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1963 DIGILAW 411 (MAD)

Anglo-AMERICAN Direct Tea Trading Company, Limited v. Its Workmen (Estates Staff Union of South India) and Others

1963-11-11

SRINIVASAN

body1963
Judgment :- This is a petition under Art. 226 praying for the issue of a writ of certiorari to quash the award made by an arbitrator appointed under S. 10A of the Industrial Disputes Act in the following circumstances. The petitioner is a plantation company owing an estate in Coimbatore district. A dispute arose between the management and the staff in respect of the termination of the services of one Dr. K. B. Mathai employed in the above estate in 1957. Dr. K. B. Mathai, respondent 2, was in charge of a hospital serving the needs of the workmen and the staff of the company. The hospital was however under the administrative control of the estate manager. A chief medical officer had also been appointed by the company to control the activities of the several doctors employed by the company. The management framed certain charges against respondent 2. They were that he disobeyed the orders in not visiting the workmen's lines, that he wrongly recommended sick allowance to the workers, that he made impertinent remarks in respect of the management of the estate and such other acts of misconduct. One misconduct of a far more serious nature he was charged with was that he granted a false medical certificate in respect of the wife of a member of the staff who was a teacher in the estate school. Respondent 2 was served with a chargesheet and his explanation was called for. An enquiry was conducted on 17 July, 1959. He produced no written explanation. Far from participating in the enquiry, he, assisted by two union officers, took advantage of every opportunity of preventing the proper conduct of the enquiry. It is so stated in the counter-affidavit. Finally, the chief medical officer who was conducting the enquiry found him guilty of the charges. He also found that the staff had lost confidence in the doctor. As a result, the services of respondent 2 were terminated with one month's noticeThis led to a dispute raised by the Estate Staff Union. Finally, it was agreed between the parties that the matter should be referred to the arbitration of one Dr. Sivanandam, respondent 3 herein. the arbitrator made his award on 27 September, 1961, holding that the dismissal of Dr. Mathai was not justified and directing his reinstatement The management, which is the petitioner, attacks the conclusions of the arbitrator. Finally, it was agreed between the parties that the matter should be referred to the arbitration of one Dr. Sivanandam, respondent 3 herein. the arbitrator made his award on 27 September, 1961, holding that the dismissal of Dr. Mathai was not justified and directing his reinstatement The management, which is the petitioner, attacks the conclusions of the arbitrator. It contends that the award is perverse and arbitrary and discloses a strong bias against the company. The affidavit accompanying the petition sets out the evidence and other details relating to some of the more serious charges. The reasoning adopted by the arbitrator in dealing with such evidence is referred to in the affidavit. It is alleged that the arbitrator went completely outside the purview of his reference in condemning the entire medical set-up of the company. It is stated that he also went out of his way to justified the actions of respondent 2. It is pointed out that the Life Insurance Corporation removed respondent 2 from its panel of doctors to who the examination of insured persons was entrusted, following upon the admitted position that the respondent did in fact issue an untrue certificate, and the arbitrator found it possible to criticize adversely even this act of the Life Insurance Corporation. It is complained that the approach of the arbitrator in viewing a very serious misdemeanour on the part of respondent 2 in a light-heared manner clearly shows the bias and the prejudiced approach to the subject of enquiry. The facts of the other two serious charges against respondent 2, viz., that he granted a false certificate recommending an employee for leave, and further that he recommended sickness allowance to persons who were not entitled to it, have been set out and it is contended that though the arbitrator has found those charges established as a matter of fact, he has glossed over them for wholly unjustifiable reasons. The view taken by the arbitrator that an officer employed by the management, viz., the chief medical officer, should not be the enquiring officer is questioned; and it is also contended that the arbitrator had no evidence before him to show that there is a sort ill-feeling between the management, on the one hand, and the union on the other. The view taken by the arbitrator that an officer employed by the management, viz., the chief medical officer, should not be the enquiring officer is questioned; and it is also contended that the arbitrator had no evidence before him to show that there is a sort ill-feeling between the management, on the one hand, and the union on the other. It is urged that the only question that the arbitrator was called upon to decide was whether the management was justified in terminating the services of respondent 2 and that he should have found that there was