# Septe1nber 17. The appeal is dismissed. S.S. SHETTY v. Appeal dismissed. BHARAT NIDHI, LTD

- **Citation:** [1958] 1 S.C.R. 442
- **Court:** Supreme Court of India
- **Decided:** 1958
- **Case number:** Civil Appeal No. 329 of 1956
- **Bench:** Bhagwati, S K. Das, Gajendragadkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/septe1nber-17-the-appeal-is-dismissed-s-s-shetty-v-appeal-dismissed-bharat-1473
- **Pages:** 18

## Headnote

Industrial
dispute-Wrongful dismissal-Tribunal
directing
reinstatement-Failure to implement award-Benefit of reinstatement-Monetary
value-Computation-Code of Civil Procedure
(Act V of 1908), s. 95-Industrial Disputes (Appellate Tribunal)
Act, 1950 (XLVIII of 1950), s. 20(1), (2).
The appellant Wll.$ in the service of the respondent but subsequently he was discharged on the plea that he had become surplus
S.C.R. SUPREME COURT REPORTS
443
to the requirement of the respondent. The Industrial Tribunal
found that the respondent had been guilty of. unfair labour
practice and victimisation and held that the order of discharge
was illegal and that he should be reinstated, with arrears of salary
and allowances from the date of discharge. The respondent having
failed to implement the award, the appellant filed an application
under section 20(2) of the Industrial Disputes (Appellate Tribunal)
Act, 1950, for computation of the money value of the benefit of
reinstatement. The Industrial Tribunal assessed the value of
reinstatement at the sum of Rs. 1,000 by adopting the measure of
damages as laid down under section 95 of the Code of Civil Procedure. Under the
bye-laws
framed by the
respondent, the
services of an employee could be terminated on
giving one
month's notice.
Held, that the monetary value of the benefit of reinstatement
is to be computed not on the basis of a breach of the contract of
employment nor on the basis of a tort alleged to have been committed by the employer by reason of the non-implementation
of the
direction for reinstatement contained in the award. The
computation has to be made by the Industrial Tribunal having
regard to all the circumstances of the case, such as, the terms aJld
conditions of employment, the tenure of service, the possibility of
termination of the employment at the instance of either party,
the possibility of retrenchment hy the employer or resignation
or
retirement by the employee and even of the employer himself
ceasing to exist, or of the employee being awarded various benefits including reinstatement under the terms of future awards by
Industrial Tribunals in the event of industrial disputes arising
between the partie> in the future.
The observations of Greer L. J. in Salt v. Power Plant Co.,
Ltd. (1936) 3 All E.R. 322, 325, relied on.
In the instant case,
having regard to the bye-laws, the
appellant would have been entitled to only one rno11th's salary in
lieu of notice, as and by way of compensation for non implementation of the direction for reinstatement, but this right could not
be availed of by the respondent in view of the finding
of the
Tribunal that he was guilty of unfair labour practice and victimisation, and a correct estimate of the value of the benefit of reinstatement had to be made bearing in mind all the relevant
factors.

## Text

442
SUPREME ,COURT REPORTS
[1958]
1957
No.12, the bed-sheet, in which the appella11t wrapped
s11brama11ia
himself after the offence. All that the document states
Gozmdan
is that among other items it is also stained with humanThe s~~te of blood, but Mr. Umrigar argues that this description
Madras
only shows that there would have been only a speck
Govinda Meuo11 1. or a spot of blood on the bed sheet, for according to
him, as a matter of fact, there should have been a
large quantity of blood on the hands of the appellant
if he had, without washing, used a bed-sheet, thereafter large patches of blood are likely to be present on
the bed-sheet. If that is so, the mere fact that the
presence of blood is described as stains would show that
the prosecution case cannot be true. We do not feel
inclined to put such a restricted meaning on the word
'stain'. 'Stained with human blood' is an expression
commonly found in Chemical Examiner's reports and
it does not necessarily refer to specks of blood alone.
We do not thirtk that any inference can be drawn
from the use of the word 'stain'
in the the Chemical
Examiner's report, that there was not sufficient blood
on the bed-sheet. The appellant has given no explanation as to how blood came to be present on material
objects Nos. 10 to 12. Agreeing with the High Court
that this is corroboration of the confession made by the
appellant, we are of the opinion that the confession
can be acted upon. If that is so, the appellant's guilt
has been proved beyond reasonable doubt.
1957
Septe1nber 17.
The appeal is dismissed.
S.S. SHETTY
v.
Appeal dismissed.
BHARAT NIDHI, LTD.
(BHAGWATI, S K. DAS and GAJENDRAGADKAR, JJ.)
