# GUJARAT STEEL TUBES LTD v. GUJARAT STEEL TUBES MAZDOOR SABHA N Guj. L.R. 108 @ 140; approved. Rohtas Industries & Anr. v. Rohtas Industries Staff U11io11 and Ors. [1976] 3 SCR 12: followed. Nagendranath Bara and Anr. v. The Con1missioner of Hills Divisions and Appeals, Assani & Ors., [1958] SCR 1240; Engineering lvlazdoor Sabha v. HiiTd Cycle Ltd., [1963] Suppl. I SCR 625; State of A.P. v. Srel'rama Rao, [1964] 3 SCR 25 @ 33; P. H. Kalyani v. Mis Air France, Calcutta, [1964] 2 SCR 104; referred to. "Tribunal" sirnpliciter has a sweeping signification and does not exclude Arbitrator. A tribunal literally means a seat of justice, may be, a commission, a Court or other adjudicatory organ created by the State. All these are tribunal and naturally the. import of the word, in Section 2(r). ofl the Industrial Disputes Act, embraces an arbitration tribunal. [188 E-F-H 189 A] Dawki11g v. Rokely, L.R. 8 Q.B. 255; quoted with approval. An Arbitrator has all the po~veys under the terms of reference, t'o which ·E both sides are party, confer. In the instant case, the Arbitrator had the authority to investigate into the propriety of the discharge and the ver,acity of the misconduct. Even if section llA of the Industrial Disputes Act is not applicable, an Arbitrator under Section 10A is· bound to act in the spirit of the legislation under which he is to function. A commercial Arbitrator who derives his juris~ diction from the terms of reference will by neca;sary implication be botind to decide according to law and when one says "according to law", it only means F existing law and the law laid down by the Supreme Court being the law of land, an Arbitrator under section 10A will have; to decide keeping in view the spirit of section llA. [196 B-DJ Union of Ilidia v. Bungo Steel F"!niture (P) Ltd. [1967] I SCR 324; reterred to. G Per Koshal J. (Contra) H 1. The orders of discharge could not be regarded as orders of their dismissal and were on the other hand, orders of discharge simp1iciter properly passed under Model Standing Order 23. [235 C-D] (a) Cl&Uses (3) and (4) of M.S.O. 25 speak of an inquiry only in the case of an order falling under sub-clause (g) of clause (1) of that M.S.O. The only sub clause of clause (I) of M.S.O. 25 to which the provisions of ~lauses (3) and. (4) of that M.S.O. wonld be attracted is sub clause (g) and if an order of discharge falls under M.S.0. 23, an inquiry under clauses (3) and r ., ' . ~' -/- • ' • • • GUJARAT STEEL TUBES V, MAZDOOR SABHA 151 (.4) of }.f .S.0. 25 would not be a pre-requisite thereto even though such an order is mentioned in sub-clause (f) clauso (I) of tbat M,S.0. ' [222 H, 223 A] (b) Under M.S.0.s. 23 and 25, the Management has tbe powers to effect termination of the services of an empJoyee by having recourse to either ot: the1n. Jn action taken under I\.f.S.O. 23, no element of punishment is involved and the discharge is a discharge simpliclter; and that is why no opportunity to the .concerned employee to show cause against the termination is provided for. Dismissal~ however~ which an employer may order is in its very nature, a punishment, the infliction of which therefore has been made subject to the result of an inquiry (having the semblance of a trial in a criminal proceeding). Exercise of each of the two powers hais the effect of the termination of the services of the concerned employee but must be regarded, because of the manner in which each bas been dealt with by the M.S.O. as separate and distinct from the other. [223 C-E] (c) To contend that once it was proved that the order of discharge of a workman was passed by reaeon of a misconduct attributed. to hin1 by the· management, the order cannot but amount to an order of dis missal is wrong for two reasons. For one thing, clause (1) of M.S.0. 25 specifically states iii sub~ dames (f) tbat a workman guilty of misconduct may be dischargod under M.S.O. 23. This cleairly means that when. the employer is satisfied that a '\\-·orkman has been guilty of misconduct he may [apart from· visiting the workman with any of tho punishments specified in sub clauses (a), (b), ( c), (cl) and ( e) of clause (1) of M.S.O. 25] either pass against him an order of discharge for which no inql!iry precedent as provided for in clauses (3) and ( 4) of M.S.0. 25 would be necessary, or n1ay dismiss him a-ftoc holding such an inquiry which of the two kinds of order, the employer shall pass is left entirely to his: discretion. [223 E-H] It is true that the employer cannot pass a real order of dismissal in the garb of one of discharge. But that only means that if the order of termination of services of an employee is in reality intended ta push an employee amd not merely to get rid of tim because he is considered useless, inconvenient or troublesome, the order even though specified to be an order of dismissal covered by sub clause (g) of clause (I) of M.S.O. 25. On the other hand if no such intention is made out the order would remain one of discharge simpliciter even though it has been passed for the sole reason that a misconduct is imputed to the employee. That is bnw M.S.Os. 23 and 25 have to be interpreted. M.S.O. 25 specifically gives to the employer the power to get rid of "a workman guilty of misconduct" by passing an order of his discharge under M.S.O. 23 . [224 A-DJ Secondly, the reasons for the termination of service of a permanent ""'orkn1an under M.S. 0. 