Chandrasekar B. vs Management of Parry and Company Ltd. and Others

P. Sathasivam, J.—The writ appeal is directed against the order of the learned single Judge, dated August 10, 1994, made in Writ Petition

No. 5108 of 1987.

The first respondent herein-Management of Parry and Company, aggrieved, by the order of the Deputy Commissioner of Labour (Appeals),

Madras (Appellate Authority under the TNSE Act) Madras 6, in TSE. No. 24 of 1985, dated August 1, 1986, filed Writ Petition No. 5108 of

1987, before this Court. An objection raised before the learned Judge stating that the appellate authority who said to have passed an order on

August 1, 1986 was relieved of the post and assumed as Deputy Commissioner of Labour (Inspection). Accordingly the said authority did not

pass orders in the appeal, filed by the appellant herein on or before August 1, 1986 when he ceased to be the appellate authority under the Tamil

Nadu Shops and Establishments Act (in short, the Act). They also received the order bearing the signature of the appellate authority dated August

1, 1986, only on 5 January 1987. Since the impugned order had been passed after the appellate authority ceased to hold the office, it will be one

without authority. On the basis of the averments made in the affidavit, particularly in Paras 15 and 16 and in the absence of counter-affidavit by the

authority explaining the same, the learned Judge allowed the writ petition and directed the authority to pass fresh orders within reasonable time and

communicate the same within a week after the order. Against the said order of the learned Judge, the second respondent therein has preferred the

present appeal.

In view of the limited question raised in the writ appeal, we are not referring the reason for filing the writ petition and the case of the appellant

herein for the present.

The only question to be considered in this writ appeal is, whether on the date of the order, namely on August 1, 1986, the appellate authority

i.e., Deputy Commissioner of Labour (Appeals) ceased to hold the office or not?

Pursuant to the submissions made and after going through the order of the learned Judge under challenge, we have summoned the original

records, including the order, dated August 1, 1986, passed by the appellate authority setting aside the order of termination, terminating the service

of the appellant herein. After going through the entire records, though the authority has not filed a counter affidavit informing the doubts raised by

the management, we are satisfied that the impugned order was passed by the authority on August 1, 1986, when he was holding the office as

Deputy Commissioner of Labour (Appeals). No doubt, on the same date he was relieved from the post and assumed charge as Deputy

Commissioner of Labour (Inspection). This is clear from the records produced by the office of the Deputy Commissioner of Labour (Appeals),

Madras. In such a circumstance, we are unable to sustain the conclusion arrived at by the learned Judge in setting aside the impugned order. In

view of our conclusion, the writ appeal is to be allowed.

Inasmuch as the learned Judge after accepting the preliminary objection raised by the management, remitted the matter to the appellate authority

for passing fresh orders with the consent of all the parties concerned, we dispose of the main writ petition by passing the following order: Second

respondent in the writ petition join the services of the petitioner-company as an Assistant Manager on October 25, 1982. He was initially placed

on probation for a period of six months and thereafter, he was posted to Secunderabad on November 17, 1982. His probation period was

extended till July 23, 1983. His services were confirmed with effect from July 25, 1983, on the same terms and conditions as contained in the letter

of appointment dated October 18, 1982. He also executed an agreement with the management on August 3, 1983. It is the further case of the

management that, since he did not show much progress he was shifted to Madras on June 15, 1983. Again, in December 1983 when his

performance came for review it was noticed that he was slack in responding to tender notices appearing in the newspapers and this was placed on

record in the memo, dated December 23, 1983. By July 1984, it was found that the concept of business development division was a total failure

and the department should be wound up. At that time the department had 10 covenanted staff including the second respondent. It it also stated that

though even on November 20, 1984, the Chairman of the petitioner-company forwarded the dossier of the second respondent to Sri M.M.

Murugappa and Murugappa Electronics and requested him to consider the second respondent for an opening in their concern. They expressed that

there was no scope to employ the second respondent in Murugappa Electronics. Under these circumstances the petitioner was left with no option

than to terminate the services of the second respondent. Therefore, on December 26, 1984 the petitioner terminated the services of the second

respondent with effect from December 31, 1984. Against the said order of termination, the second respondent preferred an appeal to the first

respondent in the writ petition, namely Deputy Commissioner of Labour (Appeals), Madras (Appellate Authority under the TNSE Act). The said

order of termination was rescinded and fresh order was passed on May 17, 1985 against which the second respondent preferred an appeal to the

first respondent and the same was numbered as TSE 24/85. Before the first respondent-the appellate authority, the second respondent examined

himself and marked his documents as Exhibits A1 to A11. The management examined one Sri Ramachandran and marked their documents as

Exhibits R1 to R9. After considering the claim of both parties in detail, the appellate authority after noting the order of termination, particularly

reason for termination of service of the second respondent is due to ""lack-lustre performance"" and after holding the management had not

conducted domestic enquiry to prove that the second respondent''s performance was not satisfactory; set aside the order of termination of the

second respondent by the management. Against the said order the management preferred Writ Petition No. 5108 of 1987.

