# [1975] 3 S.C.R. 489

- **Citation:** [1975] 3 S.C.R. 489
- **Court:** Supreme Court of India
- **Decided:** 1975-02-10
- **Bench:** A. Alagiriswami, V. R. Krishna Iyer, R. S. Sa!Xaiua
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1975-3-s-c-r-489-6423
- **Pages:** 10

## Headnote

f11dmtrial Dispules Act (14 of 1947)-Dismlssa/ of art e:mployee-Powcr
of Tribunal to go behind an order of tennr'nation-Employer must diM:/osie the
cro11nd3 of his action when challenged as colourable or ma/a fide-W lle11 Cort rt
.1/ro11/d irt1erfcre with a {iJuling of fact.
The service<i of \he appellant, who was an empl,Jyee of the respondents, w.crc
terminated by the !alter by ,.iving h.i.m a month's .not!ce as por th" stand1!1g
orders without assigning anv reasons for the tern11Q.at1on.
The consequential
industrial dispute was referred to the Labour c.,urt.
f he management alleged
that the dismissed employee misused his position by p<15sing on important and
secret inform.'\.tion about the affairs of the company to certain out~idcro, that
even after he was transferred to another section he made attempts to elicit
information from the section with a view to pass it on to outsiders, 11nd that,
therefore, ihe management lost confidence in the emolovee and terminated his
service~ by a bona fide orJcr. lhe Labotir Court confirmed the order of termination.
In appeal to this Court, it was contend~'1 that, even where a man.igement had the power to terminate the services of its employees without reasons
but with notice pay the colourable exercise of <fi~t power invalidated the order
and the Court could probe beneath the surface to check upon the hona {1.-lc.1
hehind the e~ercise of the power.
Allowing the appeal to this Court.
HEL'.) : I (a) The Labour Court has nJ.iskJ itself on the law and its onle1
'hould be set 11Side.
The workman will be reinstated with back wages. [498 GJ
(b) The manner of dressing up 11.n order doe$ not matter. The Court will
lift the veil to view the reality or substance of the order. [495 F]
(2) (a) The Tribunal has the oower and, indeed, the dutv to
X-ray the
order and discover its true nature, if the object and effect, if the attendant circlllUslances and the ulterior purpose be to dismiss the employee because he is
"D evil to be eliminated .. Bui if the management, to cover up the inability to
establish by an inquiry, illegitimately but ingeniously passes an innocent looking
<1fder of termination simpliciter, such action is !:lad and is liable to be set aside.
Loss of confidence is no new armour for the man?tgement; otherwise security·of
tcnu;·c, ensured by the new industrial jurispruden,:e and authenticated by a.
catcna of cases of this Court can be subverted ,by thi.5 neo formula Loss of
confiden;;o in the law will be the consequence of tho Loss of Confidence
doctrine. [497 C-D]
(b) An employer who believe or suspects that his employee, particularly
ono holrung a position of confidence, has betrayed that confid=. can, if the
conditions and terms of the employment permit, terminate bis employment and
discharge him without any stigma attaching to the discharge.
But such belief
or suspicion of the employer should not be a mere whim or fancy. It should
be bona fide and reasonable. It must rest on some tangible
basis
and
the
POWer bas to be exercised by the employer objectively, in good faith. which:
~ns honestly and with due care. and prudence. If the exercise of such powe1
is challenged on the gl'cund of bemg cotourable or mala fide or an act of victim.isation or unfair labour practice, the employer must disclose to the ('..onrt the
grounds of his impugned action so that tho same may be tested judicially.
1498 B-CJ
fo tho instant case this has n?t been done. There is only the ipse di.tit of
the ewployer that he was suspecting since 1968 that the appellant was divulging
'ecrets relatinR to his business. The employer has not disclbsed the grounds on
which this suspicion arose in 1968.
Further, aft~r 1968, the appellant was gi••en
490
SU1'REME COURT REPORTS
[1975] 3 S.C.R.
two extra increments in addition to his normal increments in appreciation of
his hard wo.rk.
