# [1970] 3 S.C.R. 708

- **Citation:** [1970] 3 S.C.R. 708
- **Court:** Supreme Court of India
- **Decided:** 1970-02-19
- **Case number:** Civil Appeal No. 1065 of 1966
- **Bench:** J. M. Shelat, G. K. Mitter
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1970-3-s-c-r-708-5074
- **Pages:** 8

## Headnote

B- '.
Industrial Dispute-Termination of Service for misconducl.-Principles
of natural justice-Duty to conform to--Corporation taking over employees
"'on the rolls'' of the departmental undertaking-Includes those whO are
cf.eemed --to b'e -in service-Taking over power Gnd functions of undertaking includes regulation of cOnditions of service of employees arrd disci·
plintlry action-Labour Court-Jurisdiction_ to go behind language of order
of termination-Certiorari-Finding of Labour Court that order of termiC -
nation punitive neither unreasonable or perverse-High Court lvill not be--
justified· in interfering.
·
-
''
;·./
The third·respondent was a Head Clerk .in
the
Rajya Transport
Authority, a departmental ·undertaking -of the respondent
0 State Government. - His appointment was temporary -terminable without notice. and
without assigning any reason. By a_n order dated February 18, 1959 he
was discharged from service. On April 20, 1959, the State_ Government,
D
in exercise of the power conferred under the Road Transport Corporation
_Act, .1950, set up the appellant corpdration and under the notification the
corporation was to "exercise all the powers and perform all the functions"
till then exercised and performed by the Rajya Transport Authority. In
February 1961 the State Government referred the question of termination
cf the third· respondent's services to the Labour ·Court. The Labour
Court held that he was a workman, that the termination of service was
E
punitive in nature in view· of the Corporation'S letter addressed to the
Conciliation Officer that the third respondent
had
committed
various
irregularities in the discharge' of his duties,. and that the appellant Corporation was the successor _in title to~ the Rajya Transport Authdrity.· 11te
Labour Court, _therefore, held the termination illegal
and -directed the
Corporation to reinstate the third respondent in its -service A wi'it petition
in the High Court for quashing the award was dismissed. In. the appeal
F
to this Court, it was contended that ( 1} the third respondent wa"s not a
workman as defined in s. 2(s) of the Industrial Disputes Act; (ii) tbe
order·_ terminating his service was an order of. termination simpliciter and
(iii) even assuming the order -was illegal his remedy was against the State
.Govemm~nt and not against the Corporatlon.-D~smissing the_ appeal,
HELD ; (i) Prima facie the third respondent was neither an officer
nor a member of the office staff in the administrative offices~ The standing
Orders •. therefore, were applicable to him. The definition of .workman in
G
· s. 2(s) of the Industrial Disputes Act being a- comprehen·sive one, the
third respondent must be held to be a workman within the meaning of s. -_ --:---
2(s) whose conditions of service were· governed by the standing orders, -- -
1712 J!l'
(ii) The standing orders do not provide any precedure for dealing
J
with an employee guilty pf'misconduct enume'rated therein~ but it is wellII
established that termination of service on the ground of misconduct could -
only be done in conformity \\i.th the principles of natural justice .. Even
though the order of termination may be couched in terms of an order of
termination simpliciter the Labour Court is entitled to go behind the
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STATE TRANSPORT CORP.-.v.' BIHAR STATE (f)helat, J.)
709
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appa'rent language of ihe order and co~~ider Whether-· the -order js t~r~i
nation simpliciter or is imposed by way-of punishment. The conclusion- of
the Labour Court that the termination of ·service of respondent 3 was noi
one of termination simpliciter but was by w;:iy of penalty for irregularities .
committed in the discharge of duties was neither unreasonable nor perverse
and the High Court rightly refused· to interfere with such a finding in a
writ of certiorari. [712F-713C]
·
.
'
.
(iii)
Employment of staff and regulating their condition of senrice,
inclu<ling disciplinaTy action, was clearly on

## Text

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' 'BIHAR STATE ROAD TRANSPORT CORPORATION
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STATE OF BIHAR & ORS.~,
February 19, 1970
°' ~ ·
[J. M. SHELAT AND G. K. MITTER, JJ.]
B- '.
Industrial Dispute-Termination of Service for misconducl.-Principles
of natural justice-Duty to conform to--Corporation taking over employees
"'on the rolls'' of the departmental undertaking-Includes those whO are
cf.eemed --to b'e -in service-Taking over power Gnd functions of undertaking includes regulation of cOnditions of service of employees arrd disci·
plintlry action-Labour Court-Jurisdiction_ to go behind language of order
of termination-Certiorari-Finding of Labour Court that order of termiC -
nation punitive neither unreasonable or perverse-High Court lvill not be--
justified· in interfering.
