# THE TATA OIL MILLS CO., LTD v. WORKMEN & ANR

- **Citation:** [1964] 2 S.C.R. 125
- **Court:** Supreme Court of India
- **Decided:** 1961-09-13
- **Case number:** Civil Appeal No. 322 of 1962
- **Bench:** P. B. Gajendragadkar, M. Hidayatullah, J. C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-tata-oil-mills-co-ltd-v-workmen-anr-2829
- **Pages:** 11

## Headnote

Industrial Disputt-'.l'ermination of service of an employee
an payment of one month's salary in lieu of notice-Order of
termination purported ta be discharg• under R. 40 (1) of Service
Rules-Jurisdiction of the Tribunal to examine whether it
amounU to a discharge or dismi8Sal.
Mr.
Banerjee was an employee of the appellant. His
services were terminated on the ground that the appellant had
lost confidence in him and in Heu of notice he was paid one
month's salary. The union to which Mr. Banerjee belonged
took up his cause and on the failure of the parties to reach a
settlement the matter was referred to the Industrial Tribunal
by the Government.
The appellant contended before the Tribunal that the
order of termination of service of Mr. Banerjee was an order
of discharge which it was competent to make under R. 40 (I)
l963
Stat1 ofol'unjab
••
Britcl India
iorpoT<tifJll Ltd.
D., Gupu /,
1965 --
1963
t'A1 T.t. Oll Mi/IJ
..
c,, .. , Lt6.
••
Workmm
126 SUPREME COURT REPORTS [1964] VOL.
of the Service Rules. It was contended by the respondeat
that the termination was no: a dischari:e 1implicittr but was in
suhstancc di>miss:il and that the Trihunal was entitled to
consider the propriety uf the appellant's action .
The Tribunal held that it had jurisdiction to look into
the reasons behind the discharge of an employee. On the examination of the evidence the Tribunal found that no malajid"8
on the part of the employer had been proved and that the
termination of service did not amount to victimi1ation or
unfair labour practice. Even so it held that the discharge was
not justified and directed the reinstatement of Mr. Banerjee.
The present appeal is by way of special leave.
Before this Court, in addition to the above contention
the appellants contented that in the light of the evidenre
before the Tribunal its finding that the discharge was not
justified, was wrong.
Held, that in the matter of an order of discharge of an
employee the form of the order is not decisive. An Industrial
Tribunal has jurisdiction tu examine the substance of the matter
and decide whether the termination is in fact discharge simpliciter or it amounts to dismissal which has put on the cloak of
discharge simpliciter.
The test always has to be whether the
act of the employer is bonafide or whether it is a malafide and
colourable exercise of the powers conferred by the terms of
contract or by the standing orders.
Buckingham & Carnatic Co. Ltd. v. Workmen of the
Company (1951) II L. L.J. 314, (Jhart<red Bank, Bombay v.
Chartered Bank Employees Union (1960) II L. L.]. 222 and
U. B. DuU & Co. (Private) Ltd. v. Its Workmen, (1962) II
L. L.J. 374, referred to.
Since the reasons given by the Tribunal in support of its
conclusion were wholly unsatisfactory its order must be set
aside.

## Text

25.C.R.
SUPREME COURT REPORTS 125
used by the employees on leave and license. Whatever payment.w~s received f~om them ~as not them·
fore "rent" w1thm the meanmg of cl. (u).
Our conclusion therefore is that no tax is
leviable under the Punjab Urban Immova?li; pr?-
perty Tax Act, 11140, in respect of the buildmgs m
these two appeals. The High Court therefore rightly
quashed the orders of assessment.
The appeals are
accordingly dismissed with costs.
Appeals 'dismissed.
THE TATA OIL MILLS CO., LTD.
v.
WORKMEN & ANR.
(P. B. GAJENDRAGADKAR, M. HIDAYATULLAH
and J. C. SHAH JJ.)
Industrial Disputt-'.l'ermination of service of an employee
an payment of one month's salary in lieu of notice-Order of
termination purported ta be discharg• under R. 40 (1) of Service
Rules-Jurisdiction of the Tribunal to examine whether it
amounU to a discharge or dismi8Sal.