This circumstance completely demolishes even the whimsical
and tenuous stand taken bv the employer. It was manifest that the impugned
action was

## Text

48 9
A
L. MICHAEL & ANR.
B
c
D
F
G
H
v.
M/S. JOHNSTON PUMPS INDIA LTD.
February 10, 1975
[A. ALAGIRISWAMI, V. R. KRISHNA IYER AND R. S. SA!XAIUA, JJ.]
f11dmtrial Dispules Act (14 of 1947)-Dismlssa/ of art e:mployee-Powcr
of Tribunal to go behind an order of tennr'nation-Employer must diM:/osie the
cro11nd3 of his action when challenged as colourable or ma/a fide-W lle11 Cort rt
.1/ro11/d irt1erfcre with a {iJuling of fact.
The service<i of \he appellant, who was an empl,Jyee of the respondents, w.crc
terminated by the !alter by ,.iving h.i.m a month's .not!ce as por th" stand1!1g
orders without assigning anv reasons for the tern11Q.at1on.
The consequential
industrial dispute was referred to the Labour c.,urt.
f he management alleged
that the dismissed employee misused his position by p<15sing on important and
secret inform.'\.tion about the affairs of the company to certain out~idcro, that
even after he was transferred to another section he made attempts to elicit
information from the section with a view to pass it on to outsiders, 11nd that,
therefore, ihe management lost confidence in the emolovee and terminated his
service~ by a bona fide orJcr. lhe Labotir Court confirmed the order of termination.
In appeal to this Court, it was contend~'1 that, even where a man.igement had the power to terminate the services of its employees without reasons
but with notice pay the colourable exercise of <fi~t power invalidated the order
and the Court could probe beneath the surface to check upon the hona {1.-lc.1
hehind the e~ercise of the power.
Allowing the appeal to this Court.
HEL'.) : I (a) The Labour Court has nJ.iskJ itself on the law and its onle1
'hould be set 11Side.
The workman will be reinstated with back wages. [498 GJ
(b) The manner of dressing up 11.n order doe$ not matter. The Court will
lift the veil to view the reality or substance of the order. [495 F]
(2) (a) The Tribunal has the oower and, indeed, the dutv to
X-ray the
order and discover its true nature, if the object and effect, if the attendant circlllUslances and the ulterior purpose be to dismiss the employee because he is
"D evil to be eliminated .. Bui if the management, to cover up the inability to
establish by an inquiry, illegitimately but ingeniously passes an innocent looking
<1fder of termination simpliciter, such action is !:lad and is liable to be set aside.
Loss of confidence is no new armour for the man?tgement; otherwise security·of
tcnu;·c, ensured by the new industrial jurispruden,:e and authenticated by a.
catcna of cases of this Court can be subverted ,by thi.5 neo formula Loss of
confiden;;o in the law will be the consequence of tho Loss of Confidence
doctrine. [497 C-D]
(b) An employer who believe or suspects that his employee, particularly
ono holrung a position of confidence, has betrayed that confid=. can, if the
conditions and terms of the employment permit, terminate bis employment and
discharge him without any stigma attaching to the discharge.
But such belief
or suspicion of the employer should not be a mere whim or fancy. It should
be bona fide and reasonable. It must rest on some tangible
basis
and
the
POWer bas to be exercised by the employer objectively, in good faith. which:
~ns honestly and with due care. and prudence. If the exercise of such powe1
is challenged on the gl'cund of bemg cotourable or mala fide or an act of victim.isation or unfair labour practice, the employer must disclose to the ('..onrt the
grounds of his impugned action so that tho same may be tested judicially.
1498 B-CJ
fo tho instant case this has n?t been done. There is only the ipse di.tit of
the ewployer that he was suspecting since 1968 that the appellant was divulging
'ecrets relatinR to his business. The employer has not disclbsed the grounds on
which this suspicion arose in 1968.
Further, aft~r 1968, the appellant was gi••en
490
SU1'REME COURT REPORTS
[1975] 3 S.C.R.
two extra increments in addition to his normal increments in appreciation of
his hard wo.rk.