·
-
''
;·./
The third·respondent was a Head Clerk .in
the
Rajya Transport
Authority, a departmental ·undertaking -of the respondent
0 State Government. - His appointment was temporary -terminable without notice. and
without assigning any reason. By a_n order dated February 18, 1959 he
was discharged from service. On April 20, 1959, the State_ Government,
D
in exercise of the power conferred under the Road Transport Corporation
_Act, .1950, set up the appellant corpdration and under the notification the
corporation was to "exercise all the powers and perform all the functions"
till then exercised and performed by the Rajya Transport Authority. In
February 1961 the State Government referred the question of termination
cf the third· respondent's services to the Labour ·Court. The Labour
Court held that he was a workman, that the termination of service was
E
punitive in nature in view· of the Corporation'S letter addressed to the
Conciliation Officer that the third respondent
had
committed
various
irregularities in the discharge' of his duties,. and that the appellant Corporation was the successor _in title to~ the Rajya Transport Authdrity.· 11te
Labour Court, _therefore, held the termination illegal
and -directed the
Corporation to reinstate the third respondent in its -service A wi'it petition
in the High Court for quashing the award was dismissed. In. the appeal
F
to this Court, it was contended that ( 1} the third respondent wa"s not a
workman as defined in s. 2(s) of the Industrial Disputes Act; (ii) tbe
order·_ terminating his service was an order of. termination simpliciter and
(iii) even assuming the order -was illegal his remedy was against the State
.Govemm~nt and not against the Corporatlon.-D~smissing the_ appeal,
HELD ; (i) Prima facie the third respondent was neither an officer
nor a member of the office staff in the administrative offices~ The standing
Orders •. therefore, were applicable to him. The definition of .workman in
G
· s. 2(s) of the Industrial Disputes Act being a- comprehen·sive one, the
third respondent must be held to be a workman within the meaning of s. -_ --:---
2(s) whose conditions of service were· governed by the standing orders, -- -
1712 J!l'
(ii) The standing orders do not provide any precedure for dealing
J
with an employee guilty pf'misconduct enume'rated therein~ but it is wellII
established that termination of service on the ground of misconduct could -
only be done in conformity \\i.th the principles of natural justice .. Even
though the order of termination may be couched in terms of an order of
termination simpliciter the Labour Court is entitled to go behind the
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STATE TRANSPORT CORP.-.v.' BIHAR STATE (f)helat, J.)
709
-
-._,
appa'rent language of ihe order and co~~ider Whether-· the -order js t~r~i
nation simpliciter or is imposed by way-of punishment. The conclusion- of
the Labour Court that the termination of ·service of respondent 3 was noi
one of termination simpliciter but was by w;:iy of penalty for irregularities .
committed in the discharge of duties was neither unreasonable nor perverse
and the High Court rightly refused· to interfere with such a finding in a
writ of certiorari. [712F-713C]
·
.
'
.
(iii)
Employment of staff and regulating their condition of senrice,
inclu<ling disciplinaTy action, was clearly one of the powers and functions
- of the Rajya Transport Authority and this was also to be exercised and
performed by the appellant corporation under the notification. The aver·
ment of the Corporation that it had taken over such employees of the
Rajya Transport Authority as were "on the rolls" 'of the Authority only·
meant those employees who \\•ere in the service of the -Authority and be--.
-cause that termination of service of the -third respondent was held to be
illegal he was deemed t<;t be continuing in the_ service of the Authority and
hence on its rolls.
The appellant corporation must therefdre be deemed
to have taken over the services of re.spondent 3. [713 H-714 E]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1065 of
1966.
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Appeal by speciar ieave from the judgment and order dated
September 17, 1965 of the Patna High Court in Misc. Judicial
Case No. 217 of 1962.
Sarjoo Prasad, R. P. Srivastava, Saranjit Singh Jauhar
If. K. Sinha, for the appellant.
· - ·
and
D. Goburdhun, for respondent No. 1.
The Judgment of the Co~rt. was delivered. by
Shelat, J,, This appeal, by spe~ial leave, is against the order
of the High Court of Patna dismisSing a writ petition under Arts.
226 and 227 of the Constitution challenging the award passed
by the Labour Court on a reference. to it of an industrial dispute
under s. 10( 1) of the Industrial Disputes.Act, 1947.
