Partly allowed

Blue Star Limited v. Joaquim G.D Costa

Bombay HC11 Jul 2014WP/1223/2007

Case brief

AI extract

What is this about?

The court examined a writ petition challenging a Labor Court award that reinstated a workman dismissed after allegations of misconduct. While acknowledging the dismissal was disproportionate, the High Court quashed the reinstatement and compensation components because the workman was found to be gainfully employed elsewhere, but allowed the back wages awarded.

What did the court decide?

The portion of the award directing reinstatement and compensation in lieu of reinstatement was quashed. The portion directing 50% back wages was upheld. The respondent was directed to be paid the depo

Blue Star Limited Vs Joaquim G.D Costa — Writ and Judicial Review | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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WRIT PETITION NO. 1223 OF 2007

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BLUE STAR LTD ) Sahas Building, Veer Savarkar ) Marg, Prabhadevi, ) Mumbai 400 025 ) .. PETITIONER

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Versus

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JOAQUIM G. D'COSTA ) C/o Mona J. D'Costs, 503/C, ) Vintage Co-operative Housing ) Society, I.C. Colony, Borivali(W)) Mumbai 400 103. ) .. RESPONDENT

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Mr. Vinod Tayade i/b Piyus Shah, Advocate for the petitioner. Mr. V. P. Vaidya, Advocate for the respondent.

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CORAM : M. S. SONAK, J. (In Chamber)

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Judgment reserved on : 4 July 2014 Judgment pronounced on : 11 July 2014.

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JUDGMENT:-

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1 This petition takes exception to the award Part – II dated 19/1/2007 made by the 1st Labour Court, Mumbai in Reference (IDA) No. 330 of 1998, directing inter alia the

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following:

(i) Reinstatement of the respondent – workman with 50% back wages and continuity of service w.e.f. 19/12/1996 along with consequential benefits;

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(ii) In case the petitioner (employer) does not desire to reinstate the respondent – workman, then to pay to the respondent 40% of the wages from the receipt of the award till the date of retirement / superannuation of respondent as and by way of compensation in lieu of reinstatement.

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2 The facts and circumstances in which the

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aforesaid award dated 19/1/2007 (hereinafter referred to as “ the impugned award ”) came to be passed is that the respondent was employed with the petitioner as the Service Engineer since 3/7/1974. A show cause notice /charge-sheet dated 8/5/1995 came to be issued to the respondent for having allegedly spoken to his superiors in a rude and abusive

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language, thereby committing acts of subversive of discipline and good behavior within the premises of the petitioner. Upon the respondent denying the charges, the domestic inquiry was ordered to be held. During the pendency of such inquiry proceedings, the respondent indulged in acts of loitering, idling and wasting time and, therefore, yet another chargesheet dated 16/1/1996 came to be issued to the respondent. This was also made a part of the domestic inquiry and all charges were ultimately held as proved. The petitioner, then dismissed the respondent from services w.e.f. 18/12/1996.

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3 The respondent raised an industrial dispute which was ultimately referred to the Labour Court at Mumbai, vide Reference (IDA) No. 330 of 1998. The 1^st Labour Court made an award (Part–I) dated 26/6/2006 holding that the domestic inquiry held against the respondent was fair and proper. Thereafter, the 1st Labour Court made the impugned award (Part-II) holding inter alia that the penalty of dismissal from

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service imposed upon the respondent was shockingly disproportionate. As noted earlier, the 1^st Labour Court directed reinstatement of the respondent with 50% back wages and continuity of service w.e.f. 19/12/1996. In the event, the petitioner was not desirous to reinstate the respondent, then directions came to be issued for payment of compensation in lieu of reinstatement corresponding to 40% of the wages from the date of receipt of the award till the date upon which the respondent would attain the age of superannuation.

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4 Mr. Tayade, the learned counsel for the petitioner has submitted that the 1^st Labour Court upon having concluded that the domestic inquiry was fair and proper, could not have held in the impugned award that the real reason for dismissal of services of the respondent was that the petitioner adopted new technology and, therefore, wanted to ease out employees not adapted to such new technology. Mr. Tayade

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further submitted that imposition of penalty is basically a managerial function and unless an exceptional case is made out, or unless the penalty imposed is shockingly disproportionate, the 1^st Labour Court ought not to have interfered with the award of penalty. As to the manner of exercise of discretion u/s 11A of the Industrial Disputes Act, 1947, Mr. Tayade made reference to the authority of the Supreme Court in the case of Bharat Heavy Electricals Ltd. V. M. Chandrasekhar Reddy & Ors., 2005 1 CLR 959 . Mr. Tayade also made reference to the authority of the Supreme Court in the case of Mahindra & Mahindra Ltd. v. N.B. Narawade, 2005 1 CLR 803 , where the Supreme Court has approved imposition of penalty of dismissal from service upon an employee who had committed the misconduct of hurling abuses in filthy language against superior officers. For all these reasons, Mr. Tayade submitted that the impugned award is liable to be quashed and set aside.

