# HINDUSTAN STEELS LTD., ROURKELA v. A. K. ROY & ORS

- **Citation:** [1970] 3 S.C.R. 343
- **Court:** Supreme Court of India
- **Decided:** 1969-12-18
- **Case number:** Civil Appeal No. 2127 of 1969
- **Bench:** J. M. Shelat, C. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hindustan-steels-ltd-rourkela-v-a-k-roy-ors-4997
- **Pages:** 11

## Headnote

343
Industrial Tribunal-Discretion-Termination of service for reasoru
of security-Tribunal ordering reinstatement-Duty
of Tribunal
to
exercise discretion properly-Constitution of
India Article
226--High
Court's duty to interfere in cases of improper exercise of discretion.
The first respondent was appointed in 1958 as a skilled workman by
the appellant Company. He had executed a bond to serve the Company
for five years in consideration of the Company having borne the expenses
of his training.
In accordance with the practice of the Company a veri·
fication report about him was called for as was done iii. the case of other
workmen also.
On a report 1from the Police the Security Officer recommended that it was not desirable to retain the respondent in the company's service any longer.
The respondent at the time was working a':i
a fitter in the blast furnace of the works.
In December 1960 he was
served with an order by which his service was terminated.· The Industrial
Tribunal, on a reference of the dispute. rejected the Union's allegation
as to victimisation or unfair labour practice.
Nevertheless it held tltat it
was improper on the part of the Company not to have disclosed the !report
to the respondent. that the order of termination was in fact punitive in
nature and considering the action taken as disproportionate the order was
illegal and unjustified. The Tribunal therefore di!rected reinstatement with
full back wages.
On a petition for a Writ of Certiorari the High Court
upheld the Tribunal's order.
It also held that the case was not one of
those exceptions to the general rule of reinstatement and the Tribunal
having exercised its discretion it could not interfere with the Tribunal's
order. The appeal to this Court was limited only to the question whether
the relief to the first respondent should have been reinstatement or com·
pensation.
HELD : ( l) In the circumstances of the case the Tribunal was not
justified in directing reinstatement and the High c;ourt erred in 'refusing
to interfere with the order of the Tribunal merely on the ground that it
could not do so as it was a case where the Tribunal had exercised its
l~iscretion.
lhe Tribunal has the discretion to award compensation instead of
reinsta1ernent if the circumstances of a particular case are· unusual or
exceptional so as to make reinstatement inexpedient or improper.
The
Tribun~I has to exercise its discretion judicially and in accordance with
1he well recognised principles in that 'regard and has to examine carefully
the circumstances of each case and decide whether such a case is one of
those exceptions to the general rule.
If the Tribunal were to exercise
its C·iscretion in disregard of such circumstances or the
principles
laid
down by this Court it would be a case either of no exefcise of discretion
or cf one not legally exercised. Jn either case the High Cour.t in exerc.ise
nf its jurisdiction can interfere
and cannot be content bv simply saying
that since the Tribunal has exercised its discretion.
it will not examine
the circum~tances of the case to ascertain whether or not such exercise
'344
SUPREME COURT REPORTS
[1970] 3 S.C.R.
was properly and in accordance with settled principles made.
If the
A
High Court were to do so, it would be a refusal on its paTt to exercise
jurisdiction. [351 B-E]
In the present case the termination of service was not on account of
victi'!'isation or
un~air labour practice.
It is clear that the Company
terminated the service of the workman only because it felt that it was
not desfrable for reason of security to continue the workman in its service.
Therefore what was relevant at the stage when the Trit?:unal came to
decide what relief the workman was entitled to was the question whether
the manngement genuinely apprehended as a result of the report that it·
would be risky to retain the workman in the company's service.
If, on
an examination, of the circumstances c:if the case the Tribunal came to
the conclusion that the apprehe

## Text

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HINDUSTAN STEELS LTD., ROURKELA
v.
A. K. ROY & ORS.
December 18, 1969
(J. M. SHELAT AND C. A. VAIDIALINGAM, JJ.]
343
Industrial Tribunal-Discretion-Termination of service for reasoru
of security-Tribunal ordering reinstatement-Duty
of Tribunal
to
exercise discretion properly-Constitution of
India Article
226--High
Court's duty to interfere in cases of improper exercise of discretion.
