MANAGEMENT UTKAL MACHINERY LTD v. WORKMEN, MISS SHANTI PATNAIK

The respondent-Miss Shanti Patnaik-took her degree in Master of Arts (Political Science) in 1961. At that time, Major General Pratap Narain was the General Manager of Utkal Machi 'Management'). On nery Ltd. (hereinafter referred to as December 9, 1961 Major General Pratap Narain appointed the respondent as his Secretary on a monthly salary of Rs. 400. She was thereafter transferred to the Personnel Department of Company as an Assistant. It appears that Shri A. L. Sarin joined as Personnel Officer on January 2, 1962. The respondent alleges that on April 30, 1962 she was given notice for termination of her service. On her representation she was informed on May 30, 1962 that the decision of the management to dispense with her service was final. The allegation of the respondent is that taking advantage of her subordinate official position Mr. Sarin mis behaved with her to which she offered resistance.

The respondent asserted that the termination of her service was improper, mala fide and an act of victimisation. The respondent prayed that the order of termination should be set aside and she should be rein stated with full arrears of pay. The case of the respondent was taken up by the Utkal Machinery Mazdoor Sangha and on December 18, 1962 the Govermnent of Orissa referred the follow ing dispute for adjudication to the Labour Court : "Whether the termination of services of Miss. S. Patnaik by the management of Messrs Utkal Machinery Limited, Kansabahal is legal and justified ? If not, what relief she is entitled to ?" The case of the management before the Labour Court was that Miss Patnaik was appointed on probation for a period of 6 months on a salary of Rs. 400 p.m. on the recommendation of 436 SUPREME COURT REPORTS [1966] 2 S.C,R. the then Chief Minister of Orissa, Shri B. Patnaik who suggested A t<t the management that the respondent may be put "in the staff with a start of Rs.

350 or Rs. 400 with living accommodation". The management alleged that the service of the respondent was terminated during the probation period because of her unsatis factory work and there was no question of victimisation or mala- fide motive in the termination of the respondent's service. The B management contended that it had absolute discretion to assess the work of the respondent during the period of probation and to terminate her services on the ground of unsatisfactory work. The Labour Court did not accept the contention of the manage ment and held that there was no probationary period fixed for the C respondent and the termination of her services by the management was mala fide, illegal and unjustified and the management should pay to the respondent a sum of Rs. 9,600 as compensation in lieu of her reinstatement. The first question pressed on behalf of the appellant is D that the Labour Court was wrong in rejecting the contention of the management that the respondent was appointed to serve for a period of 6 months on probation upto June 9, 1962.

Learned Counsel on behalf of the appellant pointed out that there was an endorsement at the bottom of the application by the respondent dated January 9, 1962 to the effect that she was appointed on a E salary of Rs. 400 p.m. on probation for 6 months. The endorse ment is in the handwriting of Major General Pratap Narain and both he and Vogel-another General Manager-have signed it. The Labour Court has examined the evidence on this point and found that no communication was sent to the respondent on the basis of the endorsement-Ex. A-1. The management relied F ort a letter-Ex. G-dated January 17, 1962 alleged to have been sent to the respondent. This letter states that the appointment was on probation for 6 months which may be extended at the discretion of the management and "during probationary period the services of the respondent may be terminated without any notice and with- out the management being bound to assign any reasons therefor".

G The respondent, however, denied that she received any such letter from. the management. The Labour Court has accepted her case and has reached the conclusion that there is no proof that the respondent was employed by the management on probation for a period of 6 months with effect from December 9, 1961. We are ul)able to acC'-"Jlt the argument on behalf of the appellant that the H finding of the Ll(bour Court on this point is not supported by proper evidence or that the finding is vitiated by any error of Jaw. • • • A C D E F G H UTKAL MACHINERY LTD. v. SHANTI PATNAIK (Ramaswami, !.) 437 We shall, however, assume in favour of the appellant that the respondent was appointed on December 9, 1961 on probation for a period of 6 months and it was stipulated in the contract that during the probationary period the services of the respondent could be tenninated without notice and without assigning any reason.