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5 Mr. Vaidya, the learned counsel for respondent filed written submissions, in which he has made reference to observations / findings in the Part-I award to the effect that the petitioner was in the process of down sizing the work force of the establishment, on account of adoption of new technology/equipments. Mr. Vaidya submitted that on account of this circumstance, the petitioner was on the lookout of some pretext or the other to ease out its employees. In such circumstances, it was submitted that the discretionary power u/s 11A of the Industrial Disputes Act, 1947 has been exercised appropriately by the 1^st Labour Court and such exercise ought not to be upset by this court in exercise of its jurisdiction under Article 226 of the Constitution of India.

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6 Having heard the learned counsels and having perused the material on record, I now proceed to evaluate the submissions with a view to disposing of this petition.

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7 In the charge-sheet dated 8/5/1995, allegations

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against the respondent is that on 2/5/1995, the respondent when called upon to attend a service call spoke to his Senior Officer Mr. A. K. Deshpande in a rude manner by posing the following questions / counter versions;

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“ Why are you chasing me? Why did you call me back? You don’t know anything, you don’t tell me anything. I will fix you ”.

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8 Further, the charge-sheet dated 8/5/1995 also

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makes reference to incident of 3/5/1995 when again the respondent, when called upon to attend a service call, shouted

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and threatened the Senior Officer Mr. A. K. Deshpande in

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following terms:

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“ Who are you to give me calls ? “ Why are you sending me there ?, “ I am not a baby, I know everything ”, I will fix all of you ” and “ you are a 'Chamcha '”

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9 The charge-sheet dated 16/1/1996 which was

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issued by the petitioner to the respondent during the pendency

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of domestic inquiry into the allegations contained in the charge-sheet dated 8/5/1995 states that show cause notices were issued on 12/12/1995 and 19/12/1995 to the respondent. However, the respondent failed to submit any explanation to the same. Although there is no reference to any specific instance, the charge-sheet dated 16/1/1996 states that the respondent has committed acts of omission and commission which will amount to serious misconduct like;

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“1. Loitering, idling and wasting time during working hours without permission.

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2. Willful insubordination and disobedience of lawful and reasonable orders of the Superiors.

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3. Habitual breach of service Rules applicable to the employee.

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4. Commission of acts subversive of discipline and good behaviour within the premises and precincts of the company and outside the premises/precincts of the company but which directly affects the discipline of the Company.

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5. Habitual neglect of work and gross negligence. 6. Knowingly and wrongfully interfering with the records, willful falsification, defacement of records of the company.

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7. Threatening and intimidating and using any form of violence against an employee within and outside the office premises in connection with the employment.

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8. Conduct prejudicial to good order and discipline on company's work.

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9. Cross discourtesy to customers during working hours.

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Doing private and personal work using equipments belonging to the company within the establishment during working hours without the previous permission of the Manager.

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11. Willful slowing down in performance of work.

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Refusal to accept show-cause notices and other communication serviced ”.

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10 There is material on record which establishes that

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the respondent had put in service of about 20 to 21 years at

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the stage when his services came to be terminated w.e.f. 19/12/1996. It has not been the case of the petitioner that during the course of such service spanning over two decades,

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the respondent was involved in any type of misconduct.

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Further, there is material on record that the petitioner,

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consequent upon modernization or adoption of new technology/equipment was in the process of down sizing the work force of the establishment. Mr. Deshpande, who deposed for and on behalf of the petitioner has stated that the work force had been reduced from erstwhile sixty to four. This background, is certainly not irrelevant, when it comes to exercise of discretion u/s 11A of the Industrial Disputes Act, 1947.

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11 Mr. Tayade, however, submitted that the Labour Court having come to the conclusion that the domestic inquiry against respondent was fair and proper, there was no question of adverting to any circumstances, for which the services of respondent came to be dismissed. According to Mr. Tayade, the circumstance relating to modernization and consequent down sizing of work force was completely irrelevant and ought not to have entered the decision making process of the 1^st Labour Court.