evidence upon which the management felt justified in taking that course. There is no finding by the arbitrator that there was victimization or that the finding of the enquiring officer were perverse, and that being so, it is claimed, that the direction of the arbitrator reinstating respondent 2 is contrary to lawA counter-affidavit has been filed on behalf of respondent 2. The course of the domestic enquiry and the proceedings before the arbitrator have been set out. It is stated that by consent evidence was also recorded before the arbitrator. It is pointed out that during the domestic enquiry the material witnesses had not been examined, that is, witnesses upon whose testimony the graver of the charges depended. It is claimed that the petitioner-company did in fact invite the arbitrator to go into the question with regard to the facts, and even apart from that, an arbitrator appointed under S. 10A of the Industrial Disputes Act, it is stated, is not bound by the limitations of a labour court or an industrial tribunal. It is further claimed that it was specifically agreed between the parties that the decision of the arbitrator shall be binding on both of them. Since the arbitrator derives his authority from such consent and is not a statutory arbitrator to whom the parties stand referred, it is contended that no writ proceeding can lie against the decision of such an arbitrator The counter-affidavit also traverses the more important of the charges, particularly, the alleged granting of a false certificate to Mrs. Nesamoni, who desired to insure her life, the recommendation for leave granted to one Sesha Ayyar and the recommendation for the grant of sickness allowance to some other workers. Nesamoni, who desired to insure her life, the recommendation for leave granted to one Sesha Ayyar and the recommendation for the grant of sickness allowance to some other workers. It is pointed out that the failure to examine these important witnesses during the domestic enquiry, coupled with the fact that the chief medical officer who conducted the enquiry was shown to have been biased against respondent 2, were matters which the arbitrator was entitled to take notice of, and that this Court cannot be invited to deal with the evidence considered by him as if this were a Court of appeal. The contention accordingly is that the arbitrator's findings cannot be challenged in this proceedingThe arbitration in the present case was under S. 10A of the Industrial Disputes Act. This section enables the parties to an industrial dispute "at any time before the dispute has been referred under S. 10 to a labour court or tribunal or national tribunal, by a written agreement, refer the dispute to arbitration, and the reference shall be to such person or persons . . . as an arbitrator or arbitrators as may be specified in the arbitration agreement." * This arbitration agreement is required to be in such from as may be prescribed. A copy of the agreement has to be forwarded to the appropriate Government and shall be published by it in the official gazette. Sub-section (5) of this section states that nothing in the Arbitration Act, 1940, shall apply to arbitration under this section. The form of agreement has been prescribed under the Madras Industrial Disputes Rules, 1958. The parties subscribed to the agreement in these words "We further agree that the majority decision of the arbitrators shall be binding on us." * The short contention advances by Mr. Nambiar on behalf of respondent 2 is that in so far as arbitration of this kind is concerned, it is not open to the parties to attack the findings of the arbitrator in any manner, particularly in view of the specific undertaking that the decision of the arbitrator shall be binding on the parties. My attention has also been drawn by Mr. My attention has also been drawn by Mr. Nambiar to a decision of the Kerala High Court in A. T. K. M. Employees' Association v. Musaliar Industries wherein it has been held that an arbitrator so appointed under S. 10A is not a statutory arbitrator, that his authority does not depend on any statutory jurisdiction but that he is a private tribunal set up by agreement. The decision in that case is that no certiorari or prohibition can be issued to himThat decision would spear to dispose of the present contentions. Nevertheless, I may examine the other arguments advanced on either side Mr. G. B. Pai, learned counsel for the petitioner-management, contends that there had been a proper enquiry by the management and that the management on the material before it had the right to take the view that it took with regard to the acts of negligence, disobedience and impropriety on the part of respondent 2, and that, accordingly, its order discharging him from its service stands fully justified. It is argued that the arbitrator cannot function as Court of appeal and that his powers are no higher than those of a statutory tribunal. Reliance has been placed in this regard upon a decision of the Supreme Court in Seth Thavadas Perumal v. Union of India 1955 (11) SCR 48]. It is true that this decision laid down that the legality of an award can be challenged on questions of law, provided the illegality is apparent on the face of the record. But it has to be pointed out that the decision related to an arbitration under the Arbitration Act 1940 and the scope of