THE MANAGEMENT OF SRI RAMNARAYAN MILLS LTD. versus SECRETARY COIMBATORE DISTRICT TEXTILE WORKERS UNION (HMS) AND ORS on 2 November 2018

SUPREME COURT REPORTS

[2018] 13 S.C.R.

ATHE MANAGEMENT OF SRI RAMNARAYAN MILLS LTD.

v.

SECRETARY COIMBATORE DISTRICT TEXTILE WORKERSUNION (HMS) AND ORS.

B(Civil Appeal No. 1977 of 2010)

NOVEMBER 02, 2018

[ABHAY MANOHAR SAPRE AND INDU MALHOTRA, JJ.]

Labour Law: Certified Standing Orders – Application filedby the appellant (employer) to the Joint Commissioner of LabourC(certifying officer) seeking permission to add new ground i.e. “breakin service” in Clause 16 of the Chapter of Punishment in CertifiedStanding Orders – Labour court and High Court dismissed theapplication – On appeal, held: A “break in service” cannot beallowed as a ground by way of punishment in Clause 16 of theDChapter of Punishment in Certified Standing Orders – Such a groundwill defeat the very object of the Payment of Gratuity Act which is abeneficial legislation enacted for the benefit of the employees –The proposed ground, if allowed, is likely to be misused by theemployers against its employees for their own benefit and detrimentalto the employees’ interest – No interference with the order of HighECourt called for – Payment of Gratuity Act.

Dismissing the appeal, the Court

HELD: The existing grounds enumerated in Clause 16 byway of punishment are sufficient to take care of any misconductFcommitted by any employee and there is no reason to introduceone more new ground in the existing grounds specified in Clause16 for imposing a new punishment. Secondly, the proposedground, if allowed, would likely to be misused by the employeragainst its employees for their own benefit and detrimental tothe employees’ interest. Thirdly, it would enable the employerGto take action against its employees even in a situation where anemployee is found absent even for a day and such absence will betreated as “break in service” under the Certified Standing Ordersand also under the Payment of Gratuity Act. It will, therefore, bein conflict with the definition of the expression “continuousH

service” defined under the Payment of Gratuity Act which givesdifferent modes of calculation for determining the continuousservice for payment of gratuity amount. Fourthly, such groundwill, therefore, defeat the very object of the Payment of GratuityAct which is a beneficial legislation enacted for the benefit of theemployees and lastly, it is neither bona fide nor reasonable andnor required and hence it cannot be allowed. [Paras 13-16][1202-G-H; 1203-A-D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1977of 2010

From the Judgment and Order dated 13.08.2007 of the HighCourt of Judicature at Madras in W.A. No. 2675 of 2002.

Ashish Kumar Upadhyay, Manohar Gupta, Gopal Singh Chauhan,P. V. Yogeswaran, Advs. for the Appellant.

T. R. B. Sivakumar, Adv. for the Respondents.

The Judgment of the Court was delivered by ABHAY MANOHAR SAPRE, J. 1. This appeal is filed againstthe final judgment and order dated 13.08.2007 passed by the High Courtof Judicature at Madras in W.A. No. 2675 of 2002 whereby the DivisionBench of the High Court dismissed the Writ Appeal and affirmed theorder of the Labour Court and Single Judge.

2. Facts of the case lie in a narrow compass. They, however,need mention in brief infra to appreciate the short controversy.

3. The appellant is a limited company having its mill in Coimbatore.The appellant being an employer applied to the Joint Commissioner ofLabour (Respondent No.3) praying in their application that they be allowedto add one more new ground namely “break in service” in Clause 16 ofthe Chapter of Punishment in Certified Standing Orders in addition tothe existing grounds specified therein.

4. In other words, the appellant’s prayer was that if any employeecommits “break in service” in any year, then it should be regarded asone of the ground for punishment enabling the employer (appellant) totake action against such employee under their certified standing order.They, therefore, prayed that they may be allowed to add this new groundin Clause 16 of the Chapter of Punishment in Certified Standing Orders.

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5. On 02.04.1992 the third respondent (Joint Commissioner ofLabour) allowed the said application of appellant and permitted them toamend their certified standing orders by adding “brake in service” asone new ground in Clause 16 of the Chapter of Punishment in CertifiedStanding Orders.

B6. The Workers’ Union (Respondent No.1) felt aggrieved by theorder dated 02.04.1992 filed appeal in the Labour Court. By order dated06.02.1995, the Labour Court allowing the appeal and setting aside theorder dated 02.04.1992 held that if the proposed amendment is allowed,it would cause immense prejudice to the rights of the workmen andfurther the employer would likely to misuse this new ground of punishmentCmostly for their benefit. It was also held that apart from these tworeasons, it would also defeat the object of the Payment of Gratuity Actwhile calculating the employee’s continuous service as defined underthe Payment of Gratuity Act which provides for different modes ofcalculation.

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7. The appellant felt aggrieved of the order of the Labour Courtand filed the writ petition in the High Court at Madras questioning thereinthe legality and correctness of the order of the Labour Court. By orderdated 19.07.2002, the learned Single Judge dismissed the appellant’swrit petition which gave rise to filing of the intra court appeal by theEappellant (employer) before the Division Bench of the High Court.

