Management of Tabesh Process, Sivakasi vs Presiding Officer, Labour Court and Others

The main point that is urged by the Management in this writ petition is that no interest can be levied with respect to compensation that is

awarded by a Labour Court because the Labour Court is not a Civil Court. This contention is made by Mr. K. T. Paul Pandian, learned counsel

for the employees, referring to the decisions in Rangarathinam Pillai Vs. Labour Court and Another, and Gammon India Limited Vs. Niranjan

Dass, . The learned counsel contends that in the instant case before us, the award itself provides for interest, whereas the decision reported in

Management of Nathan''s Press. Madras v. K. Krishnan, (1988) LIC. 700 (Mad) has not provided ''interest"", and as such the facts of the decision

cited case viz, (1988) LIC. 700 (Mad) are distinguishable so far as the facts of the instant case before us are concerned.

In the instant case before us, the grievance of the Management is only with respect to the interest that had been awarded by the Tribunal and

nothing else, because it is contended, inter alia, as seen from the affidavit of the proprietor of the petitioner Management, that he has been carrying

on the business in off-set printing and manufacture of cartons and wrappers employing about 30 workmen at Sivakasi and the second respondent

who was originally employed as a clerk from the year 1968 was promoted as Manager in the year 1977 after the previous Manager left his

service. As the second respondent started misusing his position and he was more concentrating on his own business which was affecting adversely

the petitioner''s business and the second respondent also started absenting himself without any advance information, the petitioner issued a show

cause notice to him dated 20th July 1978, and in spite of the same the second respondent continued to remain absent and alleging that he was

orally terminated from the service on 23th June 1978 itself raised an Industrial Dispute under S. 2-A of the I.D. Act, 1947 and on failure of

conciliation the Government of Tamil Nadu referred the same for adjudication in G.O.Ms. No. 135 dated 25th January 1979 to the Labour Court,

Madurai, and the said Industrial Dispute was numbered as I.D. No. 15 of 1979 on the file of the Presiding Officer, Labour Court, Madurai and

was disposed of by an award dated 17th December 1980 and published in the Tamil Nadu Government Gazette dated 18th February, 1981

Supplement to Part II - Section 2, page 28, as Lr. No. 2476/W1/81-1, Labour and Employment, dated 24th January 1981.

Before this Court, no other point than the one mentioned viz., with respect to interest has been argued.

Now, turning to the decision reported in Management of Nathan''s Press. Madras v. K. Krishnan, (supra), this Court, as already observed, is of

the view that the facts, of the decision cited case are not applicable to the facts of the instant case before us; and they are not similar to the facts of

the instant case before us. But, for the sake of comparison this Court is incorporating the observation at para 3, page 701 of Management of

Nathan''s Press, Madras v. K. Krishnan, (supra) which runs as follows :

The second grievance of the learned counsel for the petitioner is directed against the award of interest. Learned counsel would submit that the

second respondent is not a Civil Court and does not possess the same power as the Civil Court on the question of interest. Such a view had been

expressed by Veeraswami, J. (as he then was) in Krishnamurthi v. The Mail, 1964 II LLJ 88. The learned Judge further observed as follows :

Interest is not one of the items that appear to be competent for the Labour Court to go into under that section unless it has been provided for in an

award or a settlement. That is not the case here. The order of the Labour Court in so far as it related to interest cannot be sustained.

It is not claimed here that the award passed in the instant case provided for payment of interest as such. In this context, one has to take note of the

scope of S. 33C(2) of the I.D. Act, 1947, under which alone the present claim petition has come to be filed. The Labour Court, while making the

computation has got only the role of an executing Court, and it cannot go beyond the award unless the question is incidental to working the reliefs

on the basis of the award. The heads of claims could be based only on the award, and in the absence of any provision for payment of interest in the

award there could not be any claim for such interest and countenancing thereof by the second respondent in the present case. The claim for interest

could not be stated to be incidental to computation of the benefits given under the award. I find the view expressed in Krishnamurthi v. The Mail,

1964 II LLJ 88 has been taken note of and followed by a single Judge of the High Court of Delhi in Union of India v. Central Govt., Labour

Court, (1985) 66 FJR 16. In this view, the award of interest, by the second respondent has got to be discountenanced.

Accordingly, this writ petition is allowed to this limited extent, in the sense in the impugned order passed by the second respondent. The sum of Rs.

846.86 representing leave salary for national and festival holidays and a sum of Rs. 350/- representing the interest shall stand deleted. I make no

order as to costs in this writ petition.