interference of a Court with the award of an arbitrator was examined. This decision seems to me to be singularly inapplicable to the present case, where even according to the statute, that is, the Industrial Disputes Act, the arbitration covered by S. 10A of that Act is made not subject to the Arbitration Act, 1940. It is, therefore, impossible to apply the principles that are relevant to proceedings under the Arbitration Act in questioning the arbitrator's findings in the present case In Indian Iron and Steel Company v. Their workmen the question arose whether a dismissal for misconduct of a workman after a departmental enquiry could be in interfered with by the industrial tribunal. It is, therefore, impossible to apply the principles that are relevant to proceedings under the Arbitration Act in questioning the arbitrator's findings in the present case In Indian Iron and Steel Company v. Their workmen the question arose whether a dismissal for misconduct of a workman after a departmental enquiry could be in interfered with by the industrial tribunal. It was observed "Undoubtedly, the management of a concern has power to direct its own internal administration and discipline. But the power is not unlimited, and when a dispute arises, industrial tribunals have been given the power to see whether the termination of the service of a workman is justified and to give appropriate relief. In cases of dismissal on misconduct, the tribunal does not however act as a Court of appeal and substitute its own judgment for that of the management." * The circumstances in which an industrial tribunal can interfere with the decision of the management are set out in this decision. While it is true that when there is want of good faith or victimization and unfair labour practice or any basic error or violation of the principles of natural justice, or on the materials the finding by the management is shown to be completely baseless or perverse, the industrial tribunal can undoubtedly interfere, the position does not seem to be the same when the parties refer the matter to an arbitrator and agree to abide by his decision. Mr. Pai frankly concedes that had the arbitrator given his award in a single sentence either that the discharge was justified or was not justified, he could not attack such a decision of the arbitrator; but, according to him, since the arbitrator has examined the evidence and reached a conclusion on the merits of the case, he is entitled to point out that the findings are perverse. Even assuming that such an argument is open to him, an arbitrator appointed under S. 10A of the Act dose not appear to suffer from the limitations which an industrial tribunal is placed under. No authority has been shown to me to suggest that a private arbitrator cannot examine the actions of the management and even canvass the correctness of its findings on questions of fact. No authority has been shown to me to suggest that a private arbitrator cannot examine the actions of the management and even canvass the correctness of its findings on questions of fact. All the cases that have been referred to by the learned counsel for the petitioner are cases where a statutory industrial tribunal was seized of the matter, cases which to my mind hardly have any application hereIt has however been contended by Mr. Pai, learned counsel for the petitioner, that the arbitrator has exceeded his jurisdiction. It is somewhat difficult to appreciate this point, for, as far as I can gather from the arguments on both sides, the arbitrator was clearly invited to go into the matter in full detail. In fact, though the management contended that it had conducted an enquiry into the charges framed against Dr. Mathai, it did not, before the arbitrator, purport to depend upon the record of that enquiry or the findings reached therein. It appears to have been pointed out that some of the important witnesses, upon whose testimony alone any findings could be reached, had not been examined during the course of the domestic enquiry. The claim statement filed by the union alleged an unfairlabour practice adopted by the management towards Dr. Mathai, and alleged also that an extremely vague and fabricated chargesheet had been served upon him. According to the counter-statement filed by the management, four charges had been framed on 9 July, 1959. But, during the course of the enquiry before the arbitrator, the management filed an additional counter-statement containing several additional charges. It may be mentioned that before the domestic enquiry was actually commenced, certain further changes had been framed against Dr. Mathai. There seems to be no dispute that even before the commencement of the enquiry, the chief medical officer addressed a letter to Dr. Mathai complaining that he had not been satisfied with Dr. Mathai's general conduct and behaviour and that there was a general lack of co-operation on his part with the chief medical officer and the management. In this letter, he enumerated some further charges against Dr. Mathai complaining that he had not been satisfied with Dr. Mathai's general conduct and behaviour and that there was a general lack of co-operation on his part with the chief medical officer and the management. In this letter, he enumerated some further charges against Dr. Mathai and also stated "From personal knowledge and discussions