Industrial
dispute-Wrongful dismissal-Tribunal
directing
reinstatement-Failure to implement award-Benefit of reinstatement-Monetary
value-Computation-Code of Civil Procedure
(Act V of 1908), s. 95-Industrial Disputes (Appellate Tribunal)
Act, 1950 (XLVIII of 1950), s. 20(1), (2).
The appellant Wll.$ in the service of the respondent but subsequently he was discharged on the plea that he had become surplus
S.C.R. SUPREME COURT REPORTS
443
to the requirement of the respondent. The Industrial Tribunal
found that the respondent had been guilty of. unfair labour
practice and victimisation and held that the order of discharge
was illegal and that he should be reinstated, with arrears of salary
and allowances from the date of discharge. The respondent having
failed to implement the award, the appellant filed an application
under section 20(2) of the Industrial Disputes (Appellate Tribunal)
Act, 1950, for computation of the money value of the benefit of
reinstatement. The Industrial Tribunal assessed the value of
reinstatement at the sum of Rs. 1,000 by adopting the measure of
damages as laid down under section 95 of the Code of Civil Procedure. Under the
bye-laws
framed by the
respondent, the
services of an employee could be terminated on
giving one
month's notice.
Held, that the monetary value of the benefit of reinstatement
is to be computed not on the basis of a breach of the contract of
employment nor on the basis of a tort alleged to have been committed by the employer by reason of the non-implementation
of the
direction for reinstatement contained in the award. The
computation has to be made by the Industrial Tribunal having
regard to all the circumstances of the case, such as, the terms aJld
conditions of employment, the tenure of service, the possibility of
termination of the employment at the instance of either party,
the possibility of retrenchment hy the employer or resignation
or
retirement by the employee and even of the employer himself
ceasing to exist, or of the employee being awarded various benefits including reinstatement under the terms of future awards by
Industrial Tribunals in the event of industrial disputes arising
between the partie> in the future.
The observations of Greer L. J. in Salt v. Power Plant Co.,
Ltd. (1936) 3 All E.R. 322, 325, relied on.
In the instant case,
having regard to the bye-laws, the
appellant would have been entitled to only one rno11th's salary in
lieu of notice, as and by way of compensation for non implementation of the direction for reinstatement, but this right could not
be availed of by the respondent in view of the finding
of the
Tribunal that he was guilty of unfair labour practice and victimisation, and a correct estimate of the value of the benefit of reinstatement had to be made bearing in mind all the relevant
factors.
CIVIL APPELLATE JURISDICTION : Civil
Appeal
No. 329 of 1956.
Appeal by special leave from the decision dated
April 29, 1954, of the Labour Appellate Tribunal,
Lucknow, in Appeal No. 111-97of1953 arising out of
the Award dated
January 24, 1953,
made by the
1957
S. S. Shetty
v.
Bharat Nidhi, Ltd.
444
SUPREME
COURT
REPORTS
[1958]
1957
Central Government Industrial Tribunal, Calcutta, in
s. s. shetty
Application No. 106 of 1952.
11/iarat fvidhi, Ltd.
B. R. L.
Iyengar
and B. C.
Misra, for the
appellant.
Veda Vyasa, K. L. Mehta and /. S. Sawlmey, for
the respondent.
1957. September 17. The following Judgment of the
Court was delivered by
Rhagwali J.
BHAGWATI J.-This appeal with special leave is
directed against the decision of the Labour Appellate
Tribunal of India, Lucknow, confirming, on appeal,
the award made by the Central Government Industrial . Tribunal, Calcutta, in a dispute between the
appellant and the respondent.
The appellant took up service with the respondent
then known as the Bharat Bank Ltd., with effect from
July 1, 1944, as an Inspector at Bombay in the grade of
Rs. 170-10-200-20--400 and was
given
three
increments when the first increment fell due as from
October 1, 1945. He was also given promotions on
October 1, 1946, and on October 1, 1947, and was
drawing Rs. 240 per month plus a special allowam;e
for a servant of Rs. 30 per month at the time when
he was discharged by the respondent on August 5,
1949, on the plea that he had become surplus to the
requirement of the respondent. The Government of
India, Ministry of Labour had by Notification No.
LR. 2 (273), dated February 21, 1950, referred for
adjudication to the Central Government Industrial
Tribunal at Calcutta the disputes pending between the
various banks and their employees, and the appellant's
case came up for hearing in the course of those pro:
ceedings before-the Tribunal which held on December 5,
1950, that the order· of discharge of the appellant
was illegal and that the respondent should take him
back in service as well as pay the appellant his arrears
of salary and allowances from the date of discharge.
This direction was to be carried out within a month of
the date of the publication of the award which was
actually published in· the Gazette of India (Part II,
Section 3, page 1143) of December 30, 1950.
S.C.R.