The records show that the second respondent has not filed a counter-affidavit highlighting his stand.

The point for consideration in the writ petition is whether the appellate authority is right in setting aside the order of termination of the second

respondent merely on the ground that there is no domestic enquiry to prove that his performance was not satisfactory?

There is no dispute that the Tamil Nadu Shops and Establishments Act, 1947 and the Tamil Nadu Shops and Establishments Rules, 1948, are

applicable to the second respondent and the petitioner-management. Among the provisions, we are concerned with Section 41.

Notice of dismissal--(1) No employer shall dispense with the services of a person employed continuously for a period of not less than six

months, except for a reasonable cause and without giving such person at least once month''s notice or wages in lieu of such notice, provided

however, that such notice shall not be necessary where the services of such person are dispensed with on a charge of misconduct supported by

satisfactory evidence recorded at an enquiry held for the purpose.

(2) The person employed shall have a right to appeal to such authority and within such time as may be prescribed either on the ground that there

was no reasonable cause for dispensing with his services or on the ground that he had not been guilty of misconduct as held by the employer.

It contemplates that no employer is permitted to dispense with the service of a person employed continuously for a period of not less than six

months without a reasonable cause and without giving one month''s notice or wages in lieu of such notice. Such notice is not necessary, if services

of such a person are dispensed with on the charge of misconduct supported by satisfactory evidences recorded at an enquiry held for the purpose.

In this regard, it is relevant to refer the order of termination, terminating the services of the second respondent. In the order, dated May 17, 1985,

it is specifically stated:

..... When the contract period came to an end on December 13, 1984 because of the closure of Business Development Division and also your

lack-lustre performance, we were obliged to terminate your services.

Though it is stated by the management that the main reason for termination is closure of Business Development Division, it is clear that they also

conveyed that his performance was not satisfactory (lack-lustre performance). On completion of the contract, though it would be open to the

management to terminate the service of the person concerned, if they attribute that the termination was due to lack-lustre performance and the

performance was not satisfactory up to their expectation, as per Sub-section (1) of Section 41 undoubtedly the management has to conduct an

enquiry by affording an adequate opportunity to the second respondent. Admittedly, no enquiry was. conducted to prove that the second

respondent''s performance was not satisfactory. It is not the case of the management mat the second respondent was a probationer and his

services were not regularised. Admittedly, his service was confirmed with effect from July 25, 1983 and he was terminated from service with effect

from May 20, 1985. The perusal of the documents, namely, Exhibits A6 and A11 show that he was not a probationer. In such a circumstance,

termination without conducting an enquiry is violative of Sub-section (1) of Section 41 of the Act. This aspect has been considered by

RAMANUJAM J. in the case of United Wire Ropes, Ltd. v. Additional Commissioner for Workmen''s Compensation, Madras, reported in

1976(1) L.L.N. 243. In similar circumstance, the learned Judge after referring the earlier judgment of RAMAPRASAD RAO, J. (as he then was)

in the case of Associated Corporation of Industries v. Additional Commissioner for Workmen''s Compensation reported in 1972 I LLJ 108 has

set aside the similar order of termination. The discussion and conclusion of the learned Judge are as follows, in Para. 9, at pages 247 and 248 of

LLJ:

In my view, the facts of this case are on all fours with the case decided by RAMAPRASAD RAO, J., in Associated Corporation of Industries v.

Additional Commissioner for Workmen''s Compensation (supra). In that case also the employee was found by the management utterly

incompetent and unable to face the grim realities of the situation and to convince the management of his abilities to rise to the occasion. It was also

found that it was utter lack of sincere efforts on the part of the employee to promote the firm''s business interests, which contributed to the

stagnation and that he was grossly negligent in the discharge of his duties and responsibilities. For these reasons the employee''s services were

terminated by the management. The question arose as to whether the termination satisfied the main limb of Section 41(1). The learned Judge held

that the conduct of the employer from the very beginning showed that he was keen to dispense with the services of the employee and that the

above accusations were made in the process of arriving at a reasonable cause for dispensing with the services of the employee though it is for the

employer to decide for himself subjective as to whether the employee''s services have to be terminated or not. While considering the scope of

