D.K. Yadav v. J.M.A. Industries Ltd

Introduction

On 7^th May 1993, the Supreme Court of India held that principles of natural justice apply to all the acts that have civil consequences. It held that the right to life enshrined under Article 21 includes the right to livelihood and therefore termination of the service of a worker without giving him reasonable opportunity of hearing in unjust, arbitrary, and illegal. The bench was presided by Justice K. Ramaswamy, Justice Kuldip Singh and Justice V. Ramaswami[1]. The judgement extended the application of the principles of natural justice beyond the realm of quasi-judicial and administrative action to hitherto neglected areas in the field of industrial disputes and labour operations[2].

Background

The appellant, a worker at the respondent company, was terminated from employment by the respondent company on the grounds that he had wilfully absented himself from duty for more than five days without leave or prior information of intimation or previous permission of the management. The company relied on clause 13(2) (iv) of the Certified Standing Order in support of its action. Clause 13(2)(iv) of the certified Standing Orders permits the employer to strike off from the muster rolls the name of a worker who has not returned within eight calendar days from the expiry of his leave originally granted or subsequently extended as the case may be. If he does not explain to the satisfaction of the management the reasons for his absence or his inability to return on the expiry of the leave, such a worker would be deemed to have automatically abandoned his service and lost his lien on his appointment. But the appellant contended that despite his reporting to duty every day he was not allowed to join duty without assigning any reason.

The labour court upheld the decision of the management Clause 13(2)(iv) of the Standing orders. It held that the workers had automatically abandoned his employment.

Issues Before the Court

There were three issues that arose for consideration in this case. The main issue was whether the said termination was violative of principles of natural justice. The other issues were whether the abandonment would amount to retrenchment under the Industrial Disputes Act, 1947[3] and whether the termination would be deemed legitimate without compliance with the prescribed mandatory pre-conditions under Section 25-F of the Act[4].

Related Provisions

Constitution of India, 1950: Articles  14 and 21-Right of private employer to terminate service under certified standing order, without holding any domestic enquiry–Whether violative of principles of natural justice and fundamental rights–Held: Since termination  of service results in deprivation of right to livelihood, it is to be effected in accordance with just, fair and  reasonable procedure.

Article 141-Precedents-Reconsideration of on new grounds- Whether & when permissible.

Industrial Disputes Act, 1947: Sections 25F, 25FF and 25FFF-Retrenchment under Certified Standing Orders-Whether attracts principles     of natural justice-Whether employer’s action to be fair, just, and reasonable.

Section 2(oo)–Retrenchment–Meaning and scope of.

 Industrial Employment (Standing Orders) Act, 1946: Section 5–Certified Standing          Orders-Absence from duty- Deemed termination of service without enquiry or opportunity of hearing–Validity of–Whether attract principles of natural justice and Articles 14 and 21 of the Constitution- Whether principles of natural justice to be read into clause 13 (2) (iv) of Certified Standing Orders.

Administrative Law: Rule of natural justice—Aim of–Whether principles of natural justice applicable to both quasi-judicial as well as administrative action.

Related Cases

In support of appellant:

Kesavananda Bharti v. State of Kerala[5] and State Bank of India v. Workmen of State Bank of India and Anr[6]– The principles of natural justice must be read into the Standing Order No. 13(2)(iv). Otherwise, it would become arbitrary, unjust and unfair violating Article 14.

Mohinder Singh Gill & Anr. v. The Chief Election Commissioner & Ors.[7];  State of Orissa v. Dr. Binapani Dei & Ors[8].; State of West Bengal v. Anwar Ali Sarkar[9], and Maneka Gandhi v. Union of India[10]– The principles of natural justice are part of Article 14 and the  procedure prescribed by law must be right, just, fair and reasonable and not arbitrary, fanciful or oppressive.

Delhi Transport Corpn. v. D. T.C.  Mazdoor Congress, and Ors.[11]– Before taking any action putting an end to the tenure of an employee/workman, fair play requires that a reasonable opportunity to            put forth his case is given and      domestic enquiry conducted complying with the principles of natural justice.

Punjab Land Development and Reclamation Corpn. Ltd., Chandigarh v. Presiding Officer, Labour Court, Chandigarh and Ors[12].; State Bank of India v. Sri N. Sundara Mani[13]; Delhi Cloth & General Mills Ltd. v. Shambhu Nath Mukherjee & Ors.[14];  Hindustan Steel Ltd. v. The Presiding Officer, Labour Court[15]; Robert D’ Souza v. Executive Engineer Southern Railway, and Anr[16]., and H.D. Singh v Reserve Bank of India & Ors[17]– The  definition of ‘retrenchment’ in Section  2(oo) of the Industrial Disputes Act, 1947 is a comprehensive one intended to cover any action of the management to put an end to the employment of an employee for any reason whatsoever.

In support of respondent:

Col. J.N. Sinha v. Union of India & Anr[18]– The principles of natural justice would apply unless the employer should justify the exclusion on given special and exceptional exigencies.

Certificate Standing Orders

The Industrial Employment (Standing Orders) Act, 1946 mandated employers in industrial establishments to formally define conditions of employment under them and submit draft standing orders to certifying Authority for its Certification[19]. It is applicable to every industrial establishment which employs a hundred or more employees (reduced to fifty by the Central Government in respect of the establishments for which it is the Appropriate Government). It aims at introducing certainty in the service conditions of workmen by placing a responsibility on the employer to stipulate the terms and conditions of employment in the form of Standing Orders[20].