Mr.
Banerjee was an employee of the appellant. His
services were terminated on the ground that the appellant had
lost confidence in him and in Heu of notice he was paid one
month's salary. The union to which Mr. Banerjee belonged
took up his cause and on the failure of the parties to reach a
settlement the matter was referred to the Industrial Tribunal
by the Government.
The appellant contended before the Tribunal that the
order of termination of service of Mr. Banerjee was an order
of discharge which it was competent to make under R. 40 (I)
l963
Stat1 ofol'unjab
••
Britcl India
iorpoT<tifJll Ltd.
D., Gupu /,
1965 --
1963
t'A1 T.t. Oll Mi/IJ
..
c,, .. , Lt6.
••
Workmm
126 SUPREME COURT REPORTS [1964] VOL.
of the Service Rules. It was contended by the respondeat
that the termination was no: a dischari:e 1implicittr but was in
suhstancc di>miss:il and that the Trihunal was entitled to
consider the propriety uf the appellant's action .
The Tribunal held that it had jurisdiction to look into
the reasons behind the discharge of an employee. On the examination of the evidence the Tribunal found that no malajid"8
on the part of the employer had been proved and that the
termination of service did not amount to victimi1ation or
unfair labour practice. Even so it held that the discharge was
not justified and directed the reinstatement of Mr. Banerjee.
The present appeal is by way of special leave.
Before this Court, in addition to the above contention
the appellants contented that in the light of the evidenre
before the Tribunal its finding that the discharge was not
justified, was wrong.
Held, that in the matter of an order of discharge of an
employee the form of the order is not decisive. An Industrial
Tribunal has jurisdiction tu examine the substance of the matter
and decide whether the termination is in fact discharge simpliciter or it amounts to dismissal which has put on the cloak of
discharge simpliciter.
The test always has to be whether the
act of the employer is bonafide or whether it is a malafide and
colourable exercise of the powers conferred by the terms of
contract or by the standing orders.
Buckingham & Carnatic Co. Ltd. v. Workmen of the
Company (1951) II L. L.J. 314, (Jhart<red Bank, Bombay v.
Chartered Bank Employees Union (1960) II L. L.]. 222 and
U. B. DuU & Co. (Private) Ltd. v. Its Workmen, (1962) II
L. L.J. 374, referred to.
Since the reasons given by the Tribunal in support of its
conclusion were wholly unsatisfactory its order must be set
aside.
CIVIL APPELLATE JuRISDICTION : Civil Appeal
No. 322 of 1962.
Appeal by special leave from the Award dated
September 13, 1961, of the Second Labour Court,
West Bengal, in Case No. VIII-C-40 of 1960.
M. 0. Setalvad, J. B. Dadachanji, 0. 0.
Mathur and Ravinder Narain, for the appellant.
)
2 S.C.R.
SUPREME COURT REPORTS
127
C. K. Daphtary, Solicitor General of India and
Janardhrm Sharma, for the respondent No. 1.
1963. February 15. The Judguent of 'the
Court was delivered by
GAJENDRAGADKAR J.-Mr. R. K. Banerjee
had been employed by the appellant,. the Tata Oil
Mills Co. Ltd., as a Salesman on April 3, 1956,
as a probationer and he
was
confirmed
on
November 5, 1956. On December 5, 1959, his services
were terminated and he was informed that the appellant had lost confidence in him, and so, it had
decided to discharge him.
Accordingly, in lieu of
notice, he was paid a month's salary and was told
that he ceased to be the employee of the appellant as from the date next after he received the
order from the appellant. The discharge of Mr.
Banerjee was resented by the Union to which he
belonged and the Union took up his case. Since the
dispute could not be settled amicably, the Union
succeeded in persuading the Government ofWest
Bengal to refer the dispute for adjudication to the
Second Labour Court on the ground that the said
discharge was not justified. That is how the discharge of Mr. Banerjee became an industrial dispute
between the appellant and the respondents, its work·
men represented by their Union.