This circumstance completely demolishes even the whimsical
and tenuous stand taken bv the employer. It was manifest that the impugned
action was not bona fidie. [498 DJ
The Chartered Bank v. The Chartered Bank Emplovces' Union
f!960]
3
S.C.R. 441; Murgan Mill's I.rd. v. fodustrial Tribunal. Madras [1965] 2 S.C.R.
1-48 and Workmen of Suddcr Office, Cimwmare v.
Management,
[19701
II
L.L.J. 620. followed.
Air India Corporation Bombay v, V. A. Rebellow & Anr. [1972] 3 S.C.R.. 606
diet!nguishe<l.
Delhi Transport Undertaking v. Goel [1970] II LlJ, 20, referred to.
(3) It is true that this Court, in appeal, a~ .1 rule of practice, is loath to
inU:rfere with a finding of fact recorded by t11e trial court. But if such a fi11ding
is based on no evidence, or is the result of a misreading of the mater:al evidenc.~
or JS so unreasonable or grossly un;ust that n;i reasonable person would judi·
dally arrive at that conc\usi<m. it is the duty of this Court to interfere arid se.t
matters right. [498 E-F]
CI.VIL APPELLATE JURISDICTION: Civil Appeal No. 1605 of l.972.
A
IJ
c
Apneal by Special leave from the Award dated November 24, .l 911
D
of the Labour Court, Delhi in L.C.l.C, No. 31 of 1971.
M. K. Ramamurthi and J. Ramamurthi, for the appellant.
V. M. Tarkunde, 0. C. Mathur, D. N. Mishra, and Sudhir K.
Khanna, for the respondent.
The Judgment of the Court was delivered by
KRr>HNA. IYER, J.-Industrial law in India has many twilight patches,
illustrated by the present appeal which projects the problem of
an
employee whose services have been terminated similiciter by the Management, a pump manufacturing enterprise, issuing a notice ending the
employment and offering one month's pay as authorised by the relevant Standing Orders.
The thorny legal issue is whether the ipse .dixit
of the employer that he h~is lost confidence in the employee is. suffident
justification jettison the fatter without levelling and provr.1g the objectionable conduct which has undermined his confidence so that the: tribunal may be satisfied about the bona fides of the 'firing• as contrasted
with the colourable exercise of power hiding a not-so-innocuous purpose.
Th.e backdrop
The facts and circumst-.mces become decisive of the fate of the
case even where the law is simplistic or fair in its face.
Here, what
are the events and enviironments of employment leading to the worker
being given the boot ? Is the order an innocent and, therefore, legal
quit notic<. sanctioned by the Standing Orders which does not stigmatise
the worker but merely bids him good-bye ? Oris it a sinister intent to
punish as a guileless order based on 'loss of confidence', an alibi which,
on a certain reading of this Court's rulings, is also a protective armour
.against judicial probe and setting aside?
E
G
H
A
B
c
n
E
F
G
H
L. MICHAEL v. JOHNSTON PUMPS (Krishna Iyer, l.)
4 91
Michael, a permanent employee of proved efficiency and six years'
standing, was appreciatively given two 'merit' increme,1ts.
But a letter
of September 2, 1970 told him off service, giving him one month'!
'notice-pay' discharging him without damning, as distinguished from
dismissing him for misconduct.
The rival versions illumine the factual confrontation, the resolutioa
of which is no easy legal essay.
The worker, Michael, through
his
Union, protested against the 'sack' order as victimisoation of a Trade
Union activist but the Management was heedless, conciliation was fruitless and the dispute between the Union and the Management was eventually referred by the Delhi Administration to the Labour Court for
adjudicution.
The reference ran thus :
"Whether the termination of services of Shri L. Michael
is illegal and/or unjustified and. if so, to what relief is be
entitled and what directions are necessary in this respect ?"
Both sides stated their cases in their pleadi'ngs and the true nature of
the conflict emerges from them.
The story set out by the employee in his statement before
the
Labour Court was tfrat although he was efficient, appreciated
and
·awarded merit increments, the Management was antagonised by his
active
part in the formation
of an
Employees'
Union, especially
because oral warnings by the Regional Manager against his Unionist
procfr.dty was ignored.