23 havo to be recorded in writing and communicatod to him, if he so desires, under clause ( 4-A) thereof. Such reasons must obviously consist of an opinion derogatory to the workman in relation to the performance of his duties, and whether such reasons consist of negligence, work shirking or of -serious overt acts like theft or en1bezzlement~ they would in anY case amount to misconduct for which he may be punished under M.S.O. 25. There being no case in which such reasons would not amount to misconduct, the result is that M.S.O. 23 would be render otiose if terminMion of service thereunder for misconduct could be regarded as a dism.issal and such a result strikes at the very root of accepted canons of interpretation. If it Wlls open to the Court to "lift A B c D E F G H I I i I ' A B c • • 152 SUPREME COURT REPORTS . (1980] Z S.C.R. the veil" and to hold an order of discharge to amount to dismissal merely because the motive behind it was a misconduct attributed to the employee, the services of an employee could be terminated without holding against him an inquiry such as is contemplated by clauses (3) and (4) of M.S.O. 25. (224 D-GJ Bombay Corporation v. Malia11kar, [1978] 3 SCR 1000; applied. Merely because it is the reason which weighed with tho employer in effective the termination of services \vould not make 1 thei order of such termination as one founded on misconduct, for such a proposition would run counter to. the plain meaning of clause ( 1) of M.S. 0. 25. For Ml order to be "founded" an mis· conduct, it must be intended to have been passed by way of punishment, that is, it must be intended to chastise, or cause pain in body· or mind or harm or loss in reputation or money to the concerned worker. If such an intention cannot be spelled out of the prevailing circumstances, the crder of discharge or the reasons for which it was ostensibly passed, it cannot be regarded as an order of dismissal. Such would be the C'3.Se when the employer orders discharge 1n the interests of the factory or of the general b~dy of workers. (226 A.CJ Chartered Bank, Bombay v. The Chartered Bank Employees Union, [1960] 3 SCR 441; The Tata Oil Mills Co. Ltd. [1964] 2 SC!t p. 123; The Tata Engineering and Locomotives Co, Ltd. v .. S. C. Prasad, [1969] 3 S.C.C. 372; Workmen D of Sudder Office, Cinnamore v. Management, [1970] 2 L.L.J. 620 followed. E The real criterion which forn1cd the touchstone of a test to determinel whether . an order of termination of services is an order of discharge simpliciter or amounts to dismissal is the real nature of the order, that! is, the intention with which it was passed. If the intention was to punish, that is tol chastise; the order may be regarded as an order of dismissal; and for judging the intention, the question of mala fides (which is the same thing as colourable exercise of power) becomes all important. If no mala fides can be attributed to the management, the order of discharge must be regarded as one having been passed unde.r M.S.O. 23 even though the reason for its passage is serious misconduct. [228 CDJ • • (2) The arbitrator could not exercise tho powm conferred on a Tribunal -~ under section 11A of the 1947 Act and could not therefore interfere with the F punishment awarded by the Management to the workmen (even if the discharge G B could be reaarded a punishment). [235 D-EJ Throughout the I.D. Act, while ~arbitrator' would include an umpire. a Tri~ bunal would not include an arbitrator but would mean only an Industrial Tribunal constituted under the Act unless the context makes it necessary to give the word a different connotation. In sub section (1) of section 11, the word 'Tn'bunal' has been used in accordance with the definition appearing in clause (r) section 2 because an arbitrator is separately mentioned in that sub"'5eCtion~ In sub-sections (2) and (3) of that section a Board, a Labour Court, a Tribunal and a National Tribunal have been invested with certain powers. A Tribunal as cootemplated by sub-sections (2) and (3) then, would not include an arbitrator. [233 A-BJ It is a well settled canon: of interpretation of statutes that the language used by the Legislature must be regarded as the only oource of its intention uni..,. such language is ambiguous, in which situation the Preamble to !he Act; the statement Of Objects of and Reasons for bringing