I have had with the manager and the staff of the Pachamalai estate, I am satisfied that they have lost confidence in you as medical officer." * It was this very chief medical officer who conducted the domestic enquiry and it would not be far-fetched to state, as the arbitrator stated in his award, that even before the commencement of the enquiry, the enquiring officer appeared to have been prejudiced against Dr. Mathai and purported to rely upon personal knowledge and discussions, which he had with the management, and expressed himself as satisfied that they had lost confidence in Dr. Mathai as a medical officer. The arbitrator accordingly thought that the domestic enquiry was not a fair one in that it was entrusted to a person who was even prepared to pre-judge the issue and was relying upon extraneous materials in support of his conclusion which he purported to reach even before the commencement of the enquiry. He thought therefore that the enquiring officer was biased and showed an inclination to fall in with the wishes of the management and that an enquiry conducted by a person so inclined would certainly not be fair to Dr. Mathai It was again noticed by the arbitrator that in so far as one of charges against Dr. Mathai was concerned, in that he granted a false medical certificate to one Sesha Ayyar, this Sesha Ayyar was not even examined at the domestic enquiry. It was stated before me by Mr. Nambiar, for the respondent, that in connexion with another charge of granting an untrue medical certificate, in the case of one Mrs. Nesamoni, an employee of the estate who desired to insure her life, this lady was not examined during the domestic enquiry. It was stated before me by Mr. Nambiar, for the respondent, that in connexion with another charge of granting an untrue medical certificate, in the case of one Mrs. Nesamoni, an employee of the estate who desired to insure her life, this lady was not examined during the domestic enquiry. In the light of these features, the arbitrator reached the conclusion that the enquiry was not properly conducted, and even used a much stronger expression to the effect that the domestic enquiry appeared to be "farcical." It appears to have been, in these circumstances, that the management had all the witnesses examined before the arbitrator, and in fact, the arbitrator had, in a manner of speaking, to conduct the enquiry afresh, for, certain additional charges figured in the counter- statement filed by the management before the arbitrator. Mr. Pai's contention that the arbitrator should not have embarked upon an investigation of this kind loses much of its force in the light of these features. As I have indicated, an arbitrator under S. 10A of the Act does not stand on a par with an industrial tribunal or a labour court. No decision which would more particularly define the scope of the functions of an arbitrator under S. 10A vis-a-vis a labour court or an industrial tribunal dealing with a matter on a reference under S. 10 of the Act has been brought to my notice. But, in a decision of the Supreme Court in Ritz Theatre v. Its workers some principles relating to the recognized limitation on the jurisdiction of an industrial tribunal to interfere with the result of a domestic enquiry have been indicated. It is pointed out herein that it would be open to the employer to act on the report of an enquiry officer if the employer serves the relevant charge or charges on the employee and holds a proper and fair enquiry. If the enquiry has been properly held, the order of dismissal can only be challenged if it is shown that the conclusions reached at the departmental enquiry were perverse or the dismissal was vindictive or mala fide or amounts to an unfair labour practice. Their lordships emphatically stated that in an enquiry before a tribunal, it is not open to the tribunal to sit appeal over the findings recorded at the domestic enquiry. Their lordships emphatically stated that in an enquiry before a tribunal, it is not open to the tribunal to sit appeal over the findings recorded at the domestic enquiry. So long as a proper enquiry is held, it is open to the enquiring officer to deal with the matter on merits bona fide and come to his own conclusion. But the power of the tribunal to deal with the merits of the dispute world arise only if it was established that the departmental enquiry is not fair, that the employee had no proper or full opportunity to meet the charge of if the enquiry was affected by any irregularities vitiating it. If no enquiry has been held or the enquiry is affected by such features as indicated above, it is open to the tribunal to deal with the whole issue. This decision further states that in a case where there was no enquiry or a proper opportunity had not been given, the employer could adduce additional evidence and satisfy the tribunal that the dismissal of the employee is justified. Equally, the employee would be entitled to let in evidence in rebuttal, and, in such a case, the tribunal could deal with the dispute in the light of the entire evidence. A limitation upon this jurisdiction of the tribunal is indicated in this decision. Their lordships observe that it is not in all cases where the employer seeks to let in additional evidence that the tribunal becomes entitled to deal with the merits of the dispute. The first question which the