The Management of Punjab National Bank vs S.C. Gupta and Another

Ratnam, J.—A question of jurisdiction with reference to the maintainability of an appeal preferred by the first respondent before the second

respondent herein u/s 41(2) of the Tamil Nadu Shops and Establishments Act, 1947 (hereinafter referred to as ""the Act""), arises for consideration

and decision in this writ appeal preferred at the instance of the Management of Punjab National Bank against the order passed by a learned single

Judge in W.P. No. 7528 of 1984.

The facts are simple and undisputed as well. The first respondent herein was an employee of the erstwhile Hindustan Commercial Bank Ltd.,

which later merged with the appellant-bank. The first respondent was employed as Manager at Madras Branch. On 12th September, 1983, the

Chief General Manager of the erstwhile Hindustan Commercial Bank Ltd., issued an order in the following terms :-

The following transfers and postings are ordered in the interest of Bank''s work.

Shri R. K. Mehra, Manager, Hazaratganj Lucknow Branch is posted as Manager, Madras Branch vice Shri S. C. Gupta who shall after handing

over full charge report at Central Officer for further orders.

Shri Jagat Singh, Manager, Regional Office, Lucknow, is posted as Manager, Hazaratganj Lucknow Branch vice Shri R. K. Mehra transferred to

Madras Branch.

Orders for the posting of Manager, Lucknow Regional Office shall be advised separately. In the meantime, Shri D. K. Mathu, Officer, Regional

Office, Lucknow, shall officiate as Manager, Regional Office, till permanent arrangements are made.

Pursuant to the order so passed, the first respondent handed over charge of the Madras Branch to Mr. R. K. Mehra on 29th October, 1983. With

reference to this, the first respondent herein addressed a communication to the Chief General Manager of the erstwhile Hindustan Commercial

Bank Ltd., Central Office, Kanpur, as follows :-

With reference to your orders the undersigned had handed over the charge of Madras Branch to Shri R. K. Mehra on 29th October, 1983 and

proceeded for further reporting to Kanpur after getting railway reservation. I report to you for further instructions this day as desired by you.

Later, on 8th November, 1983, the first respondent reported at the Central office of the erstwhile Hindustan Commercial Bank Ltd., at Kanpur

and he was served with the following order :

We have to inform you that your services are hereby terminated with immediate effect as no longer required as per the provisions contained in

Rule 23 of the Central Rule of Service of the Staff of the Bank Chapter 17 (Establishment) Appendix I of the Bank''s Book of Instructions on

payment of three months'' salary in lieu of three months'' notice as stipulated in the above provisions.

Cheque No. 2404320 dated 8th November, 1983 for an amount of Rs. 8850/- (Rupees Eight thousand eight hundred and fifty only) favouring

yourself drawn on Hindustan Commercial Bank Ltd., Aryanagar, Kanpur, is enclosed.

You will immediately stand relieved from the service of the Bank on service of this letter.

Final payment of your other dues will be made to you in due course as per the rules.

This issues with the approval of the competent authority.

Against the aforesaid order of termination of services, on 7th December, 1983, the first respondent herein preferred an appeal u/s 41(2) of the Act

before the second respondent claiming that he would be governed by its provisions. The appellant raised the objection that the second respondent

had no jurisdiction to entertain the appeal preferred before him by the first respondent on the ground that the first respondent was not employed in

any commercial establishment within the State of Tamil Nadu at the time of the termination of his services, which was effected at Kanpur. In the

course of considering the objection regarding jurisdiction so raised, the first respondent was examined and he accepted in the course of his

evidence that on 29th October, 1983, he handed over charge to the new Manager at Madras Mr. R. K. Mehra and that he reached Kanpur on

7th November, 1983 and reported to the Central Office the next day, when the order of termination of his services was served on him. Taking this

evidence into account and also the circumstance that the termination of the service of the first respondent was effected at Kanpur and that order

stood on its own without reference to its being a sequel to the disciplinary proceedings initiated against the first respondent in September, 1983 for

certain irregularities, the second respondent found that the cause of action with reference to the termination of the services of the first respondent

arose at Kanpur, to which place he was transferred, and not within the State of Tamil Nadu and, therefore, it had no jurisdiction to entertain the

appeal. Accordingly, the second respondent dismissed the appeal. Aggrieved by this, the first respondent preferred W.P. No. 7528 of 1984

praying for the issue of a writ of certiorari to quash the order of the second respondent. The learned Judge took the view that no transfer order had

been passed transferring and posting the first respondent to any other place and that though the first respondent handed over charge to his

successor and was relieved and also reported at Kanpur, he should be deemed to be employed at Madras and further that the termination order

was a sequel to certain acts of omission and commission on the part of the first respondent during the period when he served at Madras and,

therefore, the substantial portion of the cause of action arose in the State of Tamil Nadu and as such, the second respondent had jurisdiction over

the matter. In that view, the writ petition was allowed, the order of the second respondent dismissing the appeal filed by the first respondent was

quashed and the matter was remitted for disposal on merits. It is the correctness of this that is questioned by the appellant-Bank in this Writ

Appeal.