SUPREME COURT
REPORTS
445
On January 30, 1951, the respondent preferred an
1957
appeal against the said order to the Labour Appellate s. s. Shetty
Tribunal, Calcutta, sitting at Allahabad, which by its Bh
tM'dh' L d
decision dated September 25, 1951, upheld the direcara _
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I •
tions given by the Industrial Tribunal and dismissed
Bhagwati J.
the appeal. The respondent failed and neglected to
implement the decision of the Labour Appellate Tribunal within the prescribed period in spite of the appellant's intimating to the respondent by his letter dated
October 10, 1951, at its address at 37, Faiz Bazar,
Delhi, that he was at Bombay and that he would like
to know where he should report himself for duty.
By
this letter
he also
claimed arrears of salary and
allowances which had not till then been paid to him,_
apart from the payments made under the interim
orders of the Labour Appellate Tribunal. The respondent did not send any reply to the said letter with the
result that the appellant served on the respondent a
notice on Noverilber 5, 1951, through his solicitors
intimating that the respondent had failed and negleced to reinstate the appellant in spite of his letter dated
October 10, 1951, requesting it to do so. The appellant further intimated
to the respondent that
by
reason of its failure to reinstate him within the prescribed period the respondent had committed a breach
of the directions of the Labour Appellate Tribunal and
the appellant had therefore become entitled to compensation for the same. The appellant therefore
called upon the respondent to pay to him a sum of
Rs. 32,388 as the amount of compensation to which he
was entitled on account of the pay he would have
earned till his 55th year, i.e., up to May 4, 1960, Provident Fund contribution on pay at 6! % as allowed by
the Rules of the Bank and gratuity for about 16 years
from July 1, 1944, to May 4, 1960, at t month's pay
per year of service, adjustment being made at 6 % per
annum for payment, if made as demanded. This
amount was exclusive of other claims against the respondent such as amounts due to him under the order
dated
February 17, 1951, of the Laour Appellate
Tribunal of India, Allahabad, . arrears of salary etc.,
withheld by the respondent. As the respondent failed
446
SUPREME COURT REPORTS
[1958J
1957
and neglected to send any reply to the said notice or
s. s. shetty
to comply with the requi.siti?ns therein contained, the
v.. .
appellant made an apphcat1on to the Government of
Bharat Nidh•, Ltd. India on February 22, 1952, for recovery of money
Bhagwati J.
under s. 20(1) of the Industrial Disputes (Appellate
Tribunal) Act, 1950 (hereinafter referred to as "the
Act") to which he received a reply on May 13, 1952,
stating that an application for recovery of money
under that section cotild be entertained only if it was
confined
to the arrears of salary and allowances
from the date of his
discharge up to the date
of the application, and advising him
to submit
a revised
application accordingly.
A suggestion
was also made in that letter that the
appellant
might approach the
Industrial Tribunal, Clacutta,
under s. 20(2) of the Act for a computation in terms
of money of the benefit of reinstatement, as it was
only when a definite sum had been so determined that
action for recovery under s. 20(1) of the Act could be
taken by the Government.
It appears that in the meantime the respondent had
transferred its banking business under an agreement
with the Punjab National Bank Ltd., and had also
changed its name to Bharat Nidhi Ltd. By its letter
dated April 3, 1952, the respondent in its new name
of the Bharat Nidhi Ltd., addressed a letter to the
appellant stating
that due to the transfer of its liabilities and equivalent assets to the Punjab National
Bank Ltd., and the closure of all its branches in India,
the appellant was surplus
to its requirements. It
therefore purported to give to the appellant two
months' notice of its intention to terminate the said
award and his services in terms of s. 19(6) of the Industrial Disputes Act, 1947. The letter further proceeded
to state that the appellant had not so far reported
himself for duty at its office at Delhi which was the
only office that it had in India since March 10, 1951,
and which was its Head Office and registered office
before that date. The appellant replied by his Advocate's letter dated April 16, 1952, pointing out that
in spite of his letter dated October 10, 1951, addressed
to the respondent the latter had not informed him as
S.C.R.