The decision in Rangarathinam Pillai v. L. C., (supra) is relied on by Mr. K. T. Paul Pandian, for the following proposition which occurs at

pages 420, 421 :

The position of the common law of master and servant, in such cases in succinctly summarized by Halsbury thus;

The measure of damages for wrongful dismissal is the loss thereby incurred, and this will be subject to the duty of the plaintiff to mitigate his loss

by taking other employment which is both suitable and available. Normally by the wage due and payable for the agreed period of service .....

Damages awarded to an employee for wrongful dismissal, although they are thus given in restitution of lost earning are payable without deduction

for Income Tax."" (Paragraph 414 at p.244 of Halsbury''s Laws of England, 3rd Edn. Vol. 1.) ............ damages are to be measured by the amount

of wages, which the servant has been prevented from earning by reason of his wrongful dismissal, including the value of any other benefit to which

he is entitled by virtue of his contract and of which he is deprived in consequence of its breach, after taking into consideration the probabilities of

his obtaining employment elsewhere. If, therefore, he obtains other employment immediately after his dismissal, the amount which would otherwise

be payable as compensation must be reduced by the amount of remuneration which he receives in respect of such employment, and if he is paid

the same or higher wages, his loss is merely nominal. Moreover, it is his duty to minimize his loss, and he must therefore use due diligence in

endeavoring to obtain employment. If, but for his own default or neglect, he could, immediately after his dismissal, have obtained suitable

employment at similar wages, he cannot recover more than nominal damages against the master. In assessing the damages the jury is entitled to

take into consideration all that happened, or is likely to happen to increase or mitigate the servant''s loss down to the day of trial.

(see para 995 at pp. 523 and 524 of Halsbury''s Laws of England, 3rd Edn., Vol. 25)

While these principles can be validly applied when the dispute before the Court is one of computing damages payable to a workman for breach

of contact or the conditions of employment by the employer there is no scope for importing those principles, in a case where the matter has been

decided finally by the industrial tribunal in its award and the question has been raised before the Labour Court acting under S. 33C(2) for

computing the money value of the benefit payable to the worker because of the master''s action in not implementing the award. That in such cases

there is no jurisdiction to import the common law principle for computing damages for breach of contract, under the law of master and servant, is

clearly laid down by the supreme court in its decision in S.S. Shetty Vs. Bharat Nidhi, Ltd., :

The monetary value of the benefit of such reinstatement is therefore to be competed not on basis of a tort alleged to have been committed by the

employer by reason of the non-implementation of the direction of reinstatement contained in the award.

It may be pointed out that the observations mentioned above were made in a case arising under S. 20(2) of the I.D. (Appellate Tribunal) Act

1950, which is in pari materia with S. 33C(2) of the I.D. Act, 1947. This decision was followed by the Supreme Court in Victor Oil Company,

Ltd. v. Amarnath Das, 1961 II LLJ 113 which is also a case under S. 33C(2).

But another principle was laid down in the two decisions of the Supreme Court last cited. Both these cases dealt with an award of the tribunal

for reinstatement with back-wages, but the management had totally failed to implement it at any time. Then the workers applied to the Labour

Court Under S. 33C(2) for the computation of their money benefit on the footing that if the award had been implemented they would have

continued in the employment even up to their period of superannuation. Therefore, the computation of the back-wages claimed by the workers in

those cases was on the notional basis of their serving out a long term of employment under the employer, retirement being the limiting point. Such

an approach was repelled in both the decisions of the Supreme Court. In Shetty (S, S) v. Bharat Nidhi, Ltd., (supra) the Supreme Court observed

that in such a case the industrial tribunal would have to take into account the terms and conditions of the employment, the tenure of service, the

possibility of the termination of the employment at the instance of either party, the possibility of retrenchment by the employer or resignation or

retirement by the workman and even of the employer himself ceasing to exist or of the workman being awarded various benefits including

reinstatement under the terms of future awards by industrial tribunal in the event of industrial disputes arising between the parties in the future In

view of these considerations, the Supreme Court observed that it was impossible to compute the money value of the benefit of reinstatement, with

mathematical exactitude in that case, land that the best that any tribunal or court would do under the circumstances would be to make as correct an

estimate as is possible bearing of course in mind all the relevant factors pro and con. Therefore, the Supreme Court bearing these principles in mind

computed the money benefit of reinstatement in that particular case at a lump sum of Rs. 12,500. These principles first now mentioned were again

relied on by the Supreme Court in the decision in Victor oil Company Ltd. v. Amarnath Das, (supra) where also the workers complained of non-

reinstatement in pursuance of the award for reinstatement with back-wages. The Supreme Court again referred to the principles laid down in

Shetty (S, S) case (supra) and held that taking into account the fact that the workers were temporary and not permanent it would be an equitable

measure of monetary value of the benefit in that case if one year''s salary was allowed.