Mr. M. R. Narayanswami, learned counsel for the appellant. referring to Sections 2(3), 2(6), 2(12)(iii), 2(16), 41(1) and 41(2) of the Act, first

contended that on the relevant date, viz., 8th November, 1983, when the order of termination was served on the first respondent, he was not a

person employed in an establishment within the State of Tamil Nadu and, therefore, there was no question of the applicability of the provisions of

the Act in so far as the first respondent was concerned. It was also further pointed out that the cause of action for the first respondent to question

the termination of his services arose only at Kanpur and having regard to the transfer of the first respondent from Madras and his handing over

charge to his successor, the first respondent could not thereafter be deemed to have been in employment in an establishment within the State of

Tamil Nadu, where the first respondent had served last. A further contention was also raised that the view taken that the termination order was

only a sequel to the prior disciplinary proceedings initiated against the first respondent for his acts of commission and omission while he functioned

as Manager at Madras Branch is incorrect, as the termination order, without anything more, stood by itself and there was no warrant whatever for

reading into it other events or proceedings, which were ex-facie absent. On the other hand, learned counsel for the first respondent contended that

though the first respondent had handed over charge of the Madras Branch to his successor, he did not cease to be an employee of the Madras

Branch, as he had not been posted elsewhere and, therefore, the appellate authority u/s 41(2) of the Act had jurisdiction to entertain the appeal

filed by the first respondent as an employee at Madras, whose services had been terminated. Learned counsel also contended that applying the

principle of the arising of cause of action, the termination order was the outcome of certain acts of irregularities stated to have been committed by

the first respondent while at Madras and it had, therefore, to be taken that the termination order related to those irregularities committed at Madras

and in that sense, the cause of action arose in Madras, though the termination order was passed and handed over to the first respondent at

Kanpur. In support of their respective contentions, counsel invited our attention to certain decisions, which will be noticed later in the course of this

judgment.

Before proceeding to consider these rival submissions, it would be necessary to refer to the relevant provisions of the Act. Section 1(2) of the

Act extends the provisions of the Act to the whole of the State of Tamil Nadu. u/s 2(3) of the Act, a ""commercial establishment"" has been defined

to mean an establishment which includes, among others, a Bank. Section 2(6) of the Act defining an ""establishment"" includes a commercial

establishment as defined in Section 2(3). u/s 2(12)(iii) of the Act, a ""person employed"" means, in the case of a commercial establishment other than

a clerical department of a factory or an industrial undertaking, a person wholly or principally employed in connection with the business of the

establishment, and includes a peon. ""Shop"" is defined in Section 2(16) of the Act as the premises where trade or business is carried on or services

are rendered to customers and includes offices. Section 41 of the Act runs as follows :-

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 atleast one 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.

(3) The decision of the appellate authority shall be final and binding on both the employer and the person employed.

Applying the aforesaid definitions, there cannot be any doubt that for purposes; of the Act, the bank would be a commercial establishment as well

as an establishment. u/s 41(1) of the Act, an employer cannot 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 atleast one month''s notice or one month''s wages in lieu of such notice,

barring cases where such service is dispensed with on proof of misconduct established by evidence at an enquiry held for that purpose. The

essential requisite for a dismissal contemplated by Section 41(1) of the Act is the subsistence of the relationship of employer and person employed

on the date of the termination of services in an establishment or commercial establishment in Tamil Nadu. u/s 2(12)(iii) of the Act, before a person

can be a ""person employed"", such person should be wholly or principally employed in connection with the business of the establishment. u/s 41(2)

of the Act, the person employed is conferred the right of appeal to the appellate authority against the order of termination of service on the ground

that there was no reasonable cause for dispensing with his services or that he had not been guilty of misconduct. A careful consideration of the

aforesaid provisions in the Act clearly establishes that the relationship of employer and employee in a business or commercial establishment in

Tamil Nadu is a pre-requisite for the termination of the services of the employee and for the employee to complain about it by preferring an appeal

u/s 41(2) of the Act.

