# SBPREME COURT REPORTS 45§ JABALPUR ELECTRIC SUPPLY 00 v. SAMBHU PRASAD SRIVASTAVA & OTHERS

- **Citation:** [1963] 3 S.C.R. 453
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Bench:** P. B~ Gajend~Agadkar, K. C. Das Gupta, J. R. Mudholkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sbpreme-court-reports-45-jabalpur-electric-supply-00-v-sambhu-prasad-srivastava-2637
- **Pages:** 9

## Headnote

Industrial Company-Delegation of Disciplinary powers
to officer-Valilrlity-Stanrling Orders els. 19, 20.
The appellant company had its Head Office in Calcutta
. but generated electricity for distribution at ] abalpur. By cl.
10 of the power of attorney executed· by it, it authorised its
Resident Engineer at Jabalpur, "subject to the Standing
Orders from time to time given by the Company to appoint,
dismiss, suspend or terminate the services of any of the
employees of the Comyany at. Jabalpur". The respondent
was charge-sheeted and after enquiry discharged by the
Resident Engineer. He made an application to the Assistant
Labour Commissioner who ordered his reinstatement without
break in his service by without payment of back wages. The
State Industrial Court, on revision applications by both the parties
held that the Resident Engineer was not empowered to hold
the enquiry and to issue an order of discharge and refused to
interfere. Both the parties moved the High Court under Art.
226 of the Constitution. The High Court took the view that
· · the powers of dismissal and suspension under cl. 19 of the
Standing Orders and the general right to discharge an
employee under cl. 20 of the Standing Orders could not be,
and latter powers had not actually been, delegated to the
Resident Engineer and allowed the respondent's appllication
with back wages.
Held, that the delegation of power by the power of
attorney was vailed in law and covered powers both under cl.
19 and cl. 20 of the Standing Orders.
There was nothing in law or in the Articles of the Asso•
ciation of the Company that forbade such delegation and the
company therefore, could, delegate the powers to meet the
exigencies of its business.
The opening words of cl. 10 of the power of attorney
did not mean. that the delegate could not at all exercise:the
powers since under the Standing Orders the company alone
1911 -
1002
Jaba lpur Electric
'Supp!J Co.
v.
Sambku Prasad
Srioas1ava
LasGuptaJ.
454
SUPREME COURT REPORTS [1963]
could do so.
Their effect. is that in exercising these powers
the delegate cannot do anything that the'cblnpany could not
do under the Standing orders.
CIVIL APPELLATE JurusmcTION: Civil Appeal
No; 432 of 1961.
Appeal by special leave form the judgment
and order dated May 15 1959 of the
Madhya
Pradesh High Court in Misoellaneous Petition Nos.
301 of 1958 and 83 of 1959.
B. Sen and S. N. Mukerji for the Appellant.
B. R. L. Iyengar and A. a: Raf/!Wparkhi for
Respondent No. 1.
I. N. Shroff, for Respondents Nos. 2 and 4.
1962. July 27. The Judgment of the Court was
delivererd by
·
DAS GUPTA, J.-Wben under the Standing
Orders of a Company the Company is empowered to
take disciplinary action against axi employee by pro·
ceeding in the prescribed· nianner can that'p?wer be
legally delegated by .~he Company, to'• any of its
officers ? That is the principal question raised in
this appeal.
'
•
The appellant is
11, Company ··incorporated
under the Indian Companies Act having its regis·
tered office at 12, Mission Row, Ca!Ctitta. It is
engaged in the generation an_d · ,distribution of
electricity at Jabalpur. ' The Company's 'office at
Jabalpur is in charge of a"ReBident'Engmeer. By
a power of attorney given by the:appellant company
on June 26, 1957, Mr.
Leonard Shell Mli.c]eod, 'the
Company's Resident Engineer . at ''Jab'li.lpur;"·was
appointed "the company's tru~" and lawful attorney
for and fu the name of the Company to db exer·
_.._,
cise and perform all or any of the ·acts; matters,
3 S.C.R.
SUPREME COURT REPORT$
455
discretions and things" set out in II clauses. The
10th clause provided that "subject to the Standing
Orders from time to time given by the Company
to appoint, dismiss, suspend or terminate the
services of any of the employees of the Company
at Jabalpur." On November 12, 1957, the respondent Sambhu Prasad Srivastava was served with
a. charge sheet -under the signature of Mr. Macleod
in which it was alleged that he had substituted
13 coils of V,I.R. cable

## Text

SBPREME COURT REPORTS
45§
JABALPUR ELECTRIC SUPPLY 00.
v.