Michael became the treasurer of tqe Union.
This Union chapter claimed its price, for the Management quietly
terminated his services by a simple letter which reads :
"We are sorry to advise that your services are no longer
required by the Company.
As such, this letter may be
treated as a notice for the termination of your services with
immediate effect.
As for the terms of your employment
Jetter, on termi.nati<YJ of services you will be paid one month's
salary extra.
You may please call on the undersigned and
have your accounts settled."
This act, claims the worker, was 'in flagrant violation of t:lementary
principles of natural justice without assigning any reason and without
giving him an opportunity to defend himself.
This, in his statement
he challenged the termination as 'wIOngful, malafide, illegal, and an
act of victimisation'. The counter case of the management get up in
its statement, as is apparent from the discharge order, is that no dismiJsal is involved, no enquiry necessary a•ad no illegality inv-alidates.
The management claimed that the alleged annoyance with
the
workman for union activity was a concoction in self-defence, as
the
Management had not even knowledge of the formation of the Union.
This latter limb of the plea is a little too naive.
The warning by the
Regional Manager was denied and the reference to trade union activities by the worker was more 'to create a ground for the workman's
daim and has been levelled as a matter of habit and routine'.
The
basic plea of the management was that the action being a simple
4 92
SUPREME COURT REPORTS
[1975J 3 S.C.I\.
termination without a sting, the process and consequence of a disciplinary action were not attracted.
The Management, however, took the Court into confidence
lll
explain why the employee was discharged. He was employed as
a
Receipt and Despatch Cierk in the office upto 10-3-1970.
As ar1 insid~r with access to office corresponde,1ce the employee misused bis
position by passing on 'very important and secret information about
the affairs of the company to certain outsiders'.
He was consequc11tially shiftl!d to the post of clerk handling posting of bills and collection of
payments but the workman, although deilied direct access to com~s
pondence in the Receipt and Despatch section, made attempt 'to elicit
information from the section with a view to pass it on to outsiders'.
The upshot of these activities of which the management was aforted
was a loss of confidc~nce in the employee.
This unreliability was
visited with non-injuri()us termination of service by a bona fide order.
Therefore, the action was claimed to be legal and immune to judicial
i nteif erenoo.
Two socially vital factors must inform the urnlerstanding a.nd
application of Industrial jurisprudence. Tbe first is the constitutional
mandate of Part IV obligating the State to make 'provisiO'J for securing just and humane conditions of work'.
Security of. employment is
the first requisite of a worker's life.
The second equally axiomatic
consideration is that a worker who wilfully or anti-socially holds up
the wheels of production or undermines the success of the business
is a high risk and deserves, in industrial interest, to be removed without
tears.
Legislation and judicial interpretation have woven the l.egal
fabric.
We have to see whether on the facts of the present case what
the relevant law is, whether it has been applied by the Labour Court
rightly and whether the appellant has merit on his side, judged by
the social conscience and judicial constructiQ/a of the law in this br.ancb
of discharge simpliciter versus disguised dismissal.
A few salient facts need emphasis before the principles of law arc
applied.
The workman in his statement stressed the case of n!alus
animus due to bis union activities, although be did vaguely refer to
the termination of service as wrongful and malafide.
From this it cannot be argued, as the M:rnagement sought to make out, that his d1::nial
of leaking out office secrets wa5 an after-thought pleaded only in the
rejoinder and therefore liable to be discredited.
How could the worker
have a hunch about the management's undisclosed ground for
dismissal ? When the latter stated the reason which prompted this action
ior the ~t time befor:e the Labour Court, .the .workman in bis reply
refuted thIS case. It 1lS noteworthy that there ts no speck of re1:ord
or any hint of written material in support of the story that the management had cr~ible information of the appellant betraying sensitive
secrets of busmess. The letters sent by the Union and the worker requesting for reinstatement were being ignored. The management could
well have disclosed their suspicion fa reply and told the Union and the
~orkman that they resorted to an innocuous discharge to avoid punit1v~ trauma. The management could have divulged in writing to
A
B
c
D
l
G
H
A
B
c
D
E
F
G
H
L. MiCHAEL v. JOHNSTON PUMPS (Krishna Iyer,!.)
49:!
the Conciliation Officer their legitimate fears about the worker's inte-
,;rity and their considerate action of simple termination.