The first respondent was appointed in 1958 as a skilled workman by
the appellant Company. He had executed a bond to serve the Company
for five years in consideration of the Company having borne the expenses
of his training.
In accordance with the practice of the Company a veri·
fication report about him was called for as was done iii. the case of other
workmen also.
On a report 1from the Police the Security Officer recommended that it was not desirable to retain the respondent in the company's service any longer.
The respondent at the time was working a':i
a fitter in the blast furnace of the works.
In December 1960 he was
served with an order by which his service was terminated.· The Industrial
Tribunal, on a reference of the dispute. rejected the Union's allegation
as to victimisation or unfair labour practice.
Nevertheless it held tltat it
was improper on the part of the Company not to have disclosed the !report
to the respondent. that the order of termination was in fact punitive in
nature and considering the action taken as disproportionate the order was
illegal and unjustified. The Tribunal therefore di!rected reinstatement with
full back wages.
On a petition for a Writ of Certiorari the High Court
upheld the Tribunal's order.
It also held that the case was not one of
those exceptions to the general rule of reinstatement and the Tribunal
having exercised its discretion it could not interfere with the Tribunal's
order. The appeal to this Court was limited only to the question whether
the relief to the first respondent should have been reinstatement or com·
pensation.
HELD : ( l) In the circumstances of the case the Tribunal was not
justified in directing reinstatement and the High c;ourt erred in 'refusing
to interfere with the order of the Tribunal merely on the ground that it
could not do so as it was a case where the Tribunal had exercised its
l~iscretion.
lhe Tribunal has the discretion to award compensation instead of
reinsta1ernent if the circumstances of a particular case are· unusual or
exceptional so as to make reinstatement inexpedient or improper.
The
Tribun~I has to exercise its discretion judicially and in accordance with
1he well recognised principles in that 'regard and has to examine carefully
the circumstances of each case and decide whether such a case is one of
those exceptions to the general rule.
If the Tribunal were to exercise
its C·iscretion in disregard of such circumstances or the
principles
laid
down by this Court it would be a case either of no exefcise of discretion
or cf one not legally exercised. Jn either case the High Cour.t in exerc.ise
nf its jurisdiction can interfere
and cannot be content bv simply saying
that since the Tribunal has exercised its discretion.
it will not examine
the circum~tances of the case to ascertain whether or not such exercise
'344
SUPREME COURT REPORTS
[1970] 3 S.C.R.
was properly and in accordance with settled principles made.
If the
A
High Court were to do so, it would be a refusal on its paTt to exercise
jurisdiction. [351 B-E]
In the present case the termination of service was not on account of
victi'!'isation or
un~air labour practice.
It is clear that the Company
terminated the service of the workman only because it felt that it was
not desfrable for reason of security to continue the workman in its service.
Therefore what was relevant at the stage when the Trit?:unal came to
decide what relief the workman was entitled to was the question whether
the manngement genuinely apprehended as a result of the report that it·
would be risky to retain the workman in the company's service.
If, on
an examination, of the circumstances c:if the case the Tribunal came to
the conclusion that the apprehensions of the eniplayer were genuine and
the employer truly felt that it was hazardous or prejudicial to the interests
of the industrv to retain the workman in his
service
on
grourds
of
security the case would be
properlv one
"-'here
compensation
would
meet the ends o( justice.
The present case is one such.
The Tribunal
exercised its discretion mechanically without weighing the circumstances
of the case and the refusal by the High Court to interfere was equally
mechanical and amounted to refusal to exercise jurisdiction. [351 F; 352
A-G]
Western India Auton1obile Association v. Industrial Tribunal [1949]
F.C.R. 321, 348; United Commercial Bank Ltd. v. U.P. Bank Employees
Union, [1952]
2 L.L.J. 577; Punjab National Bank Ltd. v. Workmen.
[)959] 2. L.L.J. 669; Assam Oil Co. Ltd. v. Workmen,
f1960l 3 S.C.R.
457; Working of Charottar Gramodhar Sahakari Mandali Ltd. v. Charottar
Gramodhar Sahakari Mandali Ltd., C.A. 382 of 1966, dee. on August 14,
1967; Deomur Dulung Tea Estate v. Workmen, C.A. 516 of 1966, dee.
on October 26,
1967: and Ruby General Insurance Co. Ltd. v. P. P.
Chopra. C.A. 1735 of 1969, dee. on September 12, 1969, referred to.