The Labour Court
which tried the dispute came to the conclusion that
the appellant had failed to justify the discharge of
Mr. Banerjee and so, it has directed the appellant
to reinstate him and pay him full emoluments from
the date of his discharge up to the date of his
reinstatement. It is this order which is challenged
by the appellant by its present appeal brought to
this Court by special leave.
The material facts leading to the termination
of Mr. Banerjee's services lie within a very narrow
compass. In November, 1959 Mr. Banerjee was
working in the Assam area and as such, had to work
IY63
7 ke TMa Oil Milis
Co., Lti.
v.
Worhn"11
G•jendr~r · /,
1963
T/'11 Tote Oil Mil(J
Co., l.Jd.
v.
Workmr"
......... •·· ................
~...
;
 ..
128 SUPREME COURT REPORTS [1964] VOL.
.
.
.
.
as a Salesman at Dhubri, Bongaigoan, Rangia and
Tejpur.
The appellant expected that as its Salesman ).[r. Banerjee should \'isit dealers in his ;irca
and carry ou intelligent and intensive propaganda
to popularise the sale of the appellant's products.
The appellant has a Sales Office in Calcutta and the
manager of the said Office visits the areas within his
jurisdiction to inspect the workof Salesmen. Accordingly, Mr. Gupta, who was then the manager of the
Calcutta Office, visited the area assigned to Mr.
Banerjee, in the last week of October.
He found
that Mr. Banerjee was not working satisfactorily as
a Salesman.
In particular, he noticed that whereas
Mr. Banerjee had reported to the Office that the
Bongaigoan Stockists had 20 boxes of dried up and
deshaped 501 Special Soap which could not be distributed in the market, he had in fact not opened
a single box and had not cared to satisfy himself
that the soaps had either dried up or had heen deshaped.
In fact, Mr. Gupta found that the boxes
were intact and he opened them and discovered that
five boxes contained soap which had dried up and
had become deshaped, whereas the 15 other boxe•
were in good
condition. Thereupon, !\fr. Gupta
made a
report
to
the
zonal
Manager on
November 2, 1959, adversely commenting on .Mr.
Banei:jee's work. The said report was in due course
forwarded to the Head Office in
Bombay. The
Head Office then instructed the Calcutta Sales
Office by telephone to send for Mr. Banerjee and
call for his explanation.
Accordingly, Mr. Banerjee was sent for and his explanation taken;
Mr.
·Gupta then made another report expressing his dissatisfaction with the explanation given by Mr. Banerjee. This report was sent on November 24, 1959.
The Head Office accepted
this
report and on
December 5, 1959, issued to Mr. Bane1jee the order
terminating his services.
That, in brief, is the case
set out by the appellant in support of the action
taken by it against Mr. Banerjee.
/
-
2 S.C.R.
SUPREME COURT REPORTS
129
The appellant had alleged that the termination
of Mr. Banerjee's services was not dismissal but was
a discharge simpliciter, and according to it, the
discharge was justified by the terms of contract
between the appellant and Mr. Banerjee as embodied
in Rule 40 (1) of the Service Rules of the appellant.
The appellam, therefore, urged that the Labour
Court had no jurisdiction to consider the propriety
<;>f the appellant's action in discharging Mr. Banerjee.
The respondents, on the other hand, contended
that the discharge was not discharge simpliciter but
was, in substance~ dismissal, and so, it was urged
that the Labour Court was entitled to consider the
propritty of the appellant's action. Basing themselves on the plea that the discharge amounted to
dismissal, the respondents pleaded that the failure of
the appellant to hold an enquiry against Mr. Banerjee introduced a serious infirmity in the order passed
against him; and they argued that the conduct of
the · appellant was malafide and the dismissal of
Mr. Banerjee amounted to victimisation.
The Labour Court has found that according to
the terms of contract under which Mr. Banerjee was
employed by the appellant, the appellant was entitled to discharge Mr. Banerjee from its employment
under Rule 40 (1) of the Service Rules; but it held
that merely because the order served on Mr. Banerjee purported to be an order of discharge, that would
not exclude the jurisdiction of the Labour Court to
examine the substance of the matter. In fact, Mr.