The question now is, whether on 8th November, 1983, when the termination order was served on the first respondent at Kanpur, the

relationship of employer and employee subsisted between the appellant and the first respondent with reference to an establishment situate in Tamil

Nadu. It is not in dispute that the first respondent, pursuant to the orders of the Chief General Manager of the erstwhile Hindustan Commercial

Bank Ltd., dated 12th September, 1983, handed over charge to his successor Mr. R. K. Mehra on 29th October, 1983. On his so handing over

charge to his successor, the first respondent cannot any longer be considered as either wholly or principally employed in connection with the

business of the establishment in Madras. At best, the first respondent, between the period when he handed over charge to his successor and his

reporting to Kanpur, could be regarded as an employee of the erstwhile Hindustan Commercial Bank Ltd., Kanpur at large and not attached to or

employed in its commercial establishment at Madras. After handing over charge on 29th October 1983, the first respondent could not have in his

capacity as an employee of the Bank either attended to the work or discharged his duties as an employee of the Bank with reference to its

establishment at Madras. On the question of the real effect of the order dated 12th September 1983, the second respondent was of the view that

the first respondent had been transferred to Kanpur, though the learned Judge was not inclined to share this view. Even in the order dated 12th

September 1983 issued by the Chief General Manager of the erstwhile Hindustan Commercial Bank Ltd., it has been stated that the first

respondent, after handing over full charge, should report at the Central Office for further orders. That would mean that the first respondent should

sever all his connections with the Madras Branch as an employee by handing over charge and should also report at the Central Office at Kanpur

for further orders. The word ""report"" in the context in which it has been used, in our view, would mean that the first respondent was required to

present himself at the Central office at Kanpur and also be available to the Central Office in whatever manner the Central Office desired to avail his

services. Viewed thus, the order dated 12th September 1983 can also be construed as not only posting a successor to the first respondent at

Madras, but also directing the first respondent to make himself available at the Central office at Kanpur for the purpose of rendering such services

as may be required to be done by the Central office at Kanpur. It is useful in this connection to refer to the decision reported in State Bank of India

v. : (1976)ILLJ478SC . Though in that case the Supreme Court considered the question whether an order of appointment stipulating the period for

employment at the end of which the employee''s service would stand terminated would amount to retrenchment within the meaning of Section

2(oo) of the Industrial Disputes Act, it was pointed out that there could be a composite order, one giving employment and the other ending or

limiting it and that a separate subsequent determination is not the sole magnetic pull of the provision. We do not see why the same principle could

not be applied here. The letter dated 12th September 1983 can, on the basis of the principle above stated, be regarded as not only directing the

first respondent to hand over charge to his successor, but also directing him to report at the Central office at Kanpur in order to enable the Central

office to utilise his services in whatever manner the Central office thought fit. We must, however, observe that before the learned Judge, the matter

was not projected in this form and Mr. M. R. Narayanaswami very frankly stated that it was not so presented. Even so, we do not see any

objection to the order dated 12th September 1983 being viewed in this manner on principle. So looked at, the communication dated 12th

September 1983 not only put an end to the relationship of employer and employee between the appellant and the first respondent in its Branch at

Madras, but also had the effect of obliging the first respondent to report at the Central office at Kanpur in order to enable the Central office to

utilise his services in any manner it thought fit.

It, therefore, follows that at the time when the termination order was served on the first respondent, he was not an employee of the Madras

Branch, but was an employee of the Central Office at Kanpur and as such the termination of his services was effected at Kanpur, while he was an

employee of the Central office. Even on the footing that the communication dated 12th September 1983 cannot be construed as an order of

transfer of the first respondent to the Central office at Kanpur, as pointed out already, he could not have had anything to do with the Madras

Branch as its employee after 29th October 1983 and though he might have remained even thereafter in the State of Tamil Nadu, he could not be

considered as an employee of the Bank during the interval between his handing over charge and his reporting at the Central Office at Kanpur on

8th November 1983. Therefore, looked at from any point of view, the first respondent cannot be regarded as an employee of the Bank in Madras

after 29th October 1983.