tribunal has to consider is whether there had been a proper domestic enquiry or not. If it is satisfied that no proper enquiry had been held or the findings recorded at such an enquiry are perverse, then alone does the tribunal derive jurisdiction to deal with the merits of the dispute. Where additional evidence is let in without prejudice to the contention of the employer that there had been a properly conducted domestic enquiry, that would not confer a right upon the tribunal to enter into the merits of the dispute. Where additional evidence is let in without prejudice to the contention of the employer that there had been a properly conducted domestic enquiry, that would not confer a right upon the tribunal to enter into the merits of the dispute. In the light of these principles, when once it was found by the arbitrator that the domestic enquiry had not been properly held and was even mala fide in the sense that the conduct of the enquiry was entrusted to an officer who even before the enquiry started displayed a prejudicial view of the case against the employee, it would certainly be open to the arbitrator to enter into the merits of the case. The jurisdiction of an arbitrator under S. 10A is certainly different form that of an industrial tribunal under S. 10. In addition to what, we have the further fact that the management did in fact treat the matter as though the enquiry was being conducted for the first time before the arbitrator, the more so, for the reason that the witnesses relevant to more than one of the charges had not been examined at the domestic enquiry. Having regard to all of these circumstances, it is abundantly clear that both the parties understood the proceedings before the arbitrator to be one more in the light of a new enquiry on the basis of the charges which were indicated in the counter-statement filed by the management. There is thus no substance in the complaint of Mr. Pai, learned counsel for the management, that the arbitrator has exceeded his jurisdictionNor do I find it possible to agree with the argument that the arbitrator has purported to regard himself as an appellant forum. When, as I have pointed out, the matter was thrashed out in its entirety before the arbitrator, it was not a case where the findings of the domestic enquiry or the evidence upon which those findings were based were being subjected to scrutiny by the arbitrator. On the other hand, he entered into the merits of the case independent of the previous record, though he might have made certain observations about the nature of the domestic enquiry and commented upon the course it took, which, according to him, failed to observe the principles of natural justice. That dose not mean that he regarded himself as entertaining an appeal against the decision of the management. That dose not mean that he regarded himself as entertaining an appeal against the decision of the management. This contention must therefore fail It has next been argued that the findings of the arbitrator are perverse. I have not been invited to go into the substance of the evidence with regard to each charge or to adjudicate upon the reasonableness of the conclusion reached by the arbitrator. Certainly that would not be within the proper jurisdiction of this Court. The argument in this regard is based upon the fact that the arbitrator did in fact find Dr. Mathai to be guilty of at least one of the charges. This complaint has special reference to the allegation that Dr. Mathai granted an untrue medical certificate to one Mrs. Nesamoni in connexion with her life insurance. It may also be stated that the Life Insurance Corporation thereafter stopped giving him any more examination work to Dr. Mathai being satisfied that the certificate granted by him was not in conformity with the facts. In Para. 85 of the arbitrator's award, it is stated thus "On 4 September, 1959 (Ex. M. 73) Mrs. Nesamoni was examined by Dr. (Mrs.) Anna Vareed at the request of the arbitrator. In her medical certificate, she stated that Mrs. Nesamoni Daniel had no abdominal scar and per vaginal examination the doctor has found that her pelvic organs are quite intact and healthy. This certificate from the expert doctor gives the true account of Mrs. Nesamoni Daniel's reproductive organs. Hence it is evident that Dr. Mathai has not examined Mrs. Nesamoni thoroughly. He never even thought of informing the Life Insurance Corporation that he did not do P.V. examination. He never even thought he was committing a grave blunder by giving an untrue medical certificate." * According to Mr. Pai, here is a clear finding that the doctor failed in his duty as an examining doctor for the Life Insurance Corporation and the argument is that this finding is sufficient to justify the discharge of Dr. Mathai. What the arbitrator found however was that the examination of Mrs. Nesamoni by Dr. Mathai was no doubt perfunctory. But in so far as that part of his work was concerned, it did not impinge upon any work which Dr. Mathai had to do in the course of his employment under the management. Mathai. What the arbitrator found however was that the examination of Mrs. Nesamoni by Dr. Mathai was no doubt perfunctory. But in so far as that part of his work was concerned, it did not impinge upon any work which Dr. Mathai had to do in the course of his employment under the management. He