This · too
they failed to do.
In theif writte';1 statement in Court the Management asserted for the first time that the employee was an intractable
smuggler of inside information.
The statement winds up with the
legalistic plea : 'the management had, in the meanwhile, lost confidence in the workman'.
This culminating collapse of trust is alleged
to be the primary cause for the discharge from employme'at.
AL the time of the evidence, M.W.l, a former Regional Manager,
swore that the workman joined as a pump operator in 1963, w•as promoted as clerk in 1967, that the suspicion of disloyal communication
arose 'for the first time in 1968' and yet 'thereafter he was given two
increments extra in addition to normal increments.
He was a hard
working· man and has a very good memory but the suspicion
was
there'.
These are the facts and the evidence in the case and it has bee,1
fairly conceded before the Labour Court by the Management's representative that were the action regarded as punitive it was bad, there having
been no enquiry whatever with liberty to the employee to meet the
charge.
But the single slender strend on which the discharge
was
suspended was 'loss of confidence' of the management in the employee.
The Labour· Court argued :
"According to the management, as there was no proof
with it for this suspicion it could not proceed against him
departmenrally and, in the circumstances, it was considered
desirable to terminate his service3 by passing an order of
discharge without any stigma attached to it."
While on all hands it was agreed that the employee was efficient, the
court took the view that the motivatio•a for the termination was
the
'suspicion which lurked in the mind of the Regional Manager that
information regarding tenders was being passed on by the workman'.
We have to find out whether the holding in the award that, on the '
materials above placed, the action could be called colourable or saved
as bona fide, could be castigated as achieving an illegitimate end or
supported as a premature but straight-forward and harmless farewell.
In short. was loss of confidence a legal label affixed by the management
to eject the workman, there being no other legal method of accomplishing their wish to remove him for misconduct?
-
I
,·
Two questions, therefore, fall for decision.
Can a person, reasonably instructed ir. the law and scrutinising with critical faculties
the facts on record, come to th.e conclusion that the snapping of the
tie of master and servant in the present case was innocuous and bonafide or oblique circumvention of the processual protection the
law
provides before a workman is dismissed for mis-c0'11duct ?
We can discern harmony and consistency
in
case
law
Chartered Bank( 1) and Murugan( 2 ) through Sudder Of!ice(3)
(1) [1960] 3 S. C R. 441.
(2) [1965] 2 S. C. R. 148.
(3\ fl9i0] II L. L. J. 620.
from
and
17-423SCl\75
494
SUPREME COURT REPOl.TS
[1975) 3 s.c.R.
Air India Corporation ( 1). The social justice perspective und pa.rticular facts are important, though.
The plethora ot precederits need
not, be covered in extenso as the law laid down is the same ex1:ept
that judicial response to each case situation leads to emphasis
on
different facets of the principle. Even so some milestone decisions,
if we may say so, may be considered.
fn Muruga11 Mills Case (supra) Wanchoo J (as he then was),
speaking for th(: Court made the following observations :
"The right of the employer to terminate the services of
his workman u'L1der a standing order like cl.17(a) in the
present case, which amounts to a claim 'to hire and fire' an
employee as the employer pleases and
thus
completely
negatives security of service which has been secured to industrial employees through industrial adjudication, came 1~? for
c0nsidcra1ion befor,e
the
Labour Appellate Tribunal in
Buckingham & Carnatic Co. Ltd v. Workers of the Compr.. ·y
(1952 L.A.C. 490).
The matter the"1 came up before this
Court also in Chartered Bank v. Chartered Bank Employees
Union (1960 3 SCR 44 I and the Management of U. B.
Dutt & Co. v. Workmen of U. B. Dutt & Co. (19152 Supp.