The reference arose from the. following facts : Prior to April
20, 1959 the Government of Bihar was. conducting through one -
of its departments, called the Rajya Transport Authority, an
undertaking of road transport in the. State. The said Authority
appointed respondent 3 as a Head Clerk in the oflke ·.of the
Divisional Manager, Rajya Transport, Bhagalpur, ·as from foly
27, 1956. ·The order appointing him stated that the appointment
was. purely temporary and was terminable without notice and
without assigning any reasons. By an order dated February 18, ·
1959, issued by the.State Transport Commissioner, Rajya Trans---
port, he was discharged from service with immediate effect. On
April 20, 1959, the State Government, in exercise of the pnwer
conferred by s. 3 of the Road Transport Corporation Act, 64 of
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•SUPREME COURT REPORTS
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[1970] 3 S.C.R.
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: 1950'\ef ~p as from- May 1, 1959, the appellant-corporatio~.
' · The :Kitification issued under s. 3 inter alia stated that "The said
Corp0ration shall, with effect froril the_ said date,- exercise. all the
powers and perform all the functio?S which are at pres~nt being
- -; _ exercised and performed by th.e Raiya _TranspQrt, ~ihar'. In th·o
meantime the question of the termination of· sernces of respondent 3 was espoused by respondent 4 before the Assistant Labour
Commissioner.
The conciliation proceedings having failed, the
State Government -referred the dispute to the Labour Court by
an order dated FebruaIJ'. 24, 1961.
The Lab~ur Court found ;-- (a) That respondent 3 was a .
workman within the defuiition of that -term in the Industrial Dis•
-._ putes Act and the ·standing Orders governing the.appellant corporation, and that though appointed a head clerk, -there was no
evidence to_ show that his work as such head clerk was managerial
or supervisory, (b) That the order dated February 18, 1959
. terminating the servic'es ·of respondent 3 was not termination of
service simpliciter, but was punitive In nat_ure. The Labour Court
relied on a letter dated January 30, 1960 addressed by the
·appellant corporation to the -said conciliation officer that the
services of respondent 3 had been tenninated because "in the
course of certain enquiries the Rajya Transport Department had -
found that Shri Shea Prasad -Sinha had committed various irregularities of the various. nature in the discharge of his duties':.
The Labour Court held that the said alleged irregularities
ampunted to -misconduct as defined by the said standing orders,
and that _ therefore, -the services of respondent 3 could not be
tenninated on. the ground of ·those irregularities without holding
· a disCiplinary enquiry and giving to respondent 3 therein an
opportunity of being heard. No such ~nquiry Jiaving admittedly
been held, the Labour Court held that the said order was-not
-justified as it was not in bona fide exercise of the power to terminate_ the services of respondent 3. !"o evidence was led by the
appellant corporation before the Labour Court either to prove
the said irregularities or to establish that the said order was -
justified. _The Labour Court consequently held:that the said
order being invalid, and therefore, inoperative, respondent 3
would be deemed to have ·continued to be in service.. It further
held that the appellant corporation was the successor-in-title of
· the said Rajya Transport and having taken over the erstWhiJe
empioyc;es .of t?e Rajya Transport; respondent 3 was deemed- to
be ~ontmumg m sernce of the appellant corporation. _ On these_
findmgs, the Labour Court concluded that the said order of termination was invalid, that respondent 3 -was deemed to have
continued in -the s~rvice of Rajya Transport and thereafter of the
appellant corpora!Ion, and on the basis -directed the appdfant
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STATE TRANSPORT CORP. v. BIHAR STATE (She/at, J.)
711
corporation to reinstate respondent 3 in its service and pay compensation for the period from February to September 1959.
The appellant corporation thereupon filed a writ petition in
the High Court for quashing the said award.
In support of the
writ petition three questions were raised before the High Court :
11) That the services of respondent 3 were terminated before
the appellant corporation was set up, and consequently, the remedy
of respondent 3 was agairist the State Government and not against
the corporation. The Labour Court had, therefore, no jurisdiction
to direct the corporation to reinstate him or to pay compensation,
!2) That respondent 3 was engaged in clerical work and was,
therefore, not a workman as defined by the Act, ( 3) That the
termination of the services of respondent 3 was in conformity with
the terms of the contract of service, and there was, therefore, 110
question of the principles of natural justice being applicable 10
such termination. The High Court rejected all the three contentions, refused to quash the order of the Labour Court and dismissed the writ petition holding that the appellant corporation
had failed to establish that there was any error of law apparent
on the face of the record.