(ii) In the circumstances of the case it would be proper for this Court
to determine the amount of compensation.
Compensation for a period
of two years at the rate of Rs. 160 per month. that being the last salary
drawn by the concerned workman would meet the ends of justice. [353 DJ
Assam Oil Co. Ltd. v. Workmen,
[1960] 3 S.C.R. 457 and
Utkal
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Machinery Ltd. v. Workmen, [1966] 2 S.C.R. 434, referred to.
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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2127 of
1969.
Appeal by special leave from the judgment and order dated
January 27, 1969 of the Orissa High Court in O.J.C. No. 280
of 1965.
H. R. Gokha/e, Govind Das and G. S. Chatterjee, for the
appellant.
R. K. Garg, S. C. Agarwala, and Sumitra Chakravarty for
respondent No. 1.
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The Judgment of the Court was delivered by
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Shelat, J.
Respondent 1 was, in 1955, admitted as a trade
apprentice by the appellant-company in' its works, the company
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HINDUSTAN STEELS V. A. K. llOY (She/at,/.)
345
agreeing to bear the cost of his training as such apprentice, which
it did for a period of 3 years.
On completion of his training, he
was appointed in September 1958 as a skilled workman, i.e., as a
fitter.
The letter of appointment under which he was engaged
contained a clause which required him to execute a bond to serve
the company for five years at least.
The object of that clause
evidently was to ensure that he served the company at least for
five years in consideration of the company having borne the expenses of his training.
The evidence produced before the Industrial Tribunal shows .
that the. practice of the company, set up at the instance of the
Government of India and the Company's Board of Directors, was
to have a confidential inquiry' made to verify the antecedents of
its employees.
Such verification not being practicable at the time
of the appointment of each employee, it used to be done after a
workman was appointed. The object of such verification was to
ascertain whether it "'.as desirable or not in the interests of the
company to continue the service of the employee in respect of whom '
such verification was made.
The inquiry was made through the
police. On receipt of a verification report from the police, the
Senior Security Officer of the company would make his recommendation and the company would terminate the service of an employee where it was considered desirable in the company's interests
not to continue such an employee in service after giving 3 months'
notice or salary for that period in lieu thereof.
Throughout the period of his service commencing from September 1958 no action was ever taken against respondent I
although he had at one time joined a strike in the company's works
and although he was an active member and the secretary of the
workmen's union.
A criminal case in relation to the sa;d strike
was filed against him but had been subsequently withdrawn.
Prima facie, the fact that.no action was taken against him indicated
that the company· did: not consider his active participation in the
union activities objectionable so as to warrant any interference on
its part.
In accordance with the practice of the company, however, a
verification report about him was called for as was done in the
case of other workmen also.
On· such a report from the police,
the Senior Security Officer recommended that it was not desirable
to retain him in the company's service any longer.
Respondent
I at the time was working as a fitter in the blast furnace of the
works.
On December 9, 1960 he was served with an order by
which hls service was terminated and was informed that he would
be entitled to 3 months' pay in lieu of a notice for that period.
"'-.....,
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SUPREME COURT REPORTS
[1970)3 S.C.R.
On the union of which; as aforesaid, he was the secretary,
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having raised a dispute, alleging that the termination of his service
was the result of,~timisation and unfair labour practice,
the
dispute was referred by the Government of Orissa to the Industrial
Tribunal.
After inquiry, the Tribunal rejected the union's allegation as to victimisation or un.fair Jabour practice on account of any
union activities carried on by respondent I.
Nevertheless, the
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Tribunal held that it was improper on the part of the company not
to have disclosed the said report to respondent I and not to have
given him an opportunity to contest its contents and
vindicate
himself.
The Tribunal held that though the said order was in form
one of termination of service, it was in fact punitive in nature and
considering the action taken against respondent 1 as disproportionC
ate further held that it was a case of victimisation, that consequently
the order was illegal and unjustified and directed reinstatement
with fulJ back wages.
The company filed a writ petition in the High Court for quashing the said order.
Before the High Court the company urged :
(a) that the termination ot the service of respondent 1 was in
bona fide exercise of the employer's right to do so, (b) that it did
so on1y because of the said adverse report and ( c) that even if it
was held that the said order was not legal or justified, the proper
relief to be granted to the respondent in the circumstance.; o'. the
case was compensation and not reinstatement. which meant imposition of a ·workman against whom there was an adverse report and
whom the company did not consider it desirable to retain in its
service.