8. By impugned order, the Division Bench dismissed the appealand affirmed the order of the Labour Court and Single Judge. It is againstthis order; the appellant (employer) has felt aggrieved and filed the presentspecial leave to appeal in this Court.

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9. So the short question which arises for consideration in this appealis whether the Courts below (Labour Court, Single Judge and the DivisionBench) were justified in rejecting the application filed by the appellant(employer) to the Joint Commissioner of Labour (certifying officer)seeking therein a permission to add one more new ground i.e. “break inGservice” in Clause 16 of the Chapter of Punishment in Certified StandingOrders.

10. Having heard the learned counsel for the parties and on perusalof the record of the case and the written submissions, we find no meritin this appeal.

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11. The Division Bench dealt with this issue in Para 6 of theimpugned order which reads as under:

“We have considered the above submission of the learnedcounsel for the appellant. In fact, what is sought for is toinclude ‘break in service’ as one of the punishment underClause 16 of the Standing Orders. To say in other words, ifthe workman does not come for duty, for any reason, breakin service will be effected for such period of absent. Bypermitting the appellant to modify the Standing Order soas to include the break in service as one of the punishment,in fact, will enable the appellant to exercise the power toimpose the punishment in an arbitrary manner i.e., if anemployee is punished for the absence in accordance withthe existing Standing Order, continuity of service of theemployee is not disrupted whereas, if the appellant ispermitted to modify the Standing Order so as to includethe break in service as also one of the punishment, even ahalf day absent from duty in a year of 12 months, will givean opportunity to the appellant to take disciplinary actionagainst an employee concerned at the end of the year andto impose a punishment of break in service, which will havea consequence of depriving the employee’s right to getgratuity for that particular year. When so many otherpunishments have been enumerated under Clause 16 ofthe said Standing Order, there is no need to include thepunishment of break in service as one of the punishments.In fact, permitting the appellant to include ‘break in service’as one of the punishment, defects the object of the Paymentof Gratuity, that is to say, as per Gratuity Act, on completionof every continuous service of 5 years, an employee iseligible to get the gratuity. As referred above, if for aparticular period of absents, to say for a day also, thisproposed modification enables an employer to impose apunishment of break in service. Consequently, for thatparticular year, an employee will not get gratuity inspite ofthe fact that he had worked for 12 calendar months. Now,only 240 days shall be taken into account and not 240 daysattendance shall be taken into account. As such, if the

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Amodification is allowed, the future right of the employee toget a gratuity for a particular year will get affected. Apartfrom this, if an employee, for certain reasons beyond hiscontrol, was forced to be absent even for a day, he can beimposed with the punishment of break in service which willhave consequence on his gratuity. That apart, if an employeeBhas to be punished for the absent as referred above. Thepunishment of either censure, reduction in rank or paymentcut etc. may be imposed and continuity of service of thatemployee is not disrupted. If the appellant is permitted toinclude break in service also as one of the punishment,Ceven for one day or half a day absent from duty in a year of12 months, will give power to the appellant to impose thepunishment of break in continuity of service in order todeprive the employee’s right to get the gratuity for thatparticular year. In fact, this proposed amendment is againstthe welfare of the employee and as rightly held by theDlearned Single Judge, besides, this can be exercised in anarbitrary manner, consequently, the employees will bepenalized. That apart, as rightly held by the learned SingleJudge, on the appreciation of the entire materials, theLabour Court has arrived at a factual conclusion that theEamendment sought for, namely, inclusion of break in servicein Clause 16 is unreasonable and it would be possible forthe Management to act arbitrarily. That apart, by includingthe break in service as one of the punishment, in fact, whatthe appellant intends to do is only to get an opportunity toimpose punishment which will have an impact in the gratuityFof the employee of the concerned year.”

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12. The Division Bench, in our considered opinion, rightly concludedthat a “break in service” cannot be allowed as a ground by way ofpunishment in Clause 16 of the Chapter of Punishment in CertifiedStanding Orders for the following reasons:G

13. Firstly, the existing grounds enumerated in Clause 16 by wayof punishment are sufficient to take care of any misconduct committedby any employee and there appears no reason to introduce one morenew ground in the existing grounds specified in Clause 16 for imposing anew punishment.H

14. Secondly, the proposed ground, if allowed, would likely to bemisused by the employer against its employees for their own benefit anddetrimental to the employees’ interest.

15. Thirdly, it would enable the employer to take action against itsemployees even in a situation where an employee is found absent evenfor a day and such absence will be treated as “break in service” underthe Certified Standing Orders and also under the Payment of GratuityAct. It will, therefore, be in conflict with the definition of the expression“continuous service” defined under the Payment of Gratuity Act whichgives different modes of calculation for determining the continuousservice for payment of gratuity amount.

16. Fourthly, such ground will, therefore, defeat the very object ofthe Payment of Gratuity Act which is a beneficial legislation enacted forthe benefit of the employees and lastly, it is neither bona fide norreasonable and nor required and hence it cannot be allowed.

17. In our opinion, we find no good ground to differ with thereasoning assigned by the Division Bench mentioned above for rejectingthe application made by the appellant (employer) for adding, “break inservice” as a new ground for punishment in the Certified Standing Orders.The reasons given by the Division Bench, in our view, deserve to beupheld.

18. In the light of the foregoing discussion, we find no merit in thisappeal. The appeal thus fails and is accordingly dismissed.

Devika Gujral

Appeal dismissed.

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