In other words, the management had the contractual right to ter minate the services of the respondent without assigning any reason therefor. But if the validity of the termination is challenged in an industrial adjudication, it would be competent to the Industrial Tribunal to enquire whether the order of termination has been effected in the bona fide exercise of its power conferred by the contract. If the discharge of the employee has been ordered by the management in bona fide exercise of its power, the Industrial Tribunal will not interfere with it, but it is open to the Industrial Tribunal to consider whether the order of termination is ma/a fide or whether it amounts to victimisation of the employee or an unfair labour practice or is so capricious or unreasonable as would lead to the inference that it has been passed for ulterior motives and not in bona fide exercise of the power arising out of the con In such a case it is open to the Industrial Tribunal to tract. interfere with the order of the management and to afford proper relief to the employee.

This view is borne out by the decision of this Court in Assam Oil Co. Ltd. v. Its workmen('). The argument was stressed on behalf of the appellant that there was no dismissal of the respondent for miscounduct but she was only discharged in terms of the contract and the order of the management cannot be treated as an order of dismissal of the respondent for misconduct. The Labour Court has examined the evidence on tills aspect of the case and has reached the finding that the order of the management discharging the respondent dated April 30, I 962 was punitive in character and it should be taken as a punishment for the alleged misconduct of the respondent. The Labour Court has referred to the fact that there is no Stand ing Order of Utkal Machinery Ltd. with regard to punishment for In the absence of any Standing Order the unsatis misconduct. factory work of an employee may be treated as misconduct and when the respondent was discharged according to the management for unsatisfactory work it should be taken that her discharge was If this tantamount to punishment for an alleged misconduct. conclusion is correct the management was not justified in dis charging the respondent from service without holding a proper enquiry.

Even before the Labour Court there was no evidence (I) [1960] 3 S.C.R. 457. • - 438 SUPREME COURT REPORTS [1966] 2 s.c.R. adduced on behalf of the management to show that the work of A the respondent was unsatisfactory. Two witnesses were examined on behalf of the management but neither uttered a word about it. Neither the Deputy General Manager nor the Joint General Manager was examined in support of th<' allegation. There was . also no document produced on behalf o~ the management to : illustrate the unsatisfactory work of the respondent. ment before the Labour Court the respondent said that she was :not told in writing till April 30, 1962 that her work was not satis factory. Mr. Sarin was her superior officer but he never expressed .any disapprobation of her work or told her that her work was not satisfactory. The Labour Court accordingly found that there C In her state- B · was no proof of the alleged misconduct on the part of the respon dent and there was no justification for terminating her services and in the face of complete absence of evidence in regard to unsatisfactory work of the respondent the discharge of the respon dent from service was ma/a fide.

We hold that the view taken by the La hour Court 1s correct. . ' D It was next submitted on behalf of the appellant amount of compensation awarded to the respondent was exorbi- It was pointed ont that the respondent had worked for an tant. actual period of less than 5 months. but she had been awarded compensation of two years' salary. We think there is some sub- E stance in this criticism. The Labour Court has relied upon the decision of this Court in Assam Oil Co. Ltd. v. Its workmen(') but the material facts of that case were different from those in the In that case the aggrieved employee, Miss Scott was present case. in the employment of the Assam Oil Co. Ltd. for about two years before the termination of her services. Scott was in the service of Burmali-Shell as a lady Secretary before she entered the service of Assam Oil Co. in October, 1954. It is also important to notice that the amount of compensation in that case was fixed on a concession of the Solicitor-General who appeared on behalf of the Assam Oil Co.

In the present case, the respondent did not give up any previous job in order to take service G , under the appellant. She had worked for a period of about 5 months with the appellant. Her appointment with the appellant also was somewhat unusual because it was made on the recom mendation of Sri B. Patnaik, the then Chief Minister of Orissa. There are no special circumstances for awarding compensation equal to two years' salary. Having regard to these considerations H we arc of opinion that the amount of compensation awarded by It also appears that Miss F (1) [1960] 3 S.C.R. 457. ·' • • UTKAL MACHINERY LTD. v. SHANTI PATNAIK (Ramaswami, !.) 439 A the Labour Court to the respondent should be reduced and the respondent should be granted a sum of Rs. 4,800 as compensation. She 5hould also be paid 6% interest from the date of order of the Labour Court till the date of payment. ~ B We accordingly modify the award of the Labour Court dated May 24, 1963 and allow the appeal to this extent. · There will be no order as to costs. Appeal allowed in part. - '