The High Court rejected these contentions and held that
the Tribunal was right in holding that the termination of service
of respondent 1 was not in bona fide exercise of the power. of the
employer to terminate an employee's service, that it was punitive
in character and was, therefore, not legal or justified. The High
Court also held that ordinarily the relief against an illegal termination of service was reinstatement though in some cases it may be
.considered inexpedient to do so, in which event a suitable compensation would be the proper r~lief. Lastly, it held that the present
case was not one of those exceptions to the gerleral rule of reinstatement and the Tribunal having exercised its discretion it could
not interfere with the Tribunal's order.
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The company thereupon applied for special leave from this
Court.
Though it was granted, it was limited only to the question
whether the relief to respondent 1 should have been reinstatement
or compensation. It is, therefore, ncit passible for us to go into
the question whether the Tribunal and the High Court were right
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in their conclusion that the termination of the .service of respondent 1 was not in bona fide exercise of the company's right to
order discharge simpliciter or whether the order was punitive in
HINDUSTAN STEELS V. A. K. ROY (She/at, J.)
347
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nature and therefore wa~ not legal in the absence of any domestic
inquiry having been held.
Besides, this appeal is one against the
High Court's order refusing certiorari under its writ jurisdiction
and not a direct appeal under Art. 136 of the Constitution against
the Tribunal's order.
These considerations will have to be kept
in mind while we are considering this appeal.
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Counsel for the appellant-company argued that even though
he could not challenge, in view of the . limited special leave
granted to the company, the finding that the impugned order was
not termination simpliciter in bona fide exercise of the employer's
right to terminate the service of an employee, he was entitled to
agitate the question whether or not the High Court, on the facts
of this case, should have interfered and ordered compensation in
place of reinstatement, particularly because : (a) the concerned
employee was posted in the blast furnace, a crucial part of the
company's works, in respect of which the company could not
hazard any risk, (b) the Tribunal had given a clear and firm
finding against the case that the workman had been victimised on
account of his union activities, and ( c) the Tribunal and the High
Court had both set aside the company's order only because of their
finding that it was punitive in nature and that the punishment was
so disproportionate, that it amounted to victimisation.
The proper
order, counsel submitted, was to award compensation instead of
imposing the service of an employee whom the company considered
risky to retain in its service.
Mr. Garg, on the other hand, argued
that the company's action involved an important principle, in that,
an employer cannot be allowed to terminate the services of his
employees on police reports which are not disclosed to the workmen or before the Tribunal, and therefore, are not open to the
workmen to challenge.
Such a course, he argued, would enable
an employer to put an end to the service of a workman not because
he is in fact a danger ts> the establishment but is merely a n. :mber
of a party or an association whose views and policies such an
employer does not like. In such a case, he submitted, the termina- ·
tion of service would be in violation of the constitutional right of
association of an individual and would be clearly unjustified, and
therefore, it would not be a case for departure from the ordinary
consequence flowing from an illegal order of termination of service .
. There can be no doubt that the right of an employer to
discharge or dismiss an employee is no longer absolute as
it is subjected to severe re~trictions. In cases of both termination
of service and dismissal, industrial adjudication is competent to
grant relief, in the former case. on the ground that the exercise of
power was ma/a fide or colourable and in the latter case if it
amounts to victimisation or unfair labour practice or is in violation
348
SUPREME COURT REPORTS
. [ 1970] 3 s.c.R.
of the principles of natural justice or iS · otherwiSe not legal or
justified. In such cases, a tribunal can award by way of relief to
the concerned employee either reinstatement or compensation. In
the earlier stages the question whether one or the other of the two
reliefs should be granted was held to be a matter of discretion for
the tribunal.
(see
Western India Automobile Association · v.
Industrial Tribunal('), United Commer.cial Bank Ltd. v. U.P. Bank
Employees Union( 2 ).
The view dlen was that to lay down a
general rule of-reipstatement being the remedy in such cases would
itself fetter the discretion of the tribunal which has to act in the
interests of industrial harmony and peace and that it might well
be that in some cases impc;>sition of the service of a workman on
an unwilling employer might not be conducive to such harmony
and peace.