SUPREME COURT REPORTS
447
to when and where he should seport for duty nor had
1957
it cared to respond to the same. He intimated that s. s. Shetty
he had already made an application to the Govern- Bh
i"M·dh' Ltd
ment of India under s. 20(1) of the Act and was awaitara _,_,,
·
ing the result thereof. The letter dated April 3, 1952,
Bhaiwari I.
addressed by the respondent to the
appellan~ was
under the circumstances characterized by the appellant as evidently addressed to him with some ulterior
motive. The respondent by its letter dated May 10,
1952, addressed to the appellant reiterated that in spite
of its asking the appellant to do so, he had failed to
join its office. It stated that by its letter dated April 3,
1952, it had clearly asked the appellant to join at
Delhi but that the appellant had failed to do so and
the conduct of the
appellant clearly amounted to
evasion of its instructions and absence from duty. It
also stated that the notice dated April 3, 1952, had
effect from the date of receipt thereof by the appellant,
viz., April 9, 1952. No further reply was made by the
appellant to the aforesaid letter but it appears that
on June 28, 1952, the respondent addressed a letter to
the Under Secretary, Government of India, New
Delhi, in answer to a communication dated June, 12,
1952, addressed by the latter to it that the appellant
had already been paid arrears of his pay and allowances awarded by the Tribunal, that he was further
asked by it to resume duty which he had failed to do,
and, in the circumstances he was being considered
absent from duty. A copy of the letter dated May 10,
1952, addressed by it to the appellant as also a copy
of the letter of the same date addressed to the Chief
Labour
Commissioner (Central), New Delhi, were
enclosed therewith for information. Nothing further
transpired and on October 8, 1952, the appellant filed
the petition under s. 20(2) of the Act for computation
of the money value of the benefit of reinstatement
because of non-implementation of the directions contained In the award by the respondent. He claimed a
sum of Rs. 47,738 computed in the manner indicated
in annexure 'D' to that petition.
The respondent filed its written statement
on
December 4, 1952, wherein the only plea taken was
448
SUPREME COURT REPORTS
[1958]
1957
that there was a flagrant violation by the appellant of
s. s. Slimy
its instructions to join duty and that thereby the
B'
.~·"' L d appellant had forfeited his right to claim reinstate-
''""'"""''
1
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d
11 b
fi
ft
.
h
f
I f
h
_
'
ment an
a
ene ts owmg t ere rom.
t
urt er
llhagwati J.
stated that without prejudice and with a view to close
his case it had offered him salary upto June 19, 1952,
by its letter dated November 15, 1952, under intimation to the Conciliation Officer, Central Government,
New Delhi, but the appellant had not replied to the
same. The respondent further contended that the
award in question was in force for only one year
under s.
19(3) of the Industrial Disputes Act, 1947,
and that the same was therefore no longer in force and
the respondent had already terminated the same.
The
claim or the appellant was
therefore illegal
and
preposterous. and the
respondent prayed that the
petition be dismisssed with costs.
The petition came up for hearing before the Central
Government lndustrail Tribinal at Calcutta and it
was observed. that there were three aspects of the case,
viz., (i) whether therespondent refused to implement
the award or the subsequent decision of the Labour
Appellate Tribunal by not taking the appellant in
service as
directed by the Tribunals (as urged on
behalf of the appellant);
(ii) whether it was the
petitioner who failed to resume his duty in spite of
having been asked to do so and thereby forfeited the
right conferred upon him in terms of the award (as
urged by the respondent); (iii) To what 1~elief or compensation in lieu of reinstatement the petitioner was
entitled in the peculiar circumstances in which Bharat
Bank ceased
functioning soon after the award
of
December, 1950, and in the light of various other
applications of other employees in which only retrenchment relief was awarded.
On the first two questions
the Industrial Tribunal held in favour of the appellant
and then proceeded to consider the third question, viz.,
as to what relief or compensation in lieu of reinstatement the appellant was entitltcd to. After discussing
the legal position it came to the conclusion that the
measure of damages was that laid down under s. 95
of the Code of Civil Procedure which put it at a figure
S.C.R.
SUPREME COURT
REPORTS
449
of. Rs. 1,000. It therefore assessed the value of rein1957
statement asked for at the -sum of Rs. 1,000 and
s. s. Shetty
awarded that sum under s. 20(2)
o~ the Act. The Bharat ;Mhi, Ltd.
other prayers of the appellant regardmg arrears were
-
not dealt with by the Industrial Triliunal in so far as
Bhagwati J.
they were the subject-matter of the application under
s. 20(1) of the Act which the appellant had already
made to the Central Government. The appellant
being aggrieved by the
award of the
Industrial
Tribunal carried an appeal to the Labour Appellate
Tribunal of India at Lucknow. A preliminary objection was taken by the respondent before the Labour
Appellate Tribunal that the. appeal was not competent
under the provisions of s. 7 of the Act. This objection
found favour with the Labour Appellate Tribunal and
holding that no substantial question of law was raised
by the award it dismissed the appeal as incompetent.
The appellant applied for and obtained special leave
to appeal against this decision of the Labour Appellate
Tribunal and that is
how the present appeal · is
before us.