Counsel for the appellant corporation urged before us :
(a) that the respondent was a temporary employee engaged as a
head clerk and was, therefore, not a workman as defined by s.
2(s) of the fodustrial Disputes Act, (b) that the order terminating his services was an order of termination simpliciter and the
Labour Court was, therefore, not entitled to interfere with or
set aside such an order, and ( c) that the order having been passed
by the Rajya Transport Authority long before the corporation
came into being, even assuming that the said order was illegal,
the remedy of respondent 3 was against the State Government
and not against the corporation.
,
There can be no doubt that the Rajya Transport Authority.
prior ,to the seting up of the appellant corporation, was carrying
on the undertaking of transport had standing orders' regulating
the conditions of sewice of its employees. The Rajya Trnasport,
having been sanctioned by the Government on a temporary basis.
as is apparent from standing order 3, its employees fell into tw0
categories, namely, temporary and casual. Standing order 2 ( d)
defined an "employee" to mean any person employed by the
Rajya
Transport
Authority
to
do
any
skilled
or
unskilled,
manual
or
clerical
labour
on
hire
or for
reward.
There can be no doubt that respondent 3 was an employee of the Rajya Transport Authority.
Standing order l,
712
SUPREME C.OURT REPORTS
(1970] 3 s.c.R.
however, provides that the" said standing , orders were to apply
only to workmen of the Rajya Transport other than officers. and
office staff employed in the administrative offices and secuons.
Tlie order appointing respondent 3 shows that he was posted at
the office of the Divisional Manager at Bhagalpur. Prima facic,
respondent 3 was neither an ofticer nor a member of. the office
staff in the administrative olfices or sections. The standmg orders,
therefore, were applicable to him.
No evidence was led by the
corporation that respondent 3, :is a. head cl~rk, was conce~ed
with or doing managerial or supervisory dunes.
The defimtmn
of a 'workman' in s. 2(s) of the Industrial Dispute Act being a
.comprehensive one, respondent 3 must be held to be a workman
within the meaning of s. 2(s), whose conditions of service were
.!JOverned by the said standing orders.
Standing order 17 deals
with the power of tennination of employment of the Rajya Transport Authority. That standing order provides that the Authority
has under the terms of employment the right to terminate the
services of an employee with 15 days' notice or payment of 15
.days' wages in lieu of such notice subject to the provisions of the
Industrial Disputes (Amendment) Act, 1953. It further provides
that the employment of such employees as are found guilty of
misconduct may be terminated in accordance with the provisions
of the relevant standing orders.
The relevant standing order is
standing order 18 which Jays down certain acts or omissions as
amounting to misconduct.
Cls. (j) and (!), thereof, Jay down
that habitual or gross neglect of work or habitual or gross negligence or neglect of duty resulting in loss to the Rajya Transport
would be misconduct.
But the standing orders do not provide
any procedure for dealing with an employee guilty of such misconduct. It is well established that if the Rajya Transoort Authority were to terminate the services of an employee on -the grou.nd
of any misconduct enumerated in standing order I 8, it could do
so only in conformity with the principles of natural justice. The
Authority in such a case would have, therefore, to famish to the
concerned employee .charges alleged against him and would have
to afford to him an opportunity to be heard. The letter of the
General Manager of the appellant corporation dated January 30,
1960 earlier referred to make it clear that the reason for terminal·
ing the services of respondent 3 was that he had been found to
have committed irregularities of a serious nature in the discharge.
of his duties. That being so, the termination of services of resJl?lldent 3 W3;S on .account of the aforesaid irregularities in the
discharge of his duties and prima fade was by wav of punishment
and not termination. simp/iciter.
As is well establised, even
though the order of termination may be couched in terms of an
Order of tennination simpliciter, a Labour Court to which an industrial dispute is referred to for adjudication is entitled to go
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STATE TRANSPORT CORP. v. BIHAR STATE (She/at, J.)
7J3;
behind the apparent language of the order in question and consider
whether the order is tennination si'mpliciter or is imposed by- way
of punishment.
The Labour Court, with which also the High
Court agreed, came to the conclusion that the order was not one
of tennination of services simpliciter, but was by way of penalty
imposed upon respondent 3 for the aforesaid irregularities. There
is nothing to show that the said conclusion was· either unreasonable or perverse, and COJ1$equently, the High Court would not be"
entitled to interfere with such a finding in a writ for certiorari.