Later on, however, the earlier flexibility appears to
have been abandoned and it was ruled that although no hard and
fast rule could be laid down and the Tribunal would have to
· consider each case on its own merits and attempt to reconcile the
conflicting interests of the employer and the employee, the employee being entitled to security of service and protection against
wrongful dismissal, the normal rule in such cases should· be reinstatement.
(see Punjab National Bank Ltd. v.
Workmen(').
This conclusion was adhered to in some of the subsequent decisions. But in the case of Punjab National Bank Ltd.(3 ) itself,
as also in other subsequent cases, the rule was qualified to mean
that in unusual or exceptional cases where it is not expedient to
grant . the normal relief of reinstatement, the proper relief wau!d
be compensation and that that would meet the ends of . justice.
The problem confronting industrial adjudication iS to promote its
two objectives, the security of employment and/rotection against
wro1;1gful discharge or dismissal on the one han
and industrial
peace and harmony on the other, both leading ultimately to the
goal of maximum possible production.
As exceptions to the general rule of reinstatement, there have
been cases where reinstatement has not been considered as either
desirable or expedient.
These were the cases where there had
been sirained relations between the employer and the employee,
where the post hel.d by the aggrieved employee had been one of
trust and confidence or where though dismissal or discharge was
unsustainable owing to some infirmity in the imp11gned order, the
em]!lloyee was found to have been guilty of an activity subversive
of prejudicial to the interests of the industry.
These cases are
to be found in Assam Oil Co. Ltd. v. Workmen('), Workmen of
Charottar Gramodhar Sahakari Mandali Ltd. v. Charottar Gramo-
(l) [1949] F.C.R. 321, 348.
(3) [1959] 2 L.L.J. 669.
(2) [1952] 2 L.L.J. 577.
(4) [1960] 3 S.C.R. 457 .•
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. HINDUSTAN STEEllS v. A. K, ROY (She/at, !.)
349
dhar Sahakari Mandali Ltd.('), Doomur Dulung Tea Estate v.
Workmen(') and Ruby General Insurance Co. Ltd. v. P. P.
Chopra('). 'These are, however, illustrative . cases
where
an
exception was made to the general rule.
No hard and fast rule
as to which circumstances would in a given case constitute an
exception to the general rule can possibly be laid down as the
Tribunal in each case, keeping the objectives of industrial adjudication in mind, must in a spirit of fairness and justice confront
the question whether the circumstances of the case require that
an exception should be made and compensation would meet the
ends of justice.
In the present case the facts are fairly clear.
As aforesaid,
the concerned workman was trained for a period of 3 years at the
cost of the company.
On completion of his training the company
engaged him as a skilled worker.
He worked as such from September 1958 to December 1960.
At the time of the termination
of his service, he was working as a fitter in the blast furnace, a
vital part of the company's works, where both efficiency and trust
would matter.
Even though he was said to have joined an illegal
strike and a criminal case had been filed against him, no steps,
even
departmentally, were taken against him.
Prima
facie,
therefore, this was not a case where the employer could be said
to be anxious to wantonly or unreasonably terminate his service.
Even though he was an active member and the secretary of the
union, the Tribunal found that the termination of his service was
not due to victimisation or any unfair labour practice.
There
can also be no dispute that the company ordered the termination
of his service only because of the adverse report of the police
against him.
The report was called for by the company in
accordance with its practice of verifying the workman's antecedents.
The evidence was that such verification was made in the
case of all workmen after they were engaged and that such verification was not made before appointing them as it was not practicable to do so.
The practice was adopted at the instance of the
Government and in accordance with the directions to that effect
of the Board of Directors.
The letter of the Deputy Inspector
General of Police communicating the report made on the investigation by the police was produced but neither the report nor the
source of information on which it was based nor the name of the
person who conducted the investigation was disclosed either to the
workman or th.~ Tribunal. The ground urged for such
non-disclosure was that the report was confidential and if disclosed it
~euld not b~ possible for the company to have such investigations
m futu•e.
The reason appears to be that if the person conduct,
(J) C.A. 382 of 1966, dee. on August t4, 1967.
(2) C.A. 516 of 1966, dee. on October 26, 1967.
(3) C.A. ms of 1969, d.C. on September 12, t969.
3 50
SUPREME COURT REPORTS
[ 1970] 3 S.C.R.
ing such investigation were produced for cross-examination by the
workman or if his report were to be disclosed, the name or names
of the informants would come out with the result that no informant in future would readily come forward to give information
about other workmen.