it on the statute book rutd • I -oc. J- • ' • . ~ " •• GUJARAT STEEL TUBES V. MAZDOOR SABHA 153 the pnrpose underlying the legislation may be taken into consideration for A ascertaining such intention. That the purpose of the legislatjon is to fulfil a socio-economic need, or the express object underlying it does not con1e into the picture till an ambiguity is detected in the language and the Court n1ust steer clear of the temptation to mould the written word according to its own concept of what should have been einacted, It is thus not permissible for the Supren1e Court to take the statements of objects and Reasons or the purpose underlying the enactment into consideration, while interpreting section 1 lA of the I.D. B Act. [231 F-G, 234 Cl 3. The High Court exceeded the limits of its jurisdiction in interfering with the said punishment, in the instant case, purporting to act in the exercise of its powers under Article 227 of the Cnnstitution of India. [235 E·F] The High Court, \Vhile discharging its functions as envisaged by that Article, C does not sit as a Court of Appeal over the Award of the' Arbitrator but exercises lin1itcd jurisdiction \vhich extends only to seeing that the arbitn1.tor uas functioned within the scope of his Jegal authority. In this view of the m~tter it was not open to the High Court to revise the punishment (if the discharge is regarded as such) meted out by the l\till in a more or less disorganised condition in spite of Unions and Federation. Therefore, it lacks the power that true combination gives. (2) Hence, my advice to the employers would be that should willingly regard workers as the real owners of the concerns which they fancy they have created. (3) ..•••.•..• " E F Tuned to these values are the policy directives in Articles 39, 41, G 42, 43 and 43A. They speak of the right to an adequate means of • • livelihood, the right to work, humane conditions of work, living wage ensuring a decent standard of life and enjoyment of Je[sure and participation of workers in management of industries. De hors these man- - (1) Socialism of my Conception (M.K. Gandhi) by Anand T. Hingorani, Bhartiya Vidya Bhavan. (2) ibid. (3) Ibid. H 156 SUPREME COURT REPORTS [1980] 2 S.C.R. , A dates, law will fail functionally. Such is the value-vision of Indian Industrial Jurisprudence. The matrix of facts-A Pre-view The nidus of facts which enwomb the issues of law may be elaboB rated a little more at this stage. In t1le vicinity of Ahmedabad City, the appellant is a prosperous engineering enterprise which enjoys entrcpreneureal excellence and employs over 800 workmen knit together into the respondent Union called the Gujarat Steel Tubes Mazdoor Sabha (lhe Sabha, for short). Fortunately, the indusry has had an innings of escalating profits but the workmen have had a running come plaint of a raw deal. Frequent demands for better conditions, followed by ;iego:iated settlements, have been a lovely feature of this establishment, although the poignant fact remains that till the dawn of the seyenties. the gross wages of the workmen have hovered around a harrowii;g hundred rupees or more in this thriving Ahmedabad indusD E F G H try. The course of this precarious co-existence was often ruffled, and there \Vas, '110\V and then. some flare-up leading to strike, conciliation anLl even reference under Section 10. When one such reference was pending, another unconnected dispute arose which, after some twists and tmns, led to an industrial break-down and a total strike. The episodic s !ages of this bitter battle will have to be narrated at length a little later. Suffice it to say that the Management jettisoned all the 853 workman and recruited some freshers to take their place and to keep the wheels of production moving. In the war of attrition that ensued, labour lost and capitulated to Capital. At long last, between the two, a reference to arbitration of the disputes was agreed upon under Section lOA of the Industrial Disputes Act 1947 (the Act, for short). The highlight of the dispute referred for arbitration was whether the termination orders issued by the Management against the \vork1ncn whose names \Vere set oy.t in the annexure to the reference \\'er~ "legal, proper and justified"; if not, \\"hethcr the workn1un \Vere 'entitled to any reliefs including the relief of reinstatement with continuity of service and full back wages'. The arbitrator's decision went against the Sabha while, on a challange under Article 226, the High Court's judgment virtually vindicated its stand. This is the hang of the case. The substantial appeal fr. Ly the Management while the Sabha has a marginal quarrel over a portion of the judgment as disclosed in its appeal. The 'jetsam' workmen, a few hundred in. number, have been directed to be reinstated with full or partial back pay and this is the bitter bone of contention. • • ' ' } <;UJARAT