The two questions of fact, viz., (i) whether the respondent refused to implement the award by not taking
the appellant back in service and (ii) whether it was
the appellant who
had failed to resume
his duty
in spite of having been asked to do so and thereby
forfeited the right conferred upon him in terms of the
award are concluded by the findings arrived at by the
Industrial Tribunal after due consideration of the
correspondence which passed between the parties. We
also have perused the said correspondence and we see
no reason to disturb those findings. If therefore the
appellant was ready and willing to be reinstated in the
service of the respondent and was not guilty of any
default in the matter of reporting himself for duty, the
only question that remains to be considered by us there
is what is the amount at which this benefit of reinstatement which was awarded to the appellant should
be computed within the meaning of s. 20(2) of the Act.
That was the only scope of the enquiry before the
Industrial Tribunal and we have to determine what is
the correct method of such computation.
M2SC III-JO
1951
). S. Shetty
v.
Bh<Wat Nit/hi Ltd.
Rhagwati J.
450
SUPREME COURT REPORTS
(1958)
Section 20(2) of the Act reads as follows:-
Section 20.-Recovery of money due from
an
employer under an award or decision.
(1) ..................... .
(2) Where any workman is entitled to receive from
the employer any benefit under an award or decision
of an industrial tribunal which is capable of being
computed in terms of money, the amount at which
such beriefit should be computed may, subject to the
rules made under this Act, be determined by that
industrial tribunal, and the amount so determined
may be recovered as provided for in sub-section (1).
It may be noted that sub-section (1) above referred
to provides that:-
any money due from an employer under any award
or decision of an industrial tribunal may be recovered
as arrears of land revenue or as a public demand by
the appropriate Government on an application made
to it by the person entitled to the money under that
award or decision.
The petition of the appellant proceeded on the basis
that the benefit of reinstatement which he was entitled
to receive under the terms of the award was capable
of being computed in terms of money and that
position was not disputed by the respondent. Even
though there was no plea by the respondent in its
written statement that there were any circumstances
which made it impossible for the respondent to reinstate the appellant in its service except the failure of
the appellant to resume his duty in spite of his having
been asked
to do so, the respondent was allowed
to lead
evidence in regard to the transfer of its
liabilities and equivalent assets to the Punjab National
Bank Ltd., and the closure of its banking business in
all of its branches in India in order to show that the
respondent was not in default and the value of the
benefit of reinstatement in terms of money had thus
dwindled into insignificance. Reliance was placed on
the further circumstance that the Punjab National
Bank Ltd., was not under any obligation to take into
its employ the employees of the respondent, that as a
matter of fact only IO% .Df the employees of the
S.C.R. SUPREME
COURT
REPORTS
451
respondent had been absorbed by the-Punjab National
1957
Bank Ltd. and in regard to the rest who were not so
s. s. she11y
absorbed the only
sums
awarded to them by the Bhar
;;.dh. Ltd
Industrial Tribunals were salary for the notice month
01
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and retrenchment compensation. We are of opinion
BhagwatiJ.
that these circumstances cannot be availed of by the
respondent. It is no doubt true that the respondent
transferred its liabilities and equivalent assets to the
Punjab National Bank Ltd., some time in March 1951.
The correspondence which was carried on between the
appellant and the respondent however shows that in
spite of such transfer to the Punjab National Bank
Ltd., and the change of the name of the respondent
from the Bharat Bank Ltd., to Bharat Nidhi Ltd.,
the respondent never contended that Bharat Nidhi Ltd.,
was not in a position to reinstate the appellant in its
service. The correspondence proceeded all along on
the footing that Bharat Nidhi Ltd., was in a position
to reinstate the appellant in its service and as a matter
of fact took up the plea that it had invited the appellant to join it at Delhi but that the appellant had
failed and neglected to do so. Not only in its letter
dated May 10, 1952, did the Bharat Nidhi Ltd, state
that the appellant's failure to join it at Delhi amounted to absence from duty but as late as June 28, 1952,
in its letter addressed to the Under Secretary to the
Government of India, New Delhi, it reiterated that
the appellant was asked to resume duty which.he had
failed to do
and that in the circumstances he was
being considered as absent from duty. It is clear
therefore that the Bharat Nidhi Ltd., was all the time
insisting that the appellant should join its service at
Delhi and never took up the plea that the transfer of
its liabilities and equivalent assets to the Punjab
National Bank Ltd., and also the possibility of the
Punjab National Bank Ltd., not absorbing the appellant in its employ were circumstances available to it
by way of defence. The appellant having become
surplus to its requirement was of course a plea taken
by it in the course of the correspondence and by its
letter dated April 3, 1952, the Bharat Nidhi Ltd., gave
the appellant two months' notice of its intention to
!9S7
S.S. Shelly
v.
Bharat Nidhi1 Ltd.
Bhagwali J.