Even in criminal cases an investigating
officer is not compelled to disclose the name of his informant.
But the Tribunal appears to have been impressed by the
company's refusal to disclose the report although it was clearly a
confidential repJrt.
The T~ibunal thought that such a report
might have been made by a person who was not a responsible
police officer or that it might be based on mere rumour or hearsay
evidence and might not be of a very convincing nature.
The High
Court went one step further and observed that it might be "as
contended by opposite-party No. I that the report is based entirely
on the trade union activities of the opposite-party in which case
the discharge would itself be improper."
This observation was
not warranted in view of the Tribunal's clear finding that this was
not a case of victimisation or unfair labour practice on account
of the union activities of the workman.
The High Court further
wus of the view that "even if the Management terminated the
services of Sfi A. K. Ray, simply on the ground that it rece;ved
an adve~se report against him, the order of such termination of
services in the circumstances cannot be treated as Jegal or .iustified."
It. also observed that "it was not admitted by the opposite party
that there was any adverse police report against him."
But the
management had examined P. B. Kanungo, the Senior Personnel
Officer, who had categorically testified that the management had
received such an adverse report and on the basis of that report the
company's Security Officer hi!d recommended the termination of
service of the workman.
There was no cross-examination on this
part of his evidence.
The High Court, therefore, was not entitled
to proceed on the basis as if the fact of such adverse report was any
longer in doubt.
Indeed, the grievance was not relating to the
factum of such report, but its non-disclosure and the Tribunal in
consequence not being able to weigh its veracity. The fact of the
management having received the police report which was adverse
was no more in dispute; nor the fact that the company's Security
Officer on the strength of that report had recommended that it was
not desirable to retain the workman in service .. The termination
of his service was by no means singular in any way, for, the evidence was that verification of antecedents of all workmen used to
be similarly made and whenever the report was adverse an order
of discharge used to be made.
Since the special leave granted to the company is limited only
to the question of the kind of relief that the Tribunal ought to have
given, we are not in a position to go into the question whether the
termination of service was legal or justified.
We have, therefore,
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HINDUSTAN STEELS v. A. K. ROY (She/at, J.)
351
to proceed on the footing that the Tribunal's eonclusion that it was
not legal was right.
~.
'"''
The question, however, still is whether the Tribunal was, in the
circumstances of the case, justified in directing reinstatement. It
is true that some of the decisions of this Court have laid down
that where the discharge or dismissal of a workman is not legal or
justified, the relief which would ordinarily follow would be reinstatement.
The Tribunal, however, has the discretion to award
compensation instead of reinstatement if the circumstances of a
particular case are unusual or exceptional so as to make reinstatement inexpedient or improper.
The Tribunal has, therefore, to
exercise its discretion judicially and in accordance with well recognised principles in that regard and has to examine carefully the
circumstances of each case and decide whether such a case is one
of those exceptions to the general rule.
If the Tribunal were to
exercise its discretion in disregard of such circumstances or the
principles laid down by this Court it would Qe a case either of no
exercise of discretion or of one riot legally exercised. In either
case the High Court in exercise of its writ jurisdi«tion can interfere
and cannot be content by simply saying that since the Tribunal has
exercised its discretion it will not examine the circumstances of the
case to ascertain whether or not such exercise was properly and in
accordance with the well-settled principles made. If the High Court
were to do so, it would be a refusal on its part to exercise
jurisdiction.
In the present case, there could be no dispute that the company,
in accordance with its practice, called for a verification! report
about the concerned workman. The report was made by the police
after investigation and on that being adverse, the company's security officer recommended to the company that it was not in the
interests of the company to retain the workman's services. There
can be no doubt that the company terminated the service of the
workman only because it felt that it was not ·desirable for reasons
of security to continue the workman in its service. This is clear
from the fact that it was otherwise not interested in termimting
the workman's service and had in fact insisted that the workman
sho.uld bind himself to serve it at least for five years. The terminal!on of service was not on account of victimisation or unfair
labour practice as was clearly found by the Tribunal.
It is, therefore, abundan.tly ~!ear that !he company passed the
impugned
order of termmal!on of service on account of the said adverse
re~ort, the recommendation of its own security officer and on being
satJsfied that it would not be in the compan'y's interests to continue
him in its service.
The Tribunal no doubt felt that it was not established whethe~
the investigation and the report following it were properly done
352
SUPREME COURT REPORTS
[1970] 3 S.C.R.