But in the present case none of the above difficulties for making a reasonable computation of the benefit due to non-reinstatement exists. There

is a defined interval, between the date when the award ought to have been implemented, namely, 18 March 1959, and the date when the petitioner

was reinstated, namely 12 January 1965. None of the uncertain factors which weighed with the Supreme Court greatly, for the purpose of making

notional estimate in both the decisions cited, exist in the circumstances of this case. Further there is the circumstance, that the Supreme Court when

the special appeal came before it, directed no doubt as a measure of security to the petitioner that one-half of the backwages should be deposited,

from the date when the award became enforceable till the date of the disposal of the appeal by the Supreme Court and this the management had

done. Therefore there is no difficulty at all in making an exact computation of the quantum of back-wages for the period in question. I am,

therefore, of the opinion that the back-wages payable should be computed without making any deduction for the remuneration which the worker

earned elsewhere in that period as the Labour Court had done. In allowing for such deduction there is a manifest error of law in the award of the

Labour Court

In regard to interest, the Labour Court has, in my opinion, adopted the right principles. The award of interest was in its discretion. It has disallowed

interest on the amounts which have been deposited by the management in pursuance of the Supreme Court''s order. It has allowed on the other

hand interest only for the period of pendency of the Supreme Court appeal and the Court has also allowed interest on a part of the salary excluding

the amount deposited by the management in pursuance of the Supreme Court order. I do not see any grounds for granting further relief in regard to

interest.

In Gammon India Limited Vs. Niranjan Dass, , the Supreme Court laid down the following principles (at p. 236)

In the course of hearing of this appeal, it was stated that the respondent has reached the age of superannuation, therefore physical reinstatement

in service is not possible. Appellant will have to establish that fact but in the event, the appellant shows that under a valid rule, respondent has

reached the stage of superannuation and therefore physical reinstatement is not possible, it is hereby declared that the respondent shall continue to

be in service uninterruptedly from the date of the attempted termination of service till the date of superannuation. Respondent would be entitled to

all back-wages including the benefit of revised wages or salary if during the period there is revision of pay scales with yearly increment revised

dearness allowance and all terminal benefits if he has reached the age of superannuation such as Provident Fund, Gratuity etc. Back-wages should

be calculated as if the respondent continued in service uninterrupted. He is also entitled to leave encashment and bonus if other workmen in the

same category were paid the same. It appears that the respondent has been unlawfully kept out of service, therefore it is but just that the appellant-

company shall pay all the arrears as calculated according to the directions herein given with 12% interest from the date the amount became due

and payable till realisation. Appellant shall also pay costs to the respondent quantified at Rs. 5,000/- The appellant is directed to pay the amount as

herein directed to be paid within 3 months from today.

Relying on the above decision, the learned counsel submits that it is not outside the scope of the Chairman, Industrial Tribunal or the Presiding

Officer, Labour Court to grant interest on the amount that is determined as compensation by them. In this regard, it is pointed out that in this

decision cited case 12% interest has been awarded from the date the amount became due and payable till realisation, in this regard the scope of S.

11A of the I.D. Act, 1947 (14 of 1947) cannot be lost sight of S. 11A of the I.D. Act 1947 reads as follows :-

11A. Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National

Tribunal for adjudication and, in the course of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be,

is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct

reinstatement of the workman on such terms and conditions, if any as it thinks fit, or give such other relief to the workman including the award of

any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require :

Provided that in any proceeding under this section the Labour Court, Tribunal or National Tribunal, as the case may be shall rely only on the

materials on record and shall not take any fresh evidence in relation to the matter.

The above S. 11A deals with the powers of Labour Courts, Tribunals and National Tribunals to give appropriate relief in case of discharge or

dismissal of workmen. The provisions of this section makes it clear that awarding of interest on the amount determined by way of compensation is

available with the Presiding Officer of the Labour Court as well as with the Chairman of the Industrial Tribunal. Under the circumstances, this

Court holds that the provision interest on the amount that is determined as payable to the aggrieved workmen by the Management can be directed

to be paid by the Management with interest the rate of which can also be at the discretion of the Labour Court or Tribunal. Thus, on a careful

consideration of the entire facts of the instant case befores, this Court does not find any infirmity in the order of the Labour Court in awarding

interest. This court does not find any merit in this writ petition.

Therefore, this writ petition is dismissed. Under the circumstances, there is no order as to costs.