452
SUPREME COURT REPORTS
[1958]
terminate the award and service of the appellant. In
this behalf it also relied on the provisions of s. 19( 6)
of the Industrial Disputes Act, 1947, but when it came
to file its written statement it did not put forward
that plea as an answer to the claim of the appellant
under s. 20(2) of the Act.
We fail
to understand
therefore how these circumstances could ever have
been taken into consideration by the Industrial Tribunal while arriving at the computation in terms of money
of the benefit of reinstatement awarded to the appellant under the terms of the award. Such computation
has therefore got to be made regardless of those
circumstances which were put forward by the respondent as a last resort.
The Industrial Tribunal computed the money value
of this benefit on the analogy of s. 95 of the Code of
Civil Procedure. It treated the non-implementation
of the direction in the award made by an Industrial
Tribunal on a par with the obtaining of arrest, attachment or injunction on insufficient grounds as awarded to the appellant the sum of Rs. 1,000 which it
deemed to be a reasonable compensation for the injury
caused to him. Even if the direction given by the
Industrial Tribunal
in its award
be treated as a
statutory obligation imposed on the respondent, this
certainly could not be a measure of compensation
or damages and it was fairly conceded by the learned
counsel for the respondent that he was not in a position
to support that part of the judgment.
Mr. Iyengar who appeared for the appellant before
us urged that the computation of the money value of
the benefit of reinstatement awarded to the appellant
should be made on one or the other of the three bases
which he suggested for the purpose, viz., (i) the order
of reinstatement should be construed as entitling the
appellant to the full tenure of service in accordance
with the terms of the original contract and the appellant should be awarded compensation commensurate
with the salary and the benefits which he would have
earned during his service with the respondent for the
full term of 55 years which was the age of suprrnnn~ .•-
tion; (ii) the non-implementation of the direction as
S.C.R. SUPREME COURT REPORTS .
453
•
to reinstatement should be treated as a breach of
i9s7
contract on the part of the respondent and the appels. s. Shetty
lant should be awarded damages for breach of the Bh
M'dh' Ltd
contract which would be calculated again on the same
0
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01
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1
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•
basis; (iii) the non-implementation should be treated
BliagwatiJ.
as a breach of a statutory duty and the appellant
should be awarded damages for non-implementation
as on a tort committed by the respondent. The appellant would in that event be entitled not only to general
damages but also special damages by reason of
oppressive conduct on the part of the respondent.
The position as it obtains in the ordinary law of
master and servant is quite clear. The master who
wrongfully dismisses his servant is bound to pay him
such damages as will compensate him for the wrong
that he has sustained. "They are to be assessed by
reference to the amount earned in the service wrongfully terminated and the time likely to elapse before
the servant obtains another post for which he is fitted.
If the contract expressly provides that it is terminable
upon, e.g., a month's notice, the damages will ordinarily
be a month's wages ............ No compensation
can be claimed in respect of the injury done to the
servant's feelings by the circumstances of his dismissal,
nor in respect of extra difficulty of finding work resulting from those circumstances. A servant who
has
been wrongfully dismissed must use diligence to seek
another employment, and the fact that he has been
offered a suitable post may be taken into account in
assessing the damages." (Chitty on Contracts, 21st
Ed., VoJ. (2), p. 559, para. 1040).
If the contract of employment is for a specific term,
the servant would in that event be entitled to damages
the amount of which would be measured prima f acie
and. subject to the rule of mitigation in the salary of
which the master had deprived him. (Vide Collier v.
Sunday Referee Publishing Co., Ltd., (1)). The seravant
would then be entitled to the whole of the satary,
benefits, etc., which he would have earned had he
continued in the employ of the master for the full
(1) [1940] 4 All E. R. 234, 237.
M2SC61-ll
454
SUPREME
COURT REPORTS
(1958)
1957
term of the contract, subject of course to mitigation of
s. s. shetty
damages by way of seeking alternative employment.
v.
L 1
Such damages would be recoverable by the servant
Bharat Nidlii,
1' · for his wrongful dismissal by the master only on the
Bhagwari J.
basis of the master having committed a breach of the
contract of employment. If, however, the contract is
treated as subsisting and a claim is
made by the
servant for
a declaration that he continues in the
employ
cif the master and should be awarded his
salary, benefits, etc., on the basis of the continuation
of the contract, the servant would be entitled to a
declaration that he continues in the employ of the
master and would only be entitled to the payment of
salary, benefits, etc., which accrued due to him up to
the date of the institution of the suit.