·,,:and made, that the company ought to have disclosed it to the workman and given hiril an opportunhy to vindicate hirilself and that
the non--Oisclosure of the report made the termination illegal and
UBjustified.
That may or tnay not be right.
But what was rele-
,. vant, at the stage when the Tribunal came to decide what relief
+:.llle workman was entitled ·to, was the question whether the man.age-
;. ment genuinely apprehended as a result of the report that it would
f be risky to retain the workman in the company's service. . They
·1 may have gone wrong in the manner of termiriating the workman's
• ·service as held by the Tribunal.
But, if the management truly
F!>e!ieved that it was not possible to retain the workman in the
·,:company's service on grounds of security and cortsequently could
r not place confidence in him any longer, that present case would be
'· .·
one of those exceptional cases where the general rule as to reinstatement could not properly be applied.
Thus of courie does not
mean that in every case where the employer says that he has Jost
confidence in the workman, and therefore, has terminated his
service that reinstatement cannot be granted and the Tribunal has
to award compensation. On the other hand, if on an examination
of all the circumstances of the case, the Tribunal comes to the
conclusion that the apprehensions of the employer were genuine
and the employer truly felt that it was hazardous or prejudicial to
the interests of the industry to retain the workman in his service on
grounds of security, the case would be properly orle where compensation would meet the ends of justice.
On a consideration of all the circumstances, the present case,
, in our view, was one such case.
The Tribunal exercised its discretion mechanically without weighing the circumstances of the case.
That was no exercise of discretion at all. There is ample authority
to the effect that if a statutory tribunal exercises its discretion on
the basis of irrelevant considerations or without regard to relevant
considerations, . certiorari may properly issue to quash its order.
[See S.A. de Smith. Judicial Review of Administrative Action.,
(2nd ed.) 324-325].
One such relevant consideration, the disregard of which would render its order amenable to interference,
would be the well-settled principles laid down in decisions binding
on the tribunal to whom the discretion is entrusted.
The refusal
by the High Court to interfere was equally mechanical and amounted to refusal to exercise its jurisdiction.
Its order,
therefore,
becomes liable to interference.
There is, therefore, no difficulty in holding that the order of
reinstatement passed by the Tribunal was liable to be quashed and
that the High Court erred· iri refusing to interfere with it merely
on the j!,round that it could not do so as it was a case where the
Tribunal had exercised its discretion.
The question next is, having
held that the order of reinstaiement was not a proper order, in that,
A
B
c
D
E
r
G
H
HINDUSTAN STEELS v. A. K. ROY (She/at, J.)
353
4
it was m>t in ~onso~ance with the decided cruies, do we simply
quash the order of the Tribullll! and that of the High Court ami
leave the concerned workman to pursue his further remedy ? The
other alternative would be to remand the case to the Tribunal to
pass a suitable order. In either case, in view of this judgment,
.00 other order except tlrat of 1:9mpensation can be obtained by
I
him. · H the case is remanded a.ud the Tribunal on such remand
passes an order of compensation and fixes the amount, such a
course would mean further proceedings and a possible appeal.
That would mean prolonging the dispute, which would hardly be
t··· · fair to or conducive to the interests o.t the parties.
In these circumstances we decided that it would be more proper that we ourselves
C . should· determine the amount of compensation which would meet
the ends of justice. Having come to that conclusion, we heard
counsel for both the parties. After doing so and talcing into
consideration all the facts and circumstances of the present case we
have come to the cOnclusion in the light also of the decisions of .
this Court such as Assam Oil Co. v. Its Workmen('), Utkal
Machinery Ltd. v. Workmen(') and the recent case ol. Ruby
8
General Insurance Co. Ltd; v. P. P. Chopra( 8 ) that compensation
for a period ol. two years at the rate of Rs. 100/- per month, that
being the last salary drawn by the concerned workman, would meet
tile ends Of justice.
We accordingly allow the appeal, quash the order of. the
'.J
Tribunal and the. High Court and instead direct the appellant-
. company to pay to the 1st respondent Rs. 3840 as and by way of
compcliSation.
There will be no order of costs.
R.K.P.S.
Appeal allowed.
UJtl!lfllJ 3 S.C.R/ 457.
(2) [1966] 2 S.C.R. 434.
· (3) c.A. 1735 or 1969 dec.id•d on September 12, 1969.