Section 41(1) of the Act the learned Judge has observed:

''No doubt, it is for the employer to decide for himself, subjectively as to whether his employee''s services have to be terminated or not. Even such

subjective appraisal must depend upon cogent material which has to be placed before an independent Tribunal like the appellate Tribunal

constituted by the statute u/s 41(2) of the Act, who in the ultimate analysis should agree with the employer that there was such reasonable cause for

termination. On the other hand, if vituperative epithets are recorded in writing and communicated to him, and he in turn refutes such allegations

made against him and ultimately the employer decides to terminate his services on such accusation, it would be idle to contend that the dispensation

of the service of the employee in those circumstances was for a reasonable cause. The vendetta is made clear and is part of the record. It has to be

decided whether such charges so made by the employer are true, proper and regular, would be a domestic one, in which certain charges of

misconduct are levelled against the: employee, and without violence to the principles of natural justice, a fair trial is held, and thereafter an ultimate

conclusion is arrived at on the matter in issue. But if bare allegations such as the charges enumerated above are made and no further attempt is

made either to call for an explanation from the employee, or to give him a reasonable opportunity in an enquiry held for the purpose to refute or

disprove the same, then it cannot be said that the employer, when he dispensed with the services of the person in such circumstances did so for a

reasonable cause''.

The above observations equally apply to the facts of this case. The difficulties experienced by the petitioner in running the Madras office which are

referred to in the order of termination are only in relation to the alleged conduct of the petitioner. The order of termination is passed without a

proper enquiry on such conduct and hence that order cannot be upheld as one made for a reasonable cause coming under the main part of Section

41(1).

Both the said decisions are directly applicable to our case and the order of termination, particularly in the light of the reason given by the

management ""due to lack-lustre performance,"" without conducting an enquiry and affording an opportunity cannot be sustained.

Learned counsel appearing for the management has very much relied on the decision of the Supreme Court in the case of The United Planters

Association of Southern India Vs. K.G. Sangameswaran and another, : in support of their claim. After referring Section 41 of the Tamil Nadu Act

and Rule 9(3) of the Tamil Nadu Rules, their Lordships have held that:

The appellate authority had wide jurisdiction to record evidence, and in cases in which an opportunity of hearing was not given to the employee or

the principles of natural justice and in any way violated, the appellate authority have jurisdiction to record evidence if necessary, in order to come

to its own conclusion on the vital conclusion whether the employee was guilty or not on the charges framed against him. It is further seen that in the

case before the Supreme Court the appellate authority has interfered with the order of discharge/dismissal of the respondent therein on the ground

only that a domestic enquiry was not held into the imputations made against the respondent and he did not decide the application of the employer

for recording evidence.

After referring to the fact that the employer had made an application for recording evidence and the same was not considered by the authority, the

Hon''ble Supreme Court has held that the appellate authority committed grave error in disposing of the application of the appellant for additional

evidence and proceeding to dispose of the appeal on the ground that the order of dismissal having been passed without holding a domestic enquiry,

was bad in law. In the case before us, we- have already referred to the documents marked and evidence let in by both sides. The order of the

appellate authority shows that the authority has considered all the materials placed. Since there was no enquiry in terms of Sub-section (1) of

Section 41, set aside the order of termination. In view of the factual position available, we are of the view that the said decision is not helpful to the

management.

Having terminated the services stating that the second respondent''s performance was not satisfactory in view of sub- section (1) of Section 41 of

the Act and in the absence of an enquiry to prove that his performance was not satisfactory, cannot be sustained. An order of termination is passed

without proper enquiry, the order cannot be upheld as one made for a reasonable cause coming under the main part of Sub-section (1) of Section

41 of the Act. We have to therefore hold that in the absence of an enquiry on the respondent''s conduct, a mere notice terminating his services

giving one month salary in lieu of notice will not satisfy the requirements of Sub-section (1) of Section 41 of the Act, Accordingly, we are in

agreement with the conclusion and the ultimate order passed by the appellate authority and we do not find any merit in the writ petition.

Under these circumstances, we pass the following order:

(i) Writ Appeal No. 589 of 1995, is allowed.

(ii) W.P. No. 5108 of 1987 filed by the management of Parry and Company questioning the order of the Deputy Commissioner of Labour

(Appeals) in TSE No. 24 of 1985, dated August 1, 1986, is dismissed.

(iii) No costs.

In view of the disposal of the main appeal, connected CMPs. are closed.