also indicated in various portions of the award the circumstances in which Dr. Mathai's examination of Mrs. Nesamoni was not through. His conclusion, however, was that whatever might be the position between Dr. Mathai and the Life Insurance Corporation, with regard to this matter, the management could not be heard to say that that would give a right to them to terminate the services of Dr. Mathai. The arbitrator also appears to have criticized the action of the Life Insurance Corporation in dispensing with the services of Dr. Mathai without giving him what the arbitrator thought was a reasonable opportunity of explaining his position. Whatever that, in so far as this charge was concerned, it had no repercussions on Dr. Mathai's duties in connexion with the management and is certainly not one which is opposed to the evidence on record. The arbitrator also seems to have taken note of the facts that there had been some ill-will between the husband of Mrs. Nesamoni, on the one hand, one Dr. Mathai, on the other, and that in these disputes the management appeared to have taken sides against Dr. Mathai. So much was inferred by the arbitrator from the evidence before him and he seems to have concluded form these features that the management pitched upon this incident as ammunition to its action against Dr. Mathai. The arbitrator, to my mind, was entitled to reach this conclusion on the materials placed before him. Mr. Pai for the management contended that where a medical practitioner is found to have been so exceedingly negligent of his duties, it would be proper to the management to dispense with his services. But reading the arbitrator's award as a whole, I am not satisfied that the arbitrator was willing to concede, that there had been any wilful negligence on the part of Dr. Mathai. The view of the arbitrator that this incident would not justify the action taken against Dr. But reading the arbitrator's award as a whole, I am not satisfied that the arbitrator was willing to concede, that there had been any wilful negligence on the part of Dr. Mathai. The view of the arbitrator that this incident would not justify the action taken against Dr. Mathai by the management is one which has been reasonably come to and with which this Court cannot interfereI have been taken through the entire evidence and the reasoning of the arbitrator, more as if, as Mr. Nambiar pointed out, this Court were sitting as an appellant Court over the decision of the arbitrator. It is unnecessary to point out that this Court cannot enter into an examination of the facts, in that light. Even assuming that a private arbitrator under S. 10A of the Act is one against whose decision, certiorari can issue, unless it is made apparent that the arbitrator reached a finding unsupported by any material or that the finding is so perverse that it cannot be supported, this Court cannot possibly interfere. It is pointed out by Mr. Nambiar that the arbitrator specifically held that the domestic tribunal did not conduct the enquiry properly and that in respect of the more important of the charges, even the witnesses necessary to establish those charges were not examined during the domestic enquiry. It was for this reason that the management itself tendered evidence before the arbitrator and in fact invited the arbitrator to hold an enquiry afresh. Having asked for an enquiry of this kind, is it open to the management now to complain that acting upon the evidence so recorded during that enquiry, the arbitrator is not competent to reach a conclusion ? It is not enough for the petitioner to urge that upon certain admitted and proved facts this Court could come to a different conclusion as to reasonableness of the order of discharge made by the management. It is not enough for the petitioner to urge that upon certain admitted and proved facts this Court could come to a different conclusion as to reasonableness of the order of discharge made by the management. What the arbitrator was apparently entrusted was to discover whether the responsibility which respondent 2 had as the doctor in charge of the plantation labour came into conflict with the managerial control and that if respondent 2 did display impatience and a species of impertinence, was that sufficient to justify the order of discharge, more particularly when it appeared to the arbitrator that as between the management, on the one hand, and respondent 2, on the other, there had been some friction which arose by reason of the management taking sides with some members of the staff. Though it is not stated in so many words, the arbitrator appears to have been inclined to take the view that respondent 2 had been unfairly treated, a view which it is not possible for this Court to discount altogether. It is difficult to see how in these circumstances it can be held that the arbitrator deliberately misread the evidence, or that his conclusion regarding the validity of the order of discharge was not properly and fairly arrived at; and more particularly, having regard to the fact that this being in the nature of a private arbitration, the arbitrator was not bound by the limitation arbitration, I am unable to agree with the learned counsel for the petitioner that the arbitrator's award is liable to be interfered withThe petition accordingly fails and is dismissed. There will be no order as to costs.