Joshi who appeared for the appellant conceded before
the Labour Court that an adjudicating Court can
look into the reasons behind the discharge of an
employee.
That is why evidence was led by both
the parties before the Labour Court.
Having considered that evidence, the Labour Court has found
that the respondents' plea about the malafides of the.
The 1 nta Oil J!ills
Co .. Ltd.
v.
H"(J1kmen
/
1963
1·1,, Tala Oil ,\[11/s
Co., /.tJ.
v.
W,'arkmen
'
130 SUPREME COURT REPORTS (1964] VOL.
appellant was not proved and it held
that the
termination of Mr. Banerjee's services could not be
said to amount to an act of victimisation or an un·
fair labour practice.
Even so, it held that the discharge was not justified, and so, it has directed the
appellant to reinstate '.\Ir. Banerjee. It is the vali·
dity of this order that is challenged before us by
:\fr. Setalvad on behalf of the appellant.
The t.rue legal position about the Industrial
Courts' jurisdiction and authority in dealing with
cases of this kind is no longer in doubt. It is true
that in several cases, contract of employment or
provisions in Standing Orders authorise an industrial
employer to ter111inate the service of his employees
after gi\'ing notice for one month or paying salary
for one month iu lieu of notice, and normallv, an
employer may, in a proper case: be entitled to ~xcr·
cise the said power.
But where an order of discharge passed by an employer gives rise to an
industrial dispute.
the form of the order by which
the employee's services are terminated, would not be
decisive ; industrial adjudication would be entitled to
examine the substance of the matter and decide
whether the termination is in fact discharge simplidler or it amouots to dismissal which has put on the
cloak of a discharge sirnpliciter. If the Industrial
Court
is satisfied that the ordlr of discharge is
puniti\'e, that it is malafule, or that it amounts ll
victimisation or unfair labo,ir practice, it is compe·
tent to !he Imlu,trial Court lo set aside the order and
in a proper case, direct the reinstatement of the
employee.
In some cases,
the tcrmiuation of the
employee's services may appear to the Industrial
Court to be capricious or so unreasonably severe that
an inference may legitimately and reasonably be
drawn that in terminating the services, the employer
was not acting bo1~•fidF. The test alwavs has to be
whether the :!ct of the employer is '""'".fide or not.
If the act is m(1[,..Jidr, or appears to be a colonrable
2 S.C.R
SUPREME COURT REPORTS
131
1963
exercise of the powers conferred on the employer
either by the terms of contract or by the standing
orders, then notwithstanding the form of the order,
industrial adjudication would examine the substance
and would direct reinstatement in a fit case.
This
position was recognised by the Labour Appellate
Tribunal as early as 1951
in
Buckingham and
Curnatic Co Ltd., v. Workers of the Company, ('),
and since t1fon, it has been consistently followed
vide Chartered Bank, Bombay, v. Chartered Bank
Employees' Union (2 ). and U. B. Dutt & Co. (Private)
Ltd. v. Its Workmen (3).
Thi Tata Oil Milli
C• .. Ltd,
••
w~rkmm
--
!aje11irU'Jikcr J.
In the present case, the Labour Court has made
a definite finding in favour of the appellant that its
action in terminating the services of Mr. Banerjee
was not malafide and did not amount to victimisation.
Even so, it proceeded to examine the propriety
of the said action and came to the conclusion that
Mr. Banerjee's discharge from employment did not
appear to it to be justified.
In coming to this
conclusion, the Labour Court has given some reasons
which are clearly unsupportable. It has observed,
for instance, that the appellant has not produced -
any documentary evidence in support of its allegation
against the efficiency of Mr.
Banerjee.
This is
clearly wrong because the two reports made by Mr.
Gupta in
respect of Mr. Banerjee's conduct do
amount to documentary evidence which cannot be
lightly brushed aside. It has then commented on the
fact that the allegations made by Mr. Gupta against
Mr. Banerjee on six counts are of a general character.
This comment again cannot be justified because
Mr. Gupta stated in clear terms the defects in Mr.
Banerjee's work which had come to his notice.