SAMBHU PRASAD SRIVASTAVA & OTHERS
(P. B~ GAJEND~AGADKAR, K. C. DAS GUPTA and
'
J. R. MUDHOLKAR, JJ.)
Industrial Company-Delegation of Disciplinary powers
to officer-Valilrlity-Stanrling Orders els. 19, 20.
The appellant company had its Head Office in Calcutta
. but generated electricity for distribution at ] abalpur. By cl.
10 of the power of attorney executed· by it, it authorised its
Resident Engineer at Jabalpur, "subject to the Standing
Orders from time to time given by the Company to appoint,
dismiss, suspend or terminate the services of any of the
employees of the Comyany at. Jabalpur". The respondent
was charge-sheeted and after enquiry discharged by the
Resident Engineer. He made an application to the Assistant
Labour Commissioner who ordered his reinstatement without
break in his service by without payment of back wages. The
State Industrial Court, on revision applications by both the parties
held that the Resident Engineer was not empowered to hold
the enquiry and to issue an order of discharge and refused to
interfere. Both the parties moved the High Court under Art.
226 of the Constitution. The High Court took the view that
· · the powers of dismissal and suspension under cl. 19 of the
Standing Orders and the general right to discharge an
employee under cl. 20 of the Standing Orders could not be,
and latter powers had not actually been, delegated to the
Resident Engineer and allowed the respondent's appllication
with back wages.
Held, that the delegation of power by the power of
attorney was vailed in law and covered powers both under cl.
19 and cl. 20 of the Standing Orders.
There was nothing in law or in the Articles of the Asso•
ciation of the Company that forbade such delegation and the
company therefore, could, delegate the powers to meet the
exigencies of its business.
The opening words of cl. 10 of the power of attorney
did not mean. that the delegate could not at all exercise:the
powers since under the Standing Orders the company alone
1911 -
1002
Jaba lpur Electric
'Supp!J Co.
v.
Sambku Prasad
Srioas1ava
LasGuptaJ.
454
SUPREME COURT REPORTS [1963]
could do so.
Their effect. is that in exercising these powers
the delegate cannot do anything that the'cblnpany could not
do under the Standing orders.
CIVIL APPELLATE JurusmcTION: Civil Appeal
No; 432 of 1961.
Appeal by special leave form the judgment
and order dated May 15 1959 of the
Madhya
Pradesh High Court in Misoellaneous Petition Nos.
301 of 1958 and 83 of 1959.
B. Sen and S. N. Mukerji for the Appellant.
B. R. L. Iyengar and A. a: Raf/!Wparkhi for
Respondent No. 1.
I. N. Shroff, for Respondents Nos. 2 and 4.
1962. July 27. The Judgment of the Court was
delivererd by
·
DAS GUPTA, J.-Wben under the Standing
Orders of a Company the Company is empowered to
take disciplinary action against axi employee by pro·
ceeding in the prescribed· nianner can that'p?wer be
legally delegated by .~he Company, to'• any of its
officers ? That is the principal question raised in
this appeal.
'
•
The appellant is
11, Company ··incorporated
under the Indian Companies Act having its regis·
tered office at 12, Mission Row, Ca!Ctitta. It is
engaged in the generation an_d · ,distribution of
electricity at Jabalpur. ' The Company's 'office at
Jabalpur is in charge of a"ReBident'Engmeer. By
a power of attorney given by the:appellant company
on June 26, 1957, Mr.
