1960 INSC 0301
Anglo-American Direct Tea Trading Company, Ltd
v.
Workmen Of Nahortoli Tea Estate
(Supreme Court Of India)
HON'BLE MR. JUSTICE P.B. GAJENDRA GADKAR HON'BLE MR. JUSTICE
K.N. WANCHOO HON'BLE MR. JUSTICE K.C. DAS GUPTA
Civil Appeal No. 244 Of 1960 | 05-12-1960

WANCHOO, J.

(1. ) This is an appeal by special leave in an industrial matter. The appellant is a tea
company in Assam. Dhaneswar Bhumiz and his wife Taramani were workmen under
the appellant. The case of the appellant was that Dhaneswar was given certain orders
on 13 December 1952 by the assistant manager. He did not carry out those orders and
was guilty of disobedience and insubordination. Consequently, he was suspended on
15 December. On the same day he was given a charge-sheet and was asked to explain
why he should not be dismissed or otherwise punished for gross misconduct inasmach
as he refused to carry out the orders of the assistant manager and became insolent. He
was also charged with having worked in the tea garden on 17 December while he was
under suspension. He gave an explanation with respect to the first charge as to the
incident of 13 December, but said nothing in his explanation as to his having worked
on 17 December, after his suspension. An enquiry is said to have been held into both
the charges on 18 December. The record of the inquiry, however, shows that all that
had happened in that inquiry was that certain questions were put to Dhaneswar to
which he gave replies. When he was asked to sign his statement he refused to do so.
Thereafter, no further enquiry seems to have been held ; there is however nothing to
show that Dhaneswar had refused to take part in the enquiry. On 22 December 1952,
Dhaneswar was dismissed. His wife was also dismissed on the same day without any
charge being framed against her and without any inquiry.

(2. ) Thereupon a dispute was raised by the union and eventually two references were
made by the Government of Assam on 15 September 1953, and 9 December 1953.
The first reference was with respect to the dismissal of Dhaneswar and the second
with respect to his wife. The industrial tribunal heard the two references together and
came to the conclusion that Dhaneswar was guilty of misconduct inasmuch as he had
disobeyed lawful orders and consequently upheld the dismissal of Dhaneswar. As for
his wife, the industrial tribunal was of opinion that as her husband was dismissed and

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it was desirable that Dhaneswar should have no footing in the garden, services of his
wife were also rightly terminated, as otherwise Dhaneswar would have an excuse to
live in the garden, which would lead to untoward incidents.

(3. ) The matter was then taken in appeal to the Labour Appellate Tribunal. A
preliminary objection was raised there as to the maintainability of the appeal on the
ground that no substantial question of law was involved in it. The Appellate Tribunal
repelled this contention on the ground that the industrial tribunal had relied on the
statements of some witnesses, who had not been examined either in the managerial
inquiry or before the industrial tribunal. Because of this error in law as to the manner
in which the tribunal below relied on evidence which was inadmissible, the Appellate
Tribunal held that it was entitled to go into the question whether the remaining
evidence which was admissible was sufficient to support the conclusion of the
industrial tribunal. After examining this evidence, the Appellate Tribunal came to the
conclusion that it had not been proved in the case of Dhaneswar that he was guilty of
misconduct, which would justify his dismissal. Further, in the case of his wife, the
Appellate Tribunal held that there was no justification whatsoever for her dismissal.
Eventually, the Appellate Tribunal considered the question of reinstatement and was
of the opinion that in the circumstances of this case the proper course was that
Dhaneswar and his wife should not be reinstated but should be compensated for
premature termination of their employment. It, therefore, ordered that they should be
paid all their Wages up to the date of its decision and one month's wages as notice
pay. Besides, they were to be paid fifteen days' average fray per year of completed
service as retrenchment compensation and fifteen days' pay per year of completed
service as compensation for unjustified and premature termination of their
employment. The appellant then came to this Court and prayed for special leave which
was granted, and that is how the matter has come up before us.

( 4. ) Three points have been urged before us on behalf of the appellant, namely- (1)
the Appellate-Tribunal had no jurisdiction to interfere as there was no substantial
question of law involved in the appeal before it; (2) the Appellate Tribunal's decision
is vitiated by the fact that it did not keep in mind the principles laid down in Indian
Iron and Steel Company, Ltd. v. their Workmen (1958 I. L.L.J. 260.= 13 F.J.R. 377),
as to the extent of the tribunal's jurisdiction to interfere with an order passed in a
managerial inquiry; and (3) in any case, the Appellate Tribunal has awarded double
compensation to Dhaneswar and his wife, which it could not have done." Re. (1):- We
are of opinion that there is no force in this contention. As the Appellate Tribunal has
pointed out, the industrial tribunal has undoubtedly relied on evidence which was
neither given in the managerial inquiry nor before it. That was undoubtedly an error of
law of a substantial nature which would vitiate the award of the industrial tribunal. In
the circumstances, the Appellate Tribunal would be justified in going into the