2 SCR 822) wherein the view taken by the Labour Appellate
Tribunal was approved and it was held that even in a case
like the present the requirement of bona fides was tsse't1tial
and if the termination of service was a colourable exercise
of the power or as a result of victimis•ation or unfair labour
practice the industrial tribunal would have the jurisdiction
to intervene and set aside such termination.
The form of
the order in such a case is not waclusive and the tribunal can
go behind the order to find the reasons which led to the order
and then consider for itself whether the termination was a
colourable exercise of unfair Jabour practice. If it came to
the conclusion that the terminaticm was a colourable exercise
of the power or was a result of victimisation or unfair labour
practice, it would have the jurisdiction to intervene >and set
aside such t~rmination."
In that case the form of the order had no foul trace, but before the
Tribunal dereliction of duty and go-slow tactics were disclosed as the
inarticulate reasons.
This Court ruled :
'This clearly amounted to pm1ishrnent for misconduct
and therefore to pass an order under cl.17(a) of the Standing Orders in such circumstances was clearly a colourable
exercise of the power to terminate the services of a workman
under the provisions of the Standing Orders."
Shri M. K. Ramamurthy, coun,cl for the appellants, contended for
the proposition that cve,1 where a management had the power to terminate tl;e scn·ices of its employee without reasons but with notice
pay only, the colourable exercise of that power invalidated it, and the
(I) [1972] 3 S. C. R. 05.
A
B
c
E
F
G
H
A
D
E
F
G
H
L. MICHAEL v. JOHNSTO.N PUMPS (Krishna Iyer, J.)
4 95
Court could probe beneath the surface to check upon the bonafides
behind the exercise of the power. If the reasons including the termination were victimisation, unfair 1'abour practice or mis-conduct, it
was foul play to avoid a fair e11quiry and fall back upon the power to
terminate simpliciter.
There me myriad situations where an employer
may, in good faith, have to reduce his st•aff, even though he may have
only a good word for his employees.
Simple termination is a weapon
useable on such occasions and not when the master is willing to strike
but afraid to ?Vound.
We have been referred to the Bihar State Road
Transport Corporation case(l). The power of the Court to go behind the language of the order is reaffirmed there. In Sudder Office
(supra) the Court apparentlY. laid stress on the Management's right to
terminate the services simpliciter under the terms of contract, where
there was no lack of bona {ides, unfair Jabour practice or victimisation.
It is signifit:ant that this Court used language and laid down law very
much like in the earlier cases and did refer to the precedents O'il the
point.
For instance, Vaidialingam J., there observed:
"It is needless to point out that it has been held by this
Court in The Chartered flank, Bombay v. The Chartered
Bank Employees' Union (1960 II LLJ 222) that if the termination of service is a colourable exercise of the power vested
in the man•ageme'at or as a result of victimisation or unfair
labour practice, the Industrial Tribunal would have jurisdiction to intervene and set aside such termination.
In order
to find out ll'hether the order of termination is one of termination simpliciter under the provisions of
CO'atract or of
standing orders, the Tribunal has ample jurisdiction to go into
all the circumstances which led to the termination simpliciter."
Tho manner of dressing up an order does not matter.
The Court
will lift the veil to view the reality or substance of the order.
The
Court, in that case. examraed the circumstances in detail to see whether
a di.smissal for mis-conduct was being masked. as a simple send off with
a month's pay, and held ultimately :
"We are satisfied th•at the management has passed the
order of termination simpliciter and the order . does not
amount to one of dismissal as and by way of punishment."
Of cpurse, loss of confidence io,1 the workman was alleged by the
management and the Court found that it was not a camouflage.
It
may be noticed that in that case the workman was being entrusted
with stores worth several lakhs of rupees, some goods were Jost from
the stores and the Union was informed by the management that it
had Jost confideace in the workman.
In the written statement boforc
the Labour Court the management alleged that the workman was the
head godown-clerk who was the custodian of the company's property,
the post being one of trust and confidence. It is noteworthy that in
the High Court the workman did not even file a counter-affidavit and
the counsel for the Union and the workman agreed that the order o(
termination was no~ a camouflage to cover up what really was an order
(1) [19701 3 S. C.R. 708.