These
defects are specific and it is idle to refuse to give ·
importance to this evidence merely on the ground
that no ~pecific instances had been cited. In regard
to the question as to whether the 20 boxes had been
opened by Mr. Banerjee before he made his report
(I) (1951) II L.L.J. 314.
(21 (1960) II L,L.J. 221,
(3J (1962) I L.L.J. 37t.
/
19•3
1 Jr, Tata Oil Mills
Co., Ltd
••
..
1-\."arkmtn
~,.,. ....... ,...._ ... _
 ...,._ ... ,_,, ft·
·~·I ..
132
SUI'l~EME COURT REPORTS [l!l64] VOL.
to the Zonal Office, the Labour Court has observed
that on this point, there is the evidence of Mr.
Banerjee against that of .Mr. Gupta anq there w<"
no particular reason to believe one in preference
to the other. ;-\ow, it is clear that such an observa.
tion is hardly of any help because it was necessary
for the Labour Court to express its conclusion on
this point; it might have believed either Mr.
Banerjee or J\lr. Gupta, but by saying·~hat there is
no reason why one should be believed rather than
the other, the Labour Court left this part of the
dispute entirely undecided.
Similarly, the Labour
Court has accepted the fact that i\'ir. Gupta tha
called for and received '.\lr. Bancrjee's explanat.on
and to that extent it has rt'jccted .:\Ir. Banc r/ee'
suggestion that he had not given any explana tion a
all ; but even so, the Labour Court has not considered
the effect of this conclusion on the main controversy
between the parues.
In our opinion,
therefore,
the masons given by the Labour Court in support of
its conclusion that the discharge of i\lr. Banerjee
was not justified are wholly unsatisfactory and so,
it has become necessary for us to examine the evidence ourselves.
The first report made by l\.fr. Gupta expressly
states six grounds on which Mr. Banerjee's work was
found to be unsatisfactory.
Mr. Gupta took the view
. that '.I.Ir. Banerjee was very slow in his work as a
Salesman, that he was not able to judge the capacity
of the dealers and to give them suflicicnt stocks in
time, that he took no steps to put the products of the
appellant on prominent view in the dealers' shops,
that he was not looking after the pasting of the posters,
in fact in one place the poster was pasted upside
down, that he was not educating the stockists and
dealers as he could have done and that he was reluctant to put hardand intelligent work.
It is remarkable that when Mr. Banerjee was asked a bout this
report in cross·exami1mtion, he frankly stated that
..
..
•
2 S.C.R.
SUPREME COURT REPORTS ' 133
Mr. Gupta was not unfriendly towards him and he
was really unable to say why Mr. Gupta should have
made these adverse comments . against his work. In
fact, the Labour Court itself has found that the
appellant was not actuated by any ulterior considerations in discharging Mr. Banerjee.
This report was
made by
Mr. Gupta soon
after he
inspected
Mr. Banerjee's work and there is no reason, whatever,
why the Labour Court should have been reluctant
to accept this report.
Confining ourselves to the main complaint
against Mr. Banerjee that he had not examined even
a single box before he reported that the contents of
the said boxes were not marketable, Mr. Gupta
expressly stated that he had seen the 20 boxes and
found that none of them had been opened at al I.
They were intact in the company's packing with the
straps on them.
Mr. Gupta got them opened and
found that the contents to the extent of 5 cases were
really damaged and that the remaining contents were
alright and could be marketted at the company's
prices.
Mr. Banerjee stated in his 'evidence that he
had all the cases opened and he added, as he had to,
that the said cases were repacked for avoiding further
deterioration. When he was asked how that could
be done, he agreed that the metal straps had to be
removed for opening of the boxes, but he added that
he had arranged to ha,·e them res trapped and nailed.
It is clear that the strapping is done in a factory by
machines.
Mr. Banerjee, however, suggested that
he could manage to get the straps put and nailed
with hands.
This evidence is patently
unr~liable.
Besides, it is significant that when he gave his explanation to Mr. Gupta, Mr. Banerjee admitted that he
had opened only 5 or 6 out of the 20 boxes in question
though his report suggested that he had opened all
the 20 boxes.