The benefit of reinstatement which is awarded to a
workman under the terms of the award does not
become a term or condition of the contract between
him and the employer. There are no doubt other
reliefs by way of changes in the terms and conditions
of employment which when awarded by the appropriate tribunal might be treated as implied terms of the
contract between the employer and the workers to
whom the award applies and would ensure for the benefit
of the worker until varied by appropriate legal proceedings. There is no statutory provision in that behalf
contained in the Industrial Disputes Act, 1947. But
it is interesting to note that in the Industrial Disputes
Order, 1951,
obtaining in England there is
enacted s. 10 which runs as follows:
Section 10: Award to be implied term of contract:
Where au award on a dispute or issue has been made
by the Tribunal then as from the date of the award or
from such other date, not being earlier than the date
on which the dispute or issue to which the award
relates first arose, as the Tribunal may direct, it shall
be an
implied
term of the contract between the
employer and workers to whom the award applies
that the terms and conditions of employment to be
observed under the contract shall be in accordance
with the award until varied by agreement between
the parties or by a subsequent award of the Tribunal
S.C.R.
SUPREME COURT REPORTS
455
or until different terms and conditions of employment
t957
in respect. of the workers ~ot?cerned are. sett~ed through
s. s. Shelly
the machmery of negotiation or arb1trat1on for the
v.
settlement of terms and conditions of employment in Bharat 1!!!!:_1• Ltd.
the trade or industry or section of trade or industry
Bhagwati J.
or undertaking in which those workers are employed.
Whatever be the position in regard to the terms and
conditions of employment thus varied in accordance
with the terms of the award, the benefit of reinstatement awarded to a workman certainly cannot be
treated as part of the contract between him and the
employer. The effect of an order of reinstatement is
merely to set at nought the order of wrongful dismissal
of the workman by the employer and to reinstate him
in the service of the employer as if the contract of
employment originally entered into had ·been continuing. The terms and conditions of the contract
which obtained when the workman was in the employ
of the employer prior to his wrongful dismissal which
has been set aside continue to govern the relations
between the parties and the workman continues in the
employ of the employer under
those terms and
conditions. There is no variation of those terms and
conditions of the contract. The only thing which
happens is that the workman is reinstated in his old
service as before.
The monetary value of the benefits of such reinstate·
ment is therefore to be computed not on the basis of
a breach of the contract of employment nor on the
basis of a tort alleged to have been committed by the
employer by reason of the non-implementation of the
direction for reinstatement contained in the award.
The analogy of a suit for a declaration that the work:-
man is continuing in the employ of the employer and
that he should be paid the salary and benefits, etc.,
which would have been earned by him up to the date
of the institution of the suit also does not strictly apply
for the simple reason that the workman here is not
asking for a declaration that he is still continuing in
service on the ground that there was a termination
of his service after the award, which termination is
void. What he is asking for is a computation in terms
456
SUPREME COURT REPORTS
[1958]
1957
of money of the benefit of reinstatement which was
s. s. Sherry
granted to him by the Industrial Tribunal and which
Bharat J:iidhi, ud. the employer did not implement.
BhagK:afi J.
The purpose of the enactment of s. 20(2) of the Act
is not to award to the workman compensation or
damages for a breach of contract or a breach of a
statutory obligation on the part of the employer. Any
money which is due from an employer
under the
award can by virtue of the provisions of s. 20(1) of the
Act be recovered by the appropriate Government on
an application made to it by the workman. Where
however any benefit which is not expressed in terms
of money is awarded to the workman under the terms
of the award it will be necessary to compute in terms
of money the value of that benefit before the workman
can ask the appropriate Government to help him in
such recovery. Section 20 sub-s. (2)
provides for the
computation in terms of money of the value of such
benefit and the amount at which such benefit should
be computed is to be determined by the
Industrial
Tribunal to which reference would be made by the
appropriate Government for the purpose. Such computation has relation only to the date from which the
reinstatement of the workman has been ordered under
the terms of the award and would have to be made by
the Industrial
Tribunal
having regard to all the
circumstances of the case. The Industrial Tribunal
would have to take into account
the terms and
conditions of employment, the tenure of service, the
possibility of termination of the employment at the
instance of either party, the possibility of retrenchment by the employer or resignation or retirement by
the workman and even of the employer himself ceasing
to exist or of the workman being awarded various
benefits including reinstatement under the terms of
future awards by Industrial Tribunals in the event of
industrial disputes arising between the parties in the
future.
Even in the case of ordinary contract.s
between
master and servant such considerations have been
imported by the courts. The observations of Greer,
S.C.R.