4 96
SUPREME COURT REPORTS
[1975) 3 ~.C.R.
of dismissal.
He merdy urged that the termination of the services
was really by way of dismissal.
In this conspectus of circumstances,
this Court found that the Head Clerk in charge of the engineeri\119
godown and responsible for the maintenance of considerable stores,
held a sensitive position.
This Court observed :
"The entire basis of the Labour Court's award for holding that the order is one of dismissal is its view that the
ma·,rngcment has invoked cl. 9 to camouflage its action.
When that approach has been given up on behalf of the
workman bcftirc the High Court the reasoning of the Labour
Court falls to the ground and the High Court has acted
within the jurisdiction under Art. 226 when it set aside the
order ol' the Labour Court especially when there has been no
finding of victimisation, ll'i1fair labour practices or mala fides
recorded, against the management. To conclude we are
satisfied that the High Court was justifie,i in setting aside the
order of the Labour Court."
We have gone into this decision at length to disabuse the impression that a new defence mechanism to protect termination of service
. simpliciter, viz., loss of confidence, had been propounded in this ruling.
We do not agree. that any such innovation has been made. The Ait"
India Corporation Case (supra). may seem to support the 'no confidence' doctrine but a closer study contradicts any such view.
Of
course,
Shri
Tarkunde,
counsel
for
the management,
placed great reliance on this ruling.
Needkss to say, this Court recognised the power of the Tribunal to go behind the form of the order,
look at the substance and set aside what may masquerade as termination simpliciter, if in walitv it cloaked a dismissal for misconduct 'as
a colourable exercise of pc1wer by the management'. The Court repeated that an Industrial employer cannot 'hire and fire' his workmen
on the basis of an unfettered right under the contract of employment.
On the facts of the Air-lndia Case (supra) the Court concluded that
it was 'not possible to hold this order to be based on any conceivable
misconduct'.
Special reference was made to the grave suspicion
regarding the complainant's private conduct with air~hbstesses. Where
no misconduct spurs the action and a delicate unsuitability for the job
vis a vis the young women in employment in the same firm is strongly
suspected, resort to termination simpliciter cannot be criticised as a
malafide mechination. In that background, the action was held to be
honafide and the overall unsuitability led to a loss of confidence in the
employee.
Not that the loss of confide·,1ce was exalted as a ground
but the special circumstances of the case exonerated bad faith in discharge simpliciter.
Before concluding the discussion, we may refer to the case of Delhi
Transport Undertaking v. Goel(!) adverted to by the Labour Court.
Indeed that decision turned on Regulations framed under the Delhi
Road Transport Authority Act, 1950 and not o•a pure Industrial Law
or construction of the Standing Orders. Moreover, the Court, in that
(I) [1970] II LLJ 20.
A
B
c
D
E
F
G
H
A
B
c
0
E
F
G
H
L. MICHAEL v. JOnNSTON PUMPS (Krishna Iyer, J.)
4 97
case, appears to have ~iscussed rulings under Art. 311 also. However,
on the facts of that case, the Court was satisfied that order of termination was not a d;sguise or cloak for dismissing the employee and the
ground given, that he was a cantankerous person undesirable to be
retained was good. We do not read the Delhi Transport case (supra)
to depart from Murugan Mills Case (supra).
Indeed, the latter did
not, and maybe _could not, overrule the former.
The above study of the chain of rulings brings out the futility of
the contention that subsequent to Murugan
Mill's
Case
(supra)
co/ourab/e exercise of power has lost validity and loss of confidence has
gained ground. The law is simply this : The Tribunal has the power
and, indeed, the duty to X-ray the order and discover its true nature, if
the object and effect, if the attendant circumstances and the ulterior
purpose be to dismiss the employee because he is an evil to be eliminated.
But if the management, to cover up the inability to establish
by an enquiry, illegitimately but ingeaiously passes an innocent-looking
order of termination simpliciter, such action is bad and is liable to be
set aside.