Therefore, there can be no doubt that
Mr. Gupta's statement is absolutely true and that
Mr. Banerjee had made his repent about the
/J6!J
The ra1a Oil MU.ls
Co., Lt•.
v.
Workmen
J9fJ
'n1 T.ro Oil Mi/11
Ce.JI.Ari.
.
••
Wo1km1n
............ --.,, ...
134
SUPREME COURT REPOR•TS[l964]VOL.
'
unsatisfactory condition of the contents of the '.LU
boxes without as much as opening any one of them.
1 hat being so, it is difficult to understaud how the
Labour Court could have come to the conclusion
that the order of discharge was not justified.
'
The
learned
Solicitor General,
however,
attempted to argue that there was nothiug on the
record to show that the 20 boxes which :\.Jr. Gupta
got opened were the same boxes in respect of which
Mr. Banerjee had made his report.
We do not think
that having regard to the
evidence
giYen by
Mr. Gupta and Mr. Banerjee and the explanation
offered bv the latter when he was called to Calcutta
by Mr. c;upta, there is any room for such an ingeni·
ous suggestion.
Both parties knew that the) v.crc
talking about the same 20 boxes and so, it is futile
now to suggest that the 20 boxes which .Mr. Gupta
examined were different from the boxes in respect of
which ,\ir. Banerjee had rn;1de his report.
It was
also suggested on behalf of the rcspondrnts that
Mr. Gupta did not admit that he had received some
letters
from
Mr. Banerjee
iu
which
he
had
complained that owing to heavy rains, conditions
were not favourable for effective work in the area
entrusted to him. It is true that when i\.Jr. Gupta
was asked about these
letters, he said be did not
remember if he had received them.
\\"c do not think
that the answers given by Mr. Gupta in respect of
these letters can be of any assistance to the respon ·
dents in discrediting .:\fr. Gupta"s evidrnce in any
manner. On the whole, we have 110 hesi1atio11 in
holding that the appellant acted bo11ajide in discharging i\Ir.
Banerjce's
services
when it accepted
Mr. Gupta's report and concurred with his conclusions that the explanation given by Mr. Banerjee
was not satisfactory.
The result is, the a ppcal is allowed and the
order passed by the Labour Court directing the
,_,. .
I •
..
2 S.C.R.
SUPRE~fE C< r 1RT REPORTS
135
appellant to reinstate Mr. Banerjee is set aside. In
the circumstances of the case, there would be no order
a~ to costs.
Appeal allowed.
RANENDRA CHANDRA BANERJEI
v.
UNION OF INDIA
(P. B. GAJENDRAGADKAR, K. N. WANCHOO,
M. HrnAYATULLAH, K. C. DAS GuPTA and
j. C. SHAH jj.)
P11blic Servant-Probationer-Discharg• from servir;,, for
unsali•faclory work-If tntitled to 7irottrtion under the Con•titution and the Rule8-Ci·•il Sm·ices (Cla•sification, Control «nd
Appeal) Rul11, rr. 3 (a), 49, 55-B-Con8titution of India,
Art. 311 (2).
The appellant was appointed on probation for one year
as Programme Assistant on May 3, 1949, on condition that
his 1ervice1 might be terminated without any notice and cause
being assigned during that period.
He agreed and joined service on these terms on July 4, 1952, he was called upon to show
cause why his services should not be terminated and as the
explanation given was not satisfactory, his services were terminated after August 31, 1952.
On an application moved under
Art. 226 of the Constitution the High Court dismissed the
application and held that the appellant was not entitled to the
protection of Art, 311 (2) of the Constitution, that rr. 49 and
55-B of the Civil Services Rules did not apply and that he was
governed by the contract of hio service.
Held, that in the present case the appellant was a pro·
bationer and the termination of his service was not by way of
punishment and could not amount to dismissal or removal
within the meaning of Art. 311. As a prob•tioner he would
be liable to be discharged during that period subject to the
196~
Thi T•t• Oil Mill•
Co,, Lti.
v.
W1.1rkmen
Gajendrag5ikar J.
1963
Feiruary 11.