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dss 11 wp1223.07-9-7 12 The aforesaid submission of Mr. Tayade, does not commend to this court. The submission, in the first place overlooks the circumstance that the findings on the aspect of modernization, old equipment having become obsolete and the consequent down sizing of work force in the establishment, are basically found in Part–I award dated 26/6/2006. The petitioner cannot rely upon the conclusions in Part-I award, but ignore the findings therein. The Part–I award shall have to be taken into consideration in its entirety, particularly since the same was not challenged either by the petitioner or the respondent. Secondly, in passing the impugned award, the Labour Court has merely noted its earlier findings as recorded in the Part-I award. It is not as if such findings form the main plank of the impugned award or the sole basis for exercise of discretion u/s 11A of the Industrial Disputes Act, 1947. At the highest, the findings constitute one of the inputs, which may have gone into the decision making process. The input, as noted earlier can

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certainly not be regarded as either extraneous or irrelevant in the facts and circumstances of the present case.

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13 The moot issue, is of course whether in the facts and circumstances of the present case the penalty of dismissal from service can be regarded as shockingly disproportionate to the misconduct alleged and, if so, what is the relief that respondent could be legitimately awarded?

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14 There is no dispute, the provisions contained in Section 11A of the Industrial Disputes Act, 1947 not only empower but further cast duty upon the Labour Court to go into the issue of proportionality of penalty. No doubt, the nature of power is discretionary. Such discretion is to be exercised on basis of sound and well settled principles. If the Labour Court exercises discretion u/s 11A of the Industrial Disputes Act, 1947, by taking into account relevant considerations and eschewing irrelevant or extraneous ones,

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then normally it is not for the writ court to interfere with the exercise of discretion. This is because proceedings for judicial review under Article 226 of the Constitution of India are not proceedings in the nature of an appeal.

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15 In the present case, the Labour Court has taken into consideration the circumstance, the service of respondent of over two decades, has in fact been blemishless. The Labour Court has also taken into consideration the circumstance that the petitioner was in the process of down sizing the work force, on account of adoption of modern technology/equipment and that the work force in the section where the respondent was employed had been reduced from sixty to four. The Labour Court has also observed that there was no reason for respondent to suddenly misbehave with his superior officer, after having putting over two decades of blemishless service. Upon consideration of such circumstances cumulatively, the Labour Court exercised discretion in

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concluding that the penalty of dismissal from service was shockingly disproportionate. Such exercise of discretion, in the facts and circumstances of the present case, cannot be regarded as perverse or based upon irrelevant or extraneous considerations.

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16 In the case of Bharat Heavy Electricals Ltd. (supra) the employee concerned was charged with removal by stealth of the title deeds deposited by him with the employer for purposes of creation of an equitable mortgage. Upon such misconduct having been proved, the Supreme Court observed that loss of confidence in such an employee, is imminent and, therefore, penalty of dismissal from service can neither be regarded as vindicative nor shockingly disproportionate. There can be no comparison with the misconduct alleged against the employee in the case of Bharat Heavy Electricals Ltd. (supra) and the misconduct as alleged against the respondent. In fact it is not even the case of the petitioner

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that the misconduct, as alleged, involves any loss of confidence.

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17 The case of Mahindra & Mahindra Ltd. (supra)

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did concern dismissal of an employee who had used abusive and filthy language against his Supervisor and the Supreme Court, in the said case held that the penalty of dismissal from service could not be regarded as shockingly disproportionate. However, in holding so, it is clear from the decision itself, that the Supreme Court took into consideration the past conduct of the employee. The employee in the said case had been charge-sheeted several times on earlier occasions and on each of the occasions, although the misconduct was proved against him, the management took a lenient view and had let him off with minor penalties. On one occasion, the employee had gone to the extent of assaulting his co-worker with a galvanized pipe and causing him grievous injury. Despite such misconduct having been proved, the employee was penalized

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with mere suspension of four days. Thus, the finding of the Supreme Court as to proportionality was based upon consideration of totality of facts and circumstances in the said case.

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18 By way of relief, the Labour Court has directed reinstatement of respondent alongwith 50 % back-wages and continuity of services. The Labour Court has proceeded to grant an option to the petitioner to pay respondent, 40% of the wages from the date of award till the date when respondent would attain the age of superannuation, as and by way of compensation in lieu of reinstatement.

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19 The Labour Court, in my opinion, is not right in awarding such option to the petitioner. The Labour Court is required to apply its mind to the question as to whether respondent was entitled to relief of reinstatement. If so, the Labour Court could have granted the same, without afford of

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any option to the petitioner. Alternatively the Labour Court could also have formed an opinion on the issue of denial of reinstatement and award of compensation in lieu of reinstatement. However, it is too late to direct a remand for the purposes of making amends to this part of the impugned award.