Loss of confidence is no new armour for the management;
otherwise security of tenure, ensured by the new industrial jurisprudence
and authe•aticated by a catena of cases of this Court, c•an be subverted
by this neo-formula. Loss of confidence in the Law will be the consequence of the Loss of Confidence doctrine.
In the light of what we have indicated, it is clear that loss of confidence is often a subjective feeling or individual reaction to an objective set facts 1md motivations.
The Court is concerned with
the
latter and not with the former, although circumstances may exist which
justify a genuine exercise of the power of simple termination. In a
reasonable case of a confidential or responsible post being misused or
a sensitive or strategic position being abused, it may be a high risk to
keep the employee, once suspicion has started and a disciplinary enquiry cannot be forced on the master.
There, a termination simpliciter
may be bona1 fide, not colourable, and loss of confidence may be evidentiary of good faith of the employer.
In the present case, the catalogue of circumsta'aces set out in the
earlier part of the judgment strikes a contrary note. The worker was
not told when he wrote; the Union was not disclosed when they demanded; the Labour Court was treated to verbal statements
like;
'very reliable sources' and other credulous phrases without a modicum
of evidence to prove bonafides.
Some testimony of unseemly attempts
by the workman to get at secrets outside his orbit, some radication of
the sour.:e of suspicion, some proof of the sensitive or strategic role
of the employee, should and would have been forthcoming had the
case been bona fide.
How contradictory, that even when
a strong
suspicion of leaking out sensitive secrets was being entertained about
the employee he was being given special merit increments
over and
above the normal increments' A case of res ipsa loauitur.
Circumstances militate against the 'I say so' of M.W.1 that ,he man-agement
had suffered an ineffable loss of confidence.
To hit below the belt
by trading legal phmses is not Industr!al Law.
We are constrained
to express ourselves unmistakably lest industrial unrest induced
by
'
498
SUPREME COURT REPORTS
[1975] 3 S.C.R.
wrongful terminations. based on convenient loss of confidence should
be generated.
Before w1~ conclude we would like to add that an employer who
believes or suspects that his employee, particularly one holding a position of confid~ace, has betrayed that confidence, can, if the conditions
and terms of the employment permit, terminate his employment and
dischurge him without any stigma attaching to the discharge.
But
such belief or suspicion of the employer should not be a mere whim
or fancy.
It should be bona fide and reasonable.
It must rest on
some tangible basis and the power has to be exercised by the employer
objectively, in good faith, which means honestly with due care and
prudence.
lf the exercise of sucn power is challenged on the ground
of being colourable or ma/a fide or an act of victimisation or unfair
labour practice, the employer must disclose to the Court the grounds of
his impugned action so that the same may be tested judicially.
In the
instant case this has not been done.
There is only the ipse dixit of the
employer that he was suspecti1ag since l. 968 that the appellant was
divulging secrets relating to his business.
The employer has not disclosed the grounds m which this suspicion arose in 1968. Further
after 1968, the appellant was given two extra increments, in addition
to his normal increments, as stated already, in appreciation of his hard
work:.
This circumsr;mce completely demolishes even the whimsical
and tenuous stand t'aken by the employer. It was manifest therefore
that the impugned action was not bona fide.
It was urged by Mr. Tarkunde, learned counsel for the employer
that the question whether or not the employer had lost conndence in
the employee, was essentially one of fact a•,1d this Court should not
disturb the finding of fact recorded by the trial court on this point.
It is true that this Court, in appeal, as a rule of practice, is loath to
interfere with a finding of fact recorded by the trial Court. But if such
a finding is based on no evidence, or is the result of a misreading of
the material evidence, or is so unreasonable or grossly u1njust tfatt no
reasonable person would judicially arrive at that conclusion, it is the
duty of this Court to interfere and set matters right.
The case before
us is one such instance, where we are called upon to do so.
The Labour Court has misled itself on the law and we set aside
its order. The work.man: will be reinstated with back: wages.
However the management will be free, if it has sufficie·,1t material and if so
advised, to proceed against the workman for misconducts or on other
grounds valid in law.
The appeal is, accordingly, allowed with costs.
P.B.R.
Appeal allowed.
A
c
D·
F
G