, as prescribed by Section 22 of the Act. If the employer disregards the provisions of Section 22, the aggrieved employee may lodge a written complaint in the manner prescribed by law to the Appellate Tribunal. Upon receiving such a complaint, the Tribunal is obliged to consider the complaint as though it were an appeal that is already before it. The violation of Section 22 therefore acts as a condition precedent to the jurisdiction that Section 23 confers on the Labour Appellate Tribunal. Once this condition is satisfied, the employee acquires an additional right to treat the employer’s conduct as the subject‑matter of an industrial dispute without having to follow the ordinary procedural requirements laid down in the Industrial Disputes Act. In an enquiry conducted under Section 23, the Tribunal must address two specific questions: first, whether the employer’s contravention of Section 22 is established on the facts, and second, if such contravention is proved, whether the order that the employer passed against the employee is justified on its merits. When both questions are answered in the employee’s favour, the Tribunal is authorised to issue an appropriate order that benefits the employee.

If the Tribunal finds that the employer did breach Section 22 but, after examining the merits, determines that the employer’s order against the employee is justified, the breach is generally regarded as a technical violation. In such cases, the Tribunal will not ordinarily award substantial compensation to the employee unless there are compelling facts that strongly support the employee’s claim. Conversely, if the first question is answered against the employee, the Tribunal cannot proceed further under Section 23, and no additional relief can be granted. Determining the precise relief appropriate for a technical breach of Section 22 depends on the factual matrix of each individual case. The Court has previously held that it is untenable to accept the argument that the sole remedy under Section 23 is a declaration that the employer has breached Section 22. This position was echoed in the decision of Atherton West & Co., Ltd. v. Suti Mill Mazdoor Union, where the Supreme Court expressed a similar view regarding the scope of Section 23. Applying these principles to the present matter, the Court concluded that the Appellate Tribunal was not justified in ordering compensation in favour of the respondents. The Tribunal’s findings demonstrate that a proper enquiry was conducted by the appellant, and the view of the enquiring officer, which was ultimately adopted by the appellant, cannot be characterised as unreasonable. The conduct of the respondents, as established by the enquiring officer, justified their dismissal, and therefore the compensation award must be set aside.

In this case, the Court observed that, as reflected in the judgment of the Appellate Tribunal, the opinion adopted by the enquiring officer and subsequently accepted by the appellant was not unreasonable. The Court further noted that the conduct of the respondents, which the enquiring officer had found to be proved, would unquestionably justify their dismissal. Considering all the factual circumstances, the Court therefore concluded that the award of compensation that had been granted by the Appellate Tribunal must be set aside. The Court also remarked that Mr. Sen had appropriately refrained from challenging the order of the Appellate Tribunal relating to the respondents’ entitlement to provident fund, gratuity and similar benefits that accrued up to the date of their dismissal, and that this aspect of the order should therefore be affirmed. Consequently, the appeal was allowed in part, limited to the points expressly indicated by the Court. The Court emphasized that the principle of fairness required the reversal of the compensation award, while simultaneously respecting the earlier determination concerning statutory benefits. It further stated that no additional monetary relief beyond the statutory amounts would be granted. Finally, the Court directed that each party should bear its own costs for the entire proceedings.