Analysis of the Judgement

The court set aside the labour court’s judgement and ordered the respondent to reinstate the workman forthwith and pay him 50% of the back wages within a period of three months from the date of receipt of the Court order. It held that the termination of employment of the appellant is violative of principles of natural justice. clause 13 (2) (iv) of the Certificate Standing Orders provided that any employee shall be terminated from employment on completion of eight days of absence from duty without prior permission or approval.  The court reasoned that mere expiration of eight days does not result in loss of lien and automatic termination of employment [21]. The management neither conducted any domestic enquiry nor gave the appellant an opportunity to put forth his case. It held that the principles of natural justice must be read into the Standing Order No.  13 (2) (iv). Otherwise, it would become arbitrary, unjust, and unfair violating Article 14[22]. It further stated that the duty to give a reasonable opportunity to be heard will be implied from the nature of the function to be performed by the authority which has the power to take punitive or damaging action[23].

The principle reasoning employed by the court was that Certified Standing Orders have a statutory force which does not expressly exclude the application of the principles of natural justice. There can be no distinction between a quasi-judicial function and an administrative function for the purpose of principles of natural justice. It stated that a particular statute or statutory rules or orders having statutory flavour can be excluded from the application of the principles of natural justice expressly or by necessary implication[24]. The rules of natural justice would apply unless the employer should justify its exclusion on given special and exceptional exigencies.

The court stated that an administrative order with civil consequences must be made in consistency with the principles of natural justice[25]. It further held that the person concerned must be informed of the case, the evidence in support thereof supplied, and must be given a fair opportunity to meet the case before an adverse decision is taken.

It was further held that the procedure prescribed for depriving a person of livelihood must meet the challenge of Article 14 (equality before the law or equal protection of the laws[26]) of the Constitution and such law would be liable to be tested on the anvil of Article 14[27]. It was held that the exercising of rights given under the procedure must be in conformity with the principles of natural justice. The principles of natural justice were deemed to be a part of Article 14 of the Constitution. Therefore, the procedure prescribed by law must be right, just, fair and reasonable and not arbitrary, fanciful or oppressive[28].

The court then proceeded to test the validity of the termination under Article 21 (no citizen can be denied his life and liberty except by the due process of law[29]) of the Constitution. It stated that he Right to livelihood is included under the Right to life (Article 21). It was held that the non-justiciable Directive Principles of State Policy (DPSP) could not be used to compel affirmative action by the State to provide a livelihood, but any person deprived of livelihood except by fair procedure could challenge the same under the right to livelihood flowing from Article 21[30]. Therefore, deprivation of livelihood must be just, fair and reasonable. The order of termination of the service of an employee/workman visits with civil consequences of jeopardising not only his/her livelihood but also career and livelihood of dependents[31].

Concepts highlighted

The court held that the termination of employees shall not be deemed complete until and unless the employees are given a just and fair chance to be heard. This has resulted in the prevention of injustice against the workers, who are already deprived and suffer due to the tyranny of the management.

The appellant raised a contention that the definition of retrenchment in Section 2(oo) of the Industrial Disputes Act, 1947 is intended to cover any action of the employers to terminate the employment of an employee. The court did not rest its decision on the basis of this argument. However, it acknowledged that the argument had enough force. Therefore, the court has sub-silentio conceded that in the event that such a contention is raised before it in the future, it would be inclined favourably towards it and such an interpretation would go a long way in strengthening the case of the workers in their unequal struggle with the management[32].

[1] D K Yadav v J M A industries, 1993 SCR (3) 930

[2] Manisha More & Arun K. Thirunvengadam, D.K. Yadav v. J.M.A. Industries Ltd., (1993) 3 SCC 259, 6 Student Advoc. 139 (1994).

[3] International Labour Law Reports, E., INDIA IND. 3: Supreme Court of India DK Yadav v. JMA Industries Ltd. (Before Kuldip Singh, V. Ramaswamy, and K. Ramaswamy JJ.) In Civil Appeal No. 166 (NL) of 1983. International Labour Law Reports Online, 13(1), pp.249-257.

[4] Ibid.

[5] [1973] Suppl.  S.C.R. 1

[6] [1991] 1 S.C.C. 13

[7] [1978] 2 S.C.R. 272

[8] [1967] 2 S.C.R. 625

[9] [1952] S.C.R.  284           

[10] [1978] 2 S.C.R. 621

[11] [1991] Suppl. 1 S.C.C. 600

[12] [1990] 3 S.C.C. 632

[13] [1976] 3 S.C.R 160

[14] [1978] 1 S.C.R. 591

[15] [1977]  1 S.C.R. 586

[16] [1982] 1 S.C.C. 645

[17]  [1985] 4 S.C.C.201

[18] [1971] 1 S.C.R. 791

[19] Chief Labour Commissioner (Central) THE INDUSTRIAL EMPLOYMENT (Standing Orders) Act, 1946 | Chief Labour Commissioner, https://clc.gov.in/clc/acts-rules/industrial-employment-standing-orders-act-1946 (last visited Jul 21, 2020)

[20] Supra note 2.

[21] Robert D’Souza v. Executive Engineer, Southern Railway and Anr. [1982] 1 SCC 645

[22] Supra note 1.

[23] A.K. Kraipak v. Union of India, (1969) 2 SCC 262

[24] Supra note 1.

[25] State of Orissa vs Dr. (Miss) Binapani Dei & Ors, 1967 AIR 1269.

[26] Article 14, Constitution of India.

[27] Supra note 1.

[28]Supra note 1.

[29] Article 21, Constitution of India.

[30] Is Uttar Pradesh’s Suspension of the Industrial Disputes Act Constitutional? Centre for Law & Policy Research, https://clpr.org.in/blog/is-uttar-pradeshs-suspension-of-the-industrial-disputes-act-constitutional/ (last visited Jul 21, 2020)

[31] Supra note 1.

[32] Supra note 2.