Jamwant Singh v. State of U. P — 1986 DIGILAW 194 (ALL)

ORDER V.K. Mehrotra, J. - Labour Court, Allahabad gave an award on Sept. 26, 1977 in Adjudication Case No. 327 of 1974. The award was published on Oct. 11, 1977 and became enforceable after expiry of thirty days therefrom. It is this award which is under challenge in the present petition under Article 226 of the Constitution, filed by Jamwant Singh. In consquence of the award, the promotion of Jamwant Singh as Branch Manager was held to be illegal. The basic question which has been raised for determination in this Court is whether it was necessary to implead Jamwant Singh as a party to the proceedings or to give him an opportunity of hearing before an award adverse to him was made even though the District Co-operative Bank Ltd., Mirzapur by which Jamwant Singh had been given promotion, was a party to the proceedings and had contested the matter. First, the facts : 2. Jamwant Singh, who was born on Oct. 1, 1943, was appointed as a clerk in the District Co-operative Bank Ltd., Mirzapur on Sept. 1, 1965. He was confirmed on the post on Jan., 2, 1967. He was a Graduate and had a B.A. Degree in Arts. The Executive Committee of the Bank in its meeting dated Nov. 25, 1971 resolved that Jamwant Singh and one Phool Chand Gupta, who were both graduates be appointed as Branch Managers. Jamwant Singh was appointed as Branch Manager in Robertsganj Branch of the Bank with effect from January 1, 1972. 3. One Ramesh Chandra Srivastava, a non-graduate who had only passed the Intermediate examination of the U.P. Board of High School and Intermediate Education and was born on July 1, 1941, was appointed as clerk in the Bank on Aug. 10, 1964, and confirmed on that post on April 18, 1966. He was performing the duties of Branch Manager at the Robartsganj Branch continuously from July 28, 1970 to Feb. 3, 1972 till he was superseded by order dated Jan. 13, 1972 to make way for the appointment of the petitioner as Manager of that Branch. 4. Complaints in regard to the supersession of Ramesh Chandra Srivastava were made to the State Government, inter alia, by the U.P. Bank Employees Union. The State Government then made a reference under Section 4-K of the U.P. Industrial Disputes Act, through its notification of Aug. 4. Complaints in regard to the supersession of Ramesh Chandra Srivastava were made to the State Government, inter alia, by the U.P. Bank Employees Union. The State Government then made a reference under Section 4-K of the U.P. Industrial Disputes Act, through its notification of Aug. 23, 1974, of the following dispute for adjudication to Labour Court, Allahabad : "Kya sewayojkon dwara appne karmchari Sri Ramesh Chandra Srivastava putra Sri Awadh Behari Lal ko Branch Manager ke pad par jyesthata ke addhar par padonnati na kiya jana uchit tatha/athawa vaidhanik hai. Yadi nahin to sambandhit karmchari kya labh/kashatipurti pane ka adhikari hai tatha anya kis vivran sahit?" 5. Notice of this reference was given to the Bank and to the U.P. Bank Employees Union who filed their written statement and rejoinder statement before the Labour Court. The Labour Court recorded the evidence for the parties which consisted of the statements of Ramesh Chandra Srivastava himself on behalf of the workmen and of Bani Madho Lal Srivastava on behalf of the Bank. Some documents were also filed on behalf of these two parties. Jamwant Singh was neither impleaded nor called upon by the Labour Court to put forward his version or adduce any evidence before the Labour Court. 6. In the writ petition, the stand of petitioner Jamwant Singh, mainly, is that under the District Co-operative Bank Ltd. Mirzapur Service Rules, 1960, which were applicable in the matter of promotion to the post of Branch Manager, promotion could only be made from amongst persons between the age of 21 and 35 years who possessed a Degree in Arts, Science or Commerce. Ramesh Chandra Srivastava, who is the third respondent in the petition, did not fulfil the requirement of educational qualification and was, as such, rightly left out of consideration for the post of Branch Manager. Also, that the later service Rules effective from July 3, 1973 specifying that in the case of departmental promotion essential educational qualification for promotion to the post of Branch manager was to be the passing of Intermediate examination, were inapplicable to the instant case. Also, that the later service Rules effective from July 3, 1973 specifying that in the case of departmental promotion essential educational qualification for promotion to the post of Branch manager was to be the passing of Intermediate examination, were inapplicable to the instant