The High Court was, therefore, right in refusing to interfere with
the finding of the Labour Court in exercise of its prerogati\e
jurisdiction.
It is quite clear from the record that the cause of respondent 3
was taken over and espoused by the respondent union before the
conciliation officer.
The dispute, therefore, was an industrial
dispute referable under s. 10 (1) of the Industrial Disputes Act
by the Government of Bihar and the reference was a competent
one.
The next question is whether the appellant corporation was
the successor-in-title of the said Rajya Transport Authority, and
therefore, the obligations and liabilities of the said Authority
devolved on the appellant corporation.
The
contention
was
that it was,not such a successor-in-title and that once the Rajya
Transport Authority ceased to carry on the said undertaking, the
relationship of master and servant between that Authority and
respondent 3 ceased, and therefore, whatever remedy respondent 3
had would be against that Authority and not against the appellant
corporation. It was also contended that under the terms of the
notification by which the appellant corporation was set up the
corporation took over only the powers and functions of the said
Authority and not its obligations and liabilities.
Consequently.
the order of reinstatement and compensation was contrary· to law.
The appellant corporation, as aforesaid, was set up by means
of the Notification dated April 20, 1959 issued under s. 3 of the
Road Transport Corporations Act, 1950.
Under cl. 2 of that
notification the appellant corporation was empowered to exercise
all the powers and perform all the functions which were till then
exercised and performed by the Rajya Transport Authority. It
is manifest that the powers and functions of the Rajya Transport
Authority were to carry on and conduct the \ransport undertaking.
For that purpose its principal function would he the administration and management of that undertaking which would necessitate the employment of an adequate staff of employees. Employment of such a staff and regulating their conditions of service.
including disciplinary action, would clearly be one of the powers
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714
SUPREME COURT REPORTS
(1970] 3 S.C.R.
or functions of the Rajya Transport Authority, which power or
function was also to 'be exercised and performed by the appellant
corporation under the said notification. Furthermore, in para 5
of the writ petition filed by the appellant corporation in the High
Court, the corporation in clear terms averred that it had taken
over as from May l, 1959 such of the employees of the Rajya
Transport Authority into its service who were on lhe rolls of
the said Authority on the date it came into existence. As rightly
observed by the High Court, on a proper construction of the
said averment, if the termination of the services of respondent 3
was invalid, it never became operative and respondent· 3, therefore, would be deemed to be continuing in the service of the
Rajya Transport Authority on May 1, 1959, and therefore, on
its rolls. In that view, the appella.nt corporation must be deemed to
have taken over the services of respondent 3. The argument, however, was that the true meaning of the said avennent was that
only those of the employees of the Rajya Transport Authority
who were actually on its rolls were taken over and _not thase
who were deemed to be on its rolls. It is difficult to understand the
distinction sought to be made between those whose names were
actually on the rolls and those whose names, though not physically on the rolls, were deemed in law to be on the rolls. If
respondent 3 continued in law to be in the service, it makes little
difference whether his name actually figured in the rolls or not.
The expression "on the rolls" n1ust mean those wh0 were on
May 1, 1959 in the service of the Rajya Transport Authority.
By reason of the order discharging him from service being illegal,
respondent 3 was and must be regarded to be in tl1e service ot
the said Authority, and therefore, he would be one of those whose
services were taken over by the appellant corporation.
Apart, therefore, from the question of the appellant corporation being the successor-in-title of the said Authority, respondent 3, in the absence of any valid termination of his services,
continued and still continues to be in the service of the appellant
corporation since May 1, 1959, and therefore, the cmporation
was bound to pay his wages including all the emoluments to
which he was entitled as from May 1, 1959.
For the period
from February to April the Rajya Transport Authority was liable
to pay his wages and other emoluments, if any, to which he was
entitled. The corporation, as successor-in-title of the said Authority, became liable to pay the said wages for ihe said period and
not from February to September 1959 as directed by the Lafour
Court.
The proper order, therefore. would be that respondent 3 is
deemed to be in the service of the appellant corporation from
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STATE TRANSPORT CORP, v. BIHAR STATE (She/at, J.)
715
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May 1, 1959, and .therefore, the corporation is liable to pay his
wages and emoluments as from May l, 1959. As the successorin-title of the said Authority, it became also liable to pay his
wages and emoluments for .the months of February to April I.959.
Except for this modification of the order passed by the Labour
Court the award stands. The appeal fails and is dismissed with
B
costs, such costs being one hearing fee only.
Y.P .
Appeal dismissed.