Leonard Shell Mli.c]eod, 'the
Company's Resident Engineer . at ''Jab'li.lpur;"·was
appointed "the company's tru~" and lawful attorney
for and fu the name of the Company to db exer·
_.._,
cise and perform all or any of the ·acts; matters,
3 S.C.R.
SUPREME COURT REPORT$
455
discretions and things" set out in II clauses. The
10th clause provided that "subject to the Standing
Orders from time to time given by the Company
to appoint, dismiss, suspend or terminate the
services of any of the employees of the Company
at Jabalpur." On November 12, 1957, the respondent Sambhu Prasad Srivastava was served with
a. charge sheet -under the signature of Mr. Macleod
in which it was alleged that he had substituted
13 coils of V,I.R. cable in the stores of the Company
·for the same quantity of cable of various makes
• from the local market, Sambhu Srivastava.'s reply
- to this charge was that when the shortage of 13
coils ca.me to his notice on the eve of ·the1 audit
· he remonstrated_ with his subordinates who actually
· ·handled these articles and that what he did ·was
~ done in the best interest& of the Comany• and· that
he never acted with :any dishonest· intention. An
- enquiry was then held by the Resident Engineer
.. a.~d ultimately on January 16, Hl58, the Resident
Engineer issued a letter to him in these terms:-
i'With reference to charge· sheet· dated
12th November, 1957, a.nd the subsequent
investigations in the case against you, please
' note' that the matter has been very carefully
"'·considered; ·a.nd'in accordance with the·inter-
- view wbioh" you had wi~h our Chief Engineer,
·Mr. :r; · W. ··Fawcett, on the morning of the
· l'5'th January; 1958, we hereby notify you
1"' that the Company does· . not find it possible
'•'to retain your ·services .
...
Therefore, you
are ·hereby _discharged
from the service of the Company, with imme-
,<1 diate effect.
'
' Please call at the Company's office on
·~ th~ l7tli. instant, to receive final settlement
of your dues from the Company."
'\.19611
.~-
'J obalp~r El1&11ic
SuppJy-Oo .
...
- Sambhu1Pr,asai
• S rivaslava
·D.as Gupta J.
JHll
J ·•t;ur mi..iric
SU71/y Co,
' ..
S 4mbl u P,.aBad
Srtvtm1aa
· D<U Glf#la J.
41>6
SUPREME COUR1' REPORTS (1963]
Srivastava then applied to the Assistant Lab-
•
our Commissioner,
Jabalpur, alleging· that this
order was in contravention of the provision of
the C. P. & Berar Industrial Tribunal Settlement
Act ·and of the Standing Orders as the powers of
the Company under the Standing Orders to hold
the enquiry can be exercised only by the Managing
'
Director. It was also alleged that the order though
in from an order for discharge was really an order
of dismissal and that els. 14, 18, 19 and 20 of
the Standing Orders had been violated. The
Company pleaded in its reply that under the power
of attorney the Resident Engineer had the power
to hold an enquiry and take disciplinary action
against an employee and the action by him should
•
be considered in law to amount to an action by
the Company. It was pleaded that the provisions
of the Standing Orders had not been violated.
The Aseistant
Labour Commissioner made an
order on September 10, 1958, ordering reinstatement
of the respondent without break in his service but
without payment of back wages.
~
The State Industrial Court which was moved
both by the Comany and by the employee held
that the order of discharge was in substance an
order of dismissal, and that misconduct alleged
was not proved, and that in any case the Resident
Engineer was not empowered to hold an enquiry
and to issue an order of discharge. It refused to
interfere with the order passed by the Assistant
Labour Commissioner and rejected both the revisional applications.
Both parties then moved the Madhya Pradesh
High Court for relief under Art. 226 of the Constitution. The High Court held that the powers.
under cl.19 of the Standinef.Orders could not be dele
gated to the Resident Engineer and also that th
)_
3 S.C,R,
SUPREME CORT REPORTS
4rli
genera.I right reserved to the Company under ol.20
of the Standing Orders was meant to be exercised
by it and was not covered by the delegation under
cl. 10 of the power of attorney. The High Court
seems to have thought also that the order made by
the Resident Engineer was not under cl. 20 of the
Standing Orders. Accordingly, the High Court
refused to interfere with the order of reinstatement
and dismissed the Company's application under
Art. 226. It allowed the employee's application
under Art. 226, being of opinion that the Assista.nt
Labour
Comm~ssioner had no discretion in the
matter of back wages
and was bound
to
order
payment of
back
wages
as
soon
as
an
order
of
reinstatement was made.