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20 Merely because, the penalty of dismissal may be disproportionate to the misconduct alleged, this does not mean and imply that respondent should get away without any penalty whatsoever. The material on record suggest that respondent had about 4 to 5 years to attain the age of superannuation, at the stage when he was dismissed from the services in the year 1996. Therefore, at this length of time, reinstatement is out of question. The Labour Court, has already denied respondent back-wages to the extent of 50%. Denial of compensation in lieu of compensation, in addition to the aforesaid, shall in the facts and circumstances of the

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present case be a penalty proportionate to misconduct committed by respondent.

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21 In arriving at aforesaid decision, reference would not be out of place to the order made by this Court on 19/3/2008, at the stage of declining respondent relief under section 17B of the Industrial Disputes Act. In the said order, it was observed thus:-

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“ In the context of the relief claimed under Section 17B of the Industrial Disputes Act, the Petitioner has not only asserted that the Respondent is gainfully engaged and is earning income from the Restaurant viz. Race View Restaurant at K. K. Marg, Race Course, Gate 8, Mahalaxmi, Mumbai 400 034, but also produced documents to support their claim that the Respondent has interest in the said business. The petitioner has also placed on record strong circumstance to indicate that even the telephone used in the Restaurant has been issued in the name of the Respondent and that the licence issued by the Authority indicates that the Respondent and his brother are the co-owners in the business.

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The Respondent has filed affidavit and has denied the claim of the Petitioner. The Respondent has stated on affidavit that the property, on which the said Restaurant is being conducted, is ancestral property in which, the Respondent has share. Howeveer, he is not deriving any share or income from the restaurant

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business, which is exclusively conducted by his brother and belongs to him.

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Except these bare words of the Respondent, there is no material or contemporaneous record produced to reassure the Court that the Respondent in fact is not associated with the business inspite of the licence having been issued jointly in the name of the Respondent and his brother and that the telephone used in the Restaurant also stands in the name of the Respondent. The Respondent has not bothered to file affidavit of brother to support the stand of the Respondent or produce accounts in relation to the Restaurant business to substantiate the stand that the Respondent was not receiving any income from the said business and had no share therein.

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Thus understood, it necessarily follows that the Respondent is gainfully employed and must be receiving income from the Restaurant business. On that finding, the question of granting any relief to the Respondent in terms of Section 17B of the Act does not arise. The Motion, therefore, fails. Hence dismissed.”

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22 Although, the material with regard to respondent

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being gainfully employed has come on record after the

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impugned award was challenged before this Court, nevertheless these being proceedings under Article 226 of the Constitution of India, such material cannot be totally ignored. The material on record before this Court, indeed establishes

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that respondent is gainfully engaged in the restaurant

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business. Incidentally, one of the charges leveled against respondent was that he was found doing private and personal work using the equipment of the petitioner within the establishment during the working hours. This was in the context of respondent typing out a Menu for his restaurant. Therefore, if the totality of the circumstances are taken into account, then there is no case made out to uphold the impugned award, in so far as it directs the reinstatement of respondent or payment of compensation in lieu of reinstatement. The impugned award to the extent it directs payment of back-wages to the extent of 50% to respondent, however, requires no interference.

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23 Mr. Vaidya, in his written submissions has submitted that the petitioner has deposited in this Court an amount equivalent to 50% of the back-wages and respondent be permitted to withdraw the same. As this Court has not interfered with the portion of impugned award which directs

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payment of back-wages to the extent of 50% to respondent, the request made by Mr. Vaidya, in his submissions, deserves

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to be accepted. Accordingly, the Registry is directed to pay the amount deposited by the petitioner together with interest, if any, as may have accrued thereon to respondent within a period of four weeks from today.

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24 In the result, I pass the following order:

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(a) The impugned award, insofar as it directs payment of 50% back-wages to the respondent is not interfered with;

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(b) The impugned award to the extent it directs reinstatement and/or compensation in lieu of reinstatement is hereby quashed and set aside;

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(c) The Registry is directed to pay to the respondent, an amount equivalent to 50% back-wages which has been deposited by the

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petitioner alongwith the interest, if any, that may have accrued thereon within a period of four weeks from today.

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25 Rule in this petition is made absolute to the aforesaid extent. In the facts and circumstances of the present case, there shall be no order as to costs.

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(M. S. SONAK, J.)

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Blue Star Limited v. Joaquim G.D Costa

Case brief

What is this about?

What did the court decide?

Blue Star Limited v. Joaquim G.D Costa

Case brief

What is this about?

What did the court decide?

What the court decided

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