SUPREME COURT REPORTS
457
L.J., in Salt v. Power Plant Co., Ltd. (1) are apposite in
1957
this context :
s. s. Shetty
"This 'is the case of a man ~ho had, according. to Bharat "Nidlii Ltd.
my view, got an engagement which was.to last for life,
--
or at any rate for the joint lives of himself and the
Bhagwati J.
company, but I think for his life, because, I think
there are authorities to the effect that if a company
winds up, that is a dismissal of the servants, and they
can then prove for damages and get their dividend,
whatever it may happen to be. Fortunately, the
company has not been wound up, but in estimating
the damages, of course, the tribunal estimating them
will have to take into consideration the fact that at
any time after June 26, 1935, it might have appeared
to the directors that they had good reasons for terminating the plaintiff's services, reasons connected with
his conduct. The present value of what his salary
would be for the rest of his life must also be considered,
and there must also be taken into account the fact
that he is a man who might at any time terminate his
service by his life coming to an end, and other matters
with which I need not deal".
These and similar considerations would equally be
germane in the matter of the computation in terms of
money of the value of the benefit of reinstatement
which was awarded to the appellant in the case
before us.
Turning therefore to the terms and conditions of
employment we find that the respondent had enacted
bye-laws for the employees of Bharat
Bank Ltd.,
which were applicable to the appellant. Bye-law 9
provides
that an employee
may resign from the
service of the respondent by giving one month's notice.
Bye-law 11
provides that the respondent shall have
the option to terminate an employee's service
on
giving him the same notice as he is required to give to
the respondent under rule No. 9 (which can be sewed
even when the employee may be on leave), or by
paying him salary for the notice period in lieu
of
notice, in the absence of an agreement to the contrary,
provided that no notice shall be necessary when he is
(t} (1936l 3 All E, R. 322, 325.
1957
S.S. Shelly
v.
Bharat Nidhi, Ltd.
Bhagwati J.
458
SUPREME COURT REPORTS
[1958
dismissed on account of misconduct, dishonesty, gross
negligence, insubordination or disregard of any of the
standing instructions. Bye-law 13 Jays down that
every employee is required to retire on attaining the
age of 55 years. He may be retained in service after
that age
only with the express sanction
of the
authorities but such
extension of service will
not
exceed more than 2 years at a time.
If regard be had to these terms and conditions, it
was possible
for the
respondent to terminate the
service of the appellant by paying him one month's
salary in lieu of notice. If there was nothing more
the appellant would have been entitled only to that
amount as and by way of compensation for nonimplementation of the direction
for reinstatement.
There was however a finding recorded by the Industrial Tribunal which made the award dated December 5
1950, that the respondent had been guilty of unfair
labour practice and victimization and the ordinary
right, which the respondent would have been in a
position to exercise, of terminating the service of the
appellant on giving him one month's salary in lieu of
notice could not be availed of by the respondent. On
an
industrial dispute raised by the appellant on the
respondent's terminating his service at any time in
the future, it would be open to the Industrial Tribunal
to go into the question whether the termination of
the appellant's service by the respondent was justified
and if the Industrial Tribunal came to an adverse
conclusion, it would be open to it to reinstate the
appellant in the service
of the respondent with all
back salary, allowances, etc. Even if the respondent
wanted to retrench the appellant, the same considerations would arise with a possible result against the
respondent. On the other hand, there was also a
possibility of the respondent being in the right and
being entitled to lawfully terminate the service of the
appellant in which event of course the appellant
would be without any redress whatever, In computing the money value of the benefit of reinstatement
the Industrial Tribunal would also have to take into
account the present value of what his salary, benefits,
S.C.R.
SUPREME COURT REPORTS
459
etc., would be till he attained the age of superannua19s1
tion the value of such benefits would have to be
8 s Sbet
computed as from the date when such reinstatement
· · v.
ty
was ordered under the terms of the award.
Bhartat Ntdhi Ltd.,
Having regard to the considerations detailed above
Bhagwa1i 1.
it is impossible to compute the money value of this
benefit of reinstatement awarded to the appellant with
mathematical exactitude and the best that
any
Tribunal or Court would do under the circumstances
would be to make as correct an estimiJ.tes as is possible
bearing of course in mind all the relevant factors pro
and con. We have ourselves devoted very anxious
thought to this aspect of the matter and we have
come to the conclusion that having regard to all the
circumstances of ihe case it would be reasonable to
compute the benefit of reinstatement which was
awarded to the appellant at an amount of Rs. 12,500
(Rupees twelve thousand and five hundred only).
We accordingly allow the appeal and set aside the
decision of the Labour Appellate Tribunal of India,
Lucknow, as well as the award made by the Central
Government Industrial Tribunal, Calcutta and award
that the appellant shall recover from the respondent
the said amount of Rs. 12,500 (Rupees twelve thousand
and five hundred only) being the computation of the
money value of the benefit of reinstatement awarded
to him under the terms of the award of the Central
Government Industrial Tribunal at Calcutta dated
December 5, 1950. The respondent will pay the
appellant's costs of this appeal
as well as
the
proceedings before the Industrial Tribunal and the
Labour Appellate Tribunal.
Appeal allowed.