Before considering t:fie question whether the
Company could delegate its power t.o take discipli·
nary action against its employees it will be proper
to clear the ground on the question whether the
order was made under cl.19 or cl. 20 of the Standing
Orders. Clause 18 of the Standing Orders mentions
inter alia that theft, fraud, or dishonesty in connection with the Company's business or property will
be treated as misconduct. Clause 19 provides various
penalties for misconduct. The substance of these
provisions is : that an employee who is adjudged by
the Company on examination of the employee and
of facts to be guilty of misconduct is liable to be
summarily
dismissed
without
notice
. or
. compensation in lieu of notice or alternatively
to
be
suspended
for
a
period
not
exceeding fourteen days; that the · order of dismissal or suspension shall be in writing over the
signature of an officer duly authorised for this pur
pose, and shall also briefly mention the reason on.
which it is based, and that no
order for dismissal
or suspension under this Standing Order shall be
made unless the employee is informed in
writing of
11111
J aboljtut' El•ol,
ll"HIJ c..
v.
S•milluPr"""'
'lrilifl•f4va
Dar<.tJ
Ri JI
458
SUPREME COURT· REPORTS [1963) .
196B
Ja,~Olpur EJectrU
· ~,Su{"pfr Co,·
.the misconduct alleged against him and that he
'shall be given an opportunity to produce evidence
ill his defence. Clause 20 does not deal with dismi·
ssal or suspension but provides that
·~the Company
·'~ ... \1, '
San:i.bhu.Pra1atl
. ~ 8.t:!~_QBtciv .t
'.ll .. qt<jr. J.
'·
. i
!
' has at all times a general right to discharge an emp·
loyee from service not only for proved misconduct
• but also when the employer has lost confidence. in
"·the employee." ·Clause 21
provide·s for notice of
. censure to be given for certain acts or omissions.
An examin.ation of these provision~ shows that
fot an order of dismissal under cl. '· 19 to be made a
•' ·special procedure is to be followed and when it is
m·ade·the employee is not entitled to any compensa·
tion. Examining now the order made on Januaryl6,
1958, we find that while cl. ·20 has· not been men·
· tioned it does not say that the employee,-has been
· found guilty of misconduct but merely states that
"'the Company does not find it possible to . retain
·(this employee's) services" and reference is made
to :the
investigations
in
the case against
him and to
an
interview · he
h'.1.d
with
.. the chief Engineer; Mr. J. W. Fawcett, on the
morning of the 15th January, 1958. The only
reasonable view to take of this order, in our
.• opinion, is that this order was being made under cl.
20 on the ground that the employer had lost con·
;.' fidence in the employe1> and was in· fact and in law
an order of disoh<;irge as distinct from an order· of
'· dismissal or suspension. It appears to us that· while
' tl1e Resident Engineer who held the enquiry may
" have.been Htisfiad that an. act of misconduct for
''.whioh the employee -was liable to dismissal had
· been proved he took. a merciful view , of. his
conduct in view of his previous clean record and
proceeded accordingly to act under cl. 20 · of 'the
· Stallding Orders instead of proceeding under cl.
" · 19:· This is a case in which the employer has actecl,
fairly and even generously in terminating the.servi~
ceii of the employee under ol. 20.
'
••
3 S.C.R.t f
SUPREME COURT REPORTS
The question remains whether the Resident '
Engineer could take action under cl. 20. The empl- '
oyee's argument, which found favour with the High
Court was that it was the Company alone which
could take action under clause 20 and the Resident
Engireer in his capacity as the Resident Engineer .
apart from anything else, was not competent to
take a.ctionunder cl. 20-For, cl. 20 enpowers the_
Company and not the Resident Engineer as such to
·discharge an employee on the ground that the em·
ployer had lost confidence in him. In the present
case, however, it was not the Resident Engineer in
his1capaoity as the Resident Engineer that made
the order of disoh:i.rge. Clearly
in making the
order of discharge he
was
acting
on
the.
basis of the power-of attorney exeuuted in his
favour on June 26, 1957. Under cl.