STEEL TUBES v. MAZDOOR SABHA (Krishna Iyer, J.) 157 A stage-by-stage recapitulation of the developments iS: impo;rtant A to get to grips with the core controversy. Sri Ashok Sen, for the appellant-Management, and Sri Tarkunde for the respondent-Sabha, have extensively presented their rival versions with forceful erudition. Sri R. K. Garg, of course, for some workmen has invoked with passion the socialist thrust of the Constitution as a substantive submission and, as justificatory of the workmen's demands, relied on the glaring contrast between the soaring profits and the S'1gging wages,. while Sri Dhandare has pressed the lachrymose case of the several hundreds of 'inte.rregual' employees whose ren1oval fron1 ;,,crvice, on re-instatement of the old, might spell iniquity. Olive Branch Approach : At this stage we must disclose an: effort at settlement we made with the hearty participation of Sri Ashok Sen and Sri Tarkunde at the early stages of the hearing. The golden rule for the judicial resolution of an industrial dispute B c is first to persuade fighting parties, by judicious suggestions, into the peace-making zone, disentangle the differences, narrow the mis1rust ·gap and convert them, through consensual steps, into negotiated jGstice. Law is not the last word i11 justice, especially social jusiice. Moreover, in our hierarchical court system, the little man lives in D the short nm but most litigation lives in the long run. So it is that negotiation first and adjudication next, is a welcome formula for the Bench and the Bar, Management and Union. This 'Olive Branch' approach brought the parties closer in our court and gave use a better understanding of the problem, although we could not clinch a scttiement. So we heard the case in depth and felt that some of the legal issues did merit this court's declaratory pronouncement, settlement or no settlement. Mercifully, counsel abbreviated their oral argument~ into an 1~ight-day exercise, sparing us the sparring maraG10'.'. of 28 labori.Pus days through which the case stretched out in the High Court Orality ad libitem may be the genius of Victorian era advocacy but E F in our 'needy' Republic with crowded dockets, forensic brevity is a necessity. The Bench and the Bar must fabricate a new shorthand G form of court methodology which will do justice to the pockets of the poor who seek right and justice and to the limited judicial hours humanly available to the court if the delivery system of justice is not to suffer obsolescence. The facts : Back to the central facts. Proof of the 'efficient' manageH ment of the Gujarat Steel Tubes Ltd. is afforded by the testimony of larger turnover and profits, year after year, from the beginning down -- A B c D E F G H 158 SUPREME COURT REPORTS [1980] 2 S.C.R. to date. The mill was commissioned in January 1964 but by the accounting year 1971-72 the turnover had leapt to Rs. 560 lal!.hs. It scaled to Rs. 680 lakhs the next year, to Rs. 1136 lakhs the year after and to Rs. 20 crores in 1974-75. This enterprise entered the export trade and otherwise established itself as a premier manufactory in the line. Steel shortage is the only shackle which hampers its higher productivity. But its increasing shower of prosperity was a sharp contrast, according to Sri Garg, to the share of the wage bill. The worker started on a magnificent sum per mensem of Rs. 100/- in toto even as late as 1970, although some workmen, with more service, were paid somewhat higher. The extenuatorY plea of the Management, justificatory of this parsimony, was that other mill-hands were receiving more ni!!- gardly wages in comparable enterprises. Probably, unionisation, under these luridly low-paid circumstances, caught on and a workers' union was born somewhere around 1966. A sensible stroke of enlightened capitalism persuaded the Management to enter into agreements with the Union, somewhat improving emoluments and ameliorating conditions. By 1968, the Sabha, a later union, came into being and commanded the backing of all or most of the mill-hands. By March 1969, the Sabha presented a charter of demands, followed by resistance from the Management and strike by the workers. By July 1969, a settlement with the Sabha was reached. Agreements relating to the various demands brought quiet and respite to the industry '.1\though it proved temporary. A vivid close-up of the sequence and consequence of the dramatic and traumatic events culminating in the reference to arbitration and the impugned award is essential as factual foundation for the decision of the issues. Even so, we must condense, since labyrinthine details are not needed in a third tier judgment. Broad lines with the brush bring out the effect, not minute etches which encumber the picture. An agreement of futuristic import with which we may begin thl'l confrontatio~al chronicle is that of April 1970.