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evidence and deciding for itself whether after excluding the inadmissible evidence on
which the industrial tribunal had relied there was sufficient material to justify its
finding. In the circumstances, we are of opinion that the Appellate Tribunal was right
in holding that there was a substantial question of law involved in this case which
entitled it to hear the appeal. Re. (2):- There is no doubt that the principles laid down
in Indian Iron and Steel Company case [1958- I L.L.J. 269] (supra) had not been
followed by the tribunals in this case. But we are of opinion . that on the facts of this
case, those principles have no application. The incident out of which the present
proceedings have arisen took place on 13 December. It seems that some kind of
preliminary inquiry was made by the management with which Dhaneswar had nothing
to do. Thereafter he was suspended on 15 December and a charge-sheet was given to
him and his explanation was called for. A second charge-sheet was given to him on 17
December, and the managerial inquiry was fixed for 18 December, in the presence of
Dhaneswar. All that happened at that inquiry was that Dhaneswar's statement was
taken before even any evidence was led on behalf of the management. It seems that
some disputes took place between Dhaneswar and the management at the time his
statement was being taken and Dhaneswar refused to sign his statement on the ground
that it was not correctly taken down. Be that as it may, it does not appear that any
evidence was recorded in the managerial inquiry either before that statement was
taken down or afterwards to prove the charge against Dhaneswar. Further, there is
nothing to show that Dhaneswar had refused to take part in the managerial inquiry
after the dispute as to his refusal to sign the statement. In these circumstances, there
was in fact no managerial inquiry worth the name in this case. This is what the
Appellate Tribunal has also pointed out, and we think rightly. This is also borne out
by the fact that before the industrial tribunal the appellant examined a number of
witnesses which would have been unnecessary if there had been a proper managerial
inquiry. It seems from this fact that it was practically accepted before the industrial
tribunal that there was no proper managerial inquiry and it was left to the industrial
tribunal to decide for itself whether the dismissal of Dhaneswar was justified. In these
circumstances, there was no scope for the application of the principles laid down in
Indian Iron and Steel Company case [ (1957) F. J. R. 377] which applies only where a
proper managerial inquiry has been held. This contention must therefore be negatived.
Re. (3): - We have already set out the final order of the Appellate Tribunal by which it
allowed two kinds of compensation- retrenchment compensation as also compensation
for unjustified and premature termination of employment. It is urged on behalf of the
appellant that the Appellate Tribunal was wrong in allowing double compensation in
this manner. It is not disputed that where a workman is entitled to reinstatement but
for some reason the tribunal does not consider it proper to give that relief,
compensation is awarded to such workman in lieu of that relief. There is, however, no
scope for allowing retrenchment compensation in a case of this kind, for there is no
question of any retrenchment as such where the tribunal decides not to pass an order
of reinstatement but to give compensation instead. Strictly speaking, therefore, the
Appellate Tribunal was wrong in giving retrenchment compensation as well as

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compensation for unjustified and premature termination of employment. What it could
and should have given was compensation only for unjustified and premature
termination of employment. In effect, however, the order of the Appellate Tribunal
works out to giving one month's average pay for each year of completed service for
unjustified and premature termination of employment in this case. We feel that though
the Appellate Tribunal was wrong in splitting up the compensation in two parts as it
did, there would have been no reason for interfering with its order if it had given
compensation for unjustified and premature termination of employment at the rate of
one month's average pay per completed year of service. Now, in a case of proper
retrenchment law allows compensation at the rate of fifteen days' average pay for each
completed year of service; it stands to reason that where a workman loses his job on
account of unjustified and premature termination of employment, he should get
something more than what he would have got as compensation if it was a proper case
of retrenchment. In such a case we do not think that the award of one month's average
pay for each completed year of service would be an excessive compensation for
unjustified and premature termination of employment. Therefore, though the order of
the Appellate Tribunal may not be quite correct in form and though some of the words
used in the last part of the decision seem to suggest that the Appellate Tribunal was
punishing the appellant which it should not and could not do, the order as a whole
giving one month's average pay for each completed year of service as compensation
does not seem to us unreasonable or unjust. In the circumstances we see no reason to
interfere.

( 5. ) So far as Dhaneswar's wife is concerned, she was dismissed because her husband
was dismissed and for no other reason. In the circumstances, the order of the
Appellate Tribunal with respect to her also must be upheld.

( 6. ) There is no force in this appeal and it is hereby dismissed with costs.

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