10 of the ·
power
of 'attorney
he had· power "subject
to the Standing Orders
from. time to time
given by the Company to appoint, dismiss, suspend
or terminate the services of any of the employees
of the Company at Jabalpur.'' The power of the
Company under cl. 19 of the. Standing Orders to
dismiss or suspend and its .power under. cl. 20 tq
discharge.an employee are both covered by cl,10 of
the power of attorney, If there be nothing in law to
prevent these powers being delegated to the Resident Engineer there could be no escape from
the _
conclusion that the exercise of the power cl, 20 in .
the present case by the Resident Engineer amounted~,
in law to an exercise of the power by the Company
itself, Is there anything in law which bars such
delegation? We are unable to find any. It is.obvious ·
and admitted that when a Company has to exercise
its -powers in connection with' the management of ·
its business it is not all the share: holders of the,
Company that have to meet to exercise the power,
How thA Company will regulate its businesH is pres-,
cribed in its Articles of Association. It is nobody's
-
J aialpur iJ)eGir-fi ·
Supply Co. - -
.v. ' -..
Sambh"UPro•ai ·
Sariikistlia
Das Gupla J. • ·
1112 '
d1!11J1Vr liJlectri.:
SUHZ., r.'o.
.
v.
.amblru l'rGSGd
Sriva1ttJtia
ID~a G Uf'I•. J. . .
460
SOPREME COURT REPORTS [1963]
case that in the Articles of Association of the Jabal-
. pur · Electric Supply Co., there is anything barring
the delegation of the disciplinary powers of the
Company to any of its officers. · In law therefore
delegation of the functions of the Company may
properly be made having regard to the exigencies
of the business aud the Articles of Association, It
cannot be reasonably disputed that where the Head
Office of the Company is at Calcutta and the main
business is to be carried on at J abalpur the exigencies of the business . do require delegation of the
Company's power to take disciplinary action against its
employees to a
responsible
official
like the Resident Engineer.
But whether or
not the Company might have don~ without such
delegation is a matter which it is unnecessary for us
to enquire into.
The delegation was made and
neither on principle nor on authority is it possible
to say that the delegation was against the provisions of law.
Nor can we see that the words "subject to the
Standing Orders from time to time given by the
Company" with which cl. 10 of the power of attorney opens affects the delegation. On a
proper
interpretation of these words their only effect is
that in exercising the power to appoint, dismiss,
suspend or terminate the services pf the employees
at Jabalpur the delegate mmnot do anything beyond
what the company itself can do under the Standing
Orders. On no reasonable construction of the
words can they mean that the delegate cannot
exercise these powers at all, because under the
Standing Orclers the Company itself is given these
powers. Whether it is the power to take action
under cl,19 or under cl.20 of tb.e Standing Orders the
delegate can exercise these powers under cl. 10 of
the power of attorney in the same way as if thP -
delegate was ~he. Company itself.
•
3 S.C.R.
SUPREME COURT REPORTS
461
We therefore hold, disagreeing with the High
Court, and the Courts below, that the order of discharge made by the Resident
Engineer wa8' in
exercise of the power validly delegated to him and
that there has been· no breach of the Standing
Orders by such action,
We therefore allow the appeal, set aside the
order passed by the High Court and direct that the
appellant's application under Art. 226 of the Constitution be allowed and the order made by the
Assistant Labour Commissioner dated September
10, 1958; ordering reinstatement of the respondent,
Sambha Prasad Srivastava be set aside. There will
be no order as to costs •
Appeal allowed.
1962
J abalpur liJlectr ic
'iupply Co,
v.
Sambhu PrMcd
Sariustca
DtUGupta J
MANAGEMENT.O"B' RITZ THEATRE (P) LTD.
1912
' v.
ITS WORKMEN
(P. B. GAIBNDRAGADKAR, K. C. DAS GUPTA and
·
J. l{. MuDHOLKR, JJ.).
· Industrial Dispute-Termination of relation o.f master anit
.J servant-Proceaure-Domestic
enquir.!/-Adrlitional
evidenc.e
before Tribunal-Powers of Tribunal regarding merits of caseScope
of-Procedure' of departriientril
enquiry-Industrial
Disputes Act, 1947 (14 of 1947).
The appellant is a company whi.-h carries on the business of exhibiting cinema films in its theatre. The respondents, Jai Jai Ram and Mohd. Mia, were its employees for
the past many years. Charge-sheets were served on them and
• the charges were enquired into by the Enquiry Officers
appointed by the appellant, ,i\t the enquiry, the. appellant
July27,