1969 (2) TMI 197 - HC - Indian Laws

Summary

Issues Involved:
1. Conflict between service agreement and standing orders.
2. Validity of termination notice under Clause 7 of the service agreement.
3. Adherence to Standing Order 20 requirements.
4. Jurisdiction and findings of the labour court.
5. Employer's right to terminate and industrial adjudication.

Detailed Analysis:

1. Conflict between service agreement and standing orders:
The primary issue addressed was whether the terms of a service agreement or the standing orders of a company prevail in case of a conflict. The Full Bench answered that "the terms of a standing order would prevail over the terms of a contract which conflict with the standing order." This established that any conflict regarding the termination of service would be governed by the standing orders.

2. Validity of termination notice under Clause 7 of the service agreement:
The company terminated the appellant's service under Clause 7 of the service agreement, which allowed termination by giving one month's notice or salary in lieu thereof. However, the reason for termination was the company's loss of confidence in the appellant due to an incident involving the misappropriation of bonus money. Despite the notice lacking a stated reason, the company's writ petition clarified the termination was due to lost confidence. The court emphasized that the form of notice is not conclusive; the actual reason must be considered.

3. Adherence to Standing Order 20 requirements:
Standing Order 20 required that an employee be given a chargesheet and an opportunity to explain before being discharged for loss of confidence. The company did not comply with this requirement. The court found that Clause 7 of the service agreement, in its general terms, conflicted with Standing Order 20. Therefore, Standing Order 20 prevailed, making the termination without adherence to its requirements illegal.

4. Jurisdiction and findings of the labour court:
The labour court held that the termination was unjustified and ordered reinstatement with full wages. It found that the termination was based on suspicion without giving the appellant a chance to clear his name. The court supported the labour court's jurisdiction to direct reinstatement, referencing the Supreme Court's view that industrial tribunals can scrutinize terminations for fairness and propriety, even if the employer claims a contractual right to terminate.

5. Employer's right to terminate and industrial adjudication:
The court cited the Supreme Court's stance that an employer's right to terminate under a contract is subject to industrial adjudication. Terminations must be bona fide and not arbitrary or capricious. The labour court found the termination unjustified, and the High Court agreed, noting that even if Clause 7 was unaffected by the standing orders, the labour court could still examine the fairness of the termination.

Conclusion:
The High Court allowed the appeal, set aside the judgment of the learned single Judge, and dismissed the writ petition. The appellant was awarded costs in the proceedings before the learned single Judge and in the special appeal.