It now remains to consider the argument of the learned counsel for the first respondent based on the cause of action having arisen at Madras

atleast in part owing to the initiation of disciplinary proceedings against the first respondent during his service at Madras. The order terminating the

services of the first respondent ex-facie does not make any reference to the proceedings stated to have been commenced against the first

respondent for the alleged irregularities. It seems to us that the order of termination has been passed without any reference whatever to those

proceedings. Even on the footing that the prior proceedings stated to have been initiated against the first respondent was the motive for the passing

of the order of termination, that is not sufficient to sufficient to correlate the actual order of termination to the prior proceedings and to say that the

termination order was only a continuation or sequel to the earlier proceedings. It will be useful in this connection to refer to the decisions reported

in Ramiah (V.) Vs. State Bank of India, Oil and Natural Gas Commission and Others Vs. Dr. Md. S. Iskender Ali, and Union of India (UOI) and

Others Vs. P.S. Bhatt, relied on by Mr. M. R. Narayanswami. In the first of these decisions, it has been laid down that the motive which led to the

exercise of a function has to be carefully distinguished from the nature of the act. Any employer may initiate a proceeding, hold an enquiry, and

come to a certain conclusion, but at that stage, it may choose to purse one of two alternatives, either to punish the employee on a finding of

misconduct or to terminate the employment under the contract and if the employer chooses the alternative of terminating the employment, it is not

motivated by some prior enquiry or investigation or that it is not bona fide. In Oil and Natural Gas Commission v. Md. S. Iskander Ali (supra), the

Supreme Court has pointed out that even if misconduct, negligence and inefficiency might be the motive or the inducing factor which influenced the

employer to employer to terminate the services of the employee the exercise of such a power under the terms of the appointment or the contract of

service cannot be characterised to be in the nature of either a punishment or a penalty. This principle has been reaffirmed by the Supreme Court in

the decision in Union of India v. P. S. Bhatt (supra) where it has been laid down that even if the conduct of the employee is considered to be the

motive or inducing factor which influenced the employer to pass the impugned order, such an order cannot be said to be by means of any

punishment. It follows from the principles laid down in the aforesaid decisions that an action taken in the exercise of a power to take such an action

cannot in any manner be correlated to the motive for the taking of such an action, even though such a motive is made out. Earlier, it has been

noticed how in the order of termination dated 8th November 1983 there is absolutely no reference whatever to any of the irregularities alleged to

have been committed by the first respondent and it is difficult to read into that matters which are not ex-facie discernible. It has been pointed out

already that either the first respondent had been called upon to go over to Kanpur in order to enable the Central office to avail itself of his services

in any manner it liked or he had, with effect from 29th October 1983, ceased to be an employee of the bank at Madras and in as much as there is

no dispute that the order of termination of the services of the first respondent was issued at Kanpur, the cause of action for the first respondent to

question the termination order did not arise within the State of Tamil Nadu, to which territory alone the provisions of the Act would apply. We may

now refer to the decision reported in Workmen of Shri Rangavilas Motors (P.) Ltd. and Another Vs. Shri Rangavilas Motors (P) Ltd. and Others,

relied on by the learned counsel for the first respondent. In that case, the employee working at the Bangalore branch office of a company having its

head office at Krishnagiri in Tamil Nadu was transferred by the orders of the head office. But the order of transfer was not obeyed, which resulted

in the removal of the employee from service, upon which a reference was made under the provisions of the Industrial Disputes Act by the State of

Karnataka and on an objection being raised that the reference was incompetent, the Supreme Court pointed out that the concerned employee was

working in Bangalore at the time of his transfer and the subject-matter of dispute arose within the jurisdiction of the Karnataka Government and,

therefore, the reference was competent. That decision cannot have any application on the facts of this case, where the first respondent had ceased

to be an employee in an establishment in Tamil Nadu on and from 29th October 1983 and the order of termination of his services was passed on

8th November 1983 at Kanpur and during the interval the first respondent could at best be regarded either as an employee of the bank called

upon to report at the Central office at Kanpur or an employee of the Central office at large, and not of any establishment of the bank within the

State of Tamil Nadu. In other words, the first respondent did not have any connection whatever with the State of Tamil Nadu on and from 29th

October 1983 and at the time when the order of termination was passed and there is, therefore, no question of any part of the cause of action

arising within State of Tamil Nadu. We are of the view that there is absolutely no nexus between the prior proceedings and the order of termination

of the services of the first respondent and we cannot, therefore, accept the argument of the learned counsel for the first respondent that the prior

proceedings in Madras resulted in the order of termination being passed at Kanpur and, therefore, atleast some part of the cause in Madras

enabling the first respondent to maintain his appeal u/s 41(2) of the Act before the second respondent at Madras. We may also add that neither

side supported the liberal interpretation of the provisions of the Act adopted by the learned Judge in the course of his order or the other reasons

given for the deemed employment of the first respondent under the bank. We, therefore, hold the appellate authority functioning u/s 41(2) of the

Act within the State of Tamil Nadu did not have jurisdiction to entertain the appeal filed by the first respondent herein. We, therefore, allow the

writ appeal and dismiss W.P. No. 7528 of 1984. There will be, however, no order as to costs.