case. The Labour Court was in error in taking aid of those Rules for its view that Ramesh Chandra Srivastava was eligible to be considered for promotion in the year 1971 when the Executive Committee of the Bank passed the resolution for the promotion of Jamwant Singh in preference to Ramesh Chandra Srivastava and in January 1972 when the order of promotion was given effect to. Also, that even on the basis of seniority Ramesh Chandra Srivastava was not entitled to promotion to him had been left out of consideration. Ramesh Chandra Srivastava could not preferred to them. 7. The workmen are also impleaded through their Union which has been made respondent 5 to the petition. Later, one Surendra Bahadur Singh, who was also a clerk in the Bank, was impleaded as respondent 6. He has filed a counter affidavit in the case. The Employees Union has appeared and filed a counter affidavit sworn by one P.N. Tewari, who was then the General Secretary of the U.P. Bank Employees Union. They, broadly, say that the educational qualification of being a Graduate for the post of Branch Manager, even under the 1960 Rules, was applicable only to direct recruitment to that post and not in the case of a departmental promotion; that the mere fact that petitioner Jamwant Singh was a Graduate, which consideration alone weighed with the Executive Committee of the Bank, was not enough to give him promotion in preference to several other senior members of the clerical staff without comparing their inter se merit and that Jamwant Singh had no separate entity, apart from the Bank itself, which has been a party to the proceedings before the Labour Court and has put forward the possible defence for justifying the promotion given to Jamwant Singh. It was not necessary for the Labour Court to give notice to Jamwant Singh and obtain his version or permit him to lead evidence in the proceedings. It was not necessary for the Labour Court to give notice to Jamwant Singh and obtain his version or permit him to lead evidence in the proceedings. It was well within the jurisdiction of the Labour Court to set aside the promotion of Jamwant Singh while considering the question referred to it and that the matter of correctness or otherwise of the promotion given to Jamwant Singh was incidental to the question which was before the Labour Court on the reference made to it. The question for determination : 8. Is it necessary, in a case like the present, where a grievance is made of supersession of an employee in the matter of promotion by the employer, to give opportunity of hearing to the employee whose promotion gets adversely affected by the award by calling upon him to place his version, and such material as he likes, before the Labour Court before a decision is taken that the promotion given to him was invalid. The rival contentions : 9. Sri Sankatha Rai, who has appeared for the petitioner, has canvassed that a decision prejudicial to a person whose promotion is in reality in question, without calling upon him to place his version and considering it, is violative of the principles of natural justice. The decision adversely affecting his promotion, as it were, behind his back should be held to be invalid. 10. Sri B. P. Singh, who has appeared for Surendra Bahadur Singh, the 6th respondent, and Sri Sinha, appearing for the third respondent Ramesh Chandra Srivastava, have on the contrary, urged that the dispute being one between the Bank and its employees, who were both duly heard, no violation of any principle of natural justice was involved in not separately calling upon Jamwant Singh to place his version as he was neither a party to the lis nor could be said to have been prejudiced as he was duly represented by the Bank. The legal position (a) Some cases : 11. In Bengal Chemical & Pharmaceutical Works Ltd. v. Their Employees, AIR 1959 SC 633 , Subba Rao, J. speaking for the Supreme Court, said that :- ".....The Industrial Disputes Act is intended to be a self-contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration. In Bengal Chemical & Pharmaceutical Works Ltd. v. Their Employees, AIR 1959 SC 633 , Subba Rao, J. speaking for the Supreme Court, said that :- ".....The Industrial Disputes Act is intended to be a self-contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration. Awards are given on circumstances peculiar to each dispute and the tribunals are, to a large extent, free from the restrictions of technical considerations imposed on Courts. ......Though Article 136 is couched in widest terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards are made in violation of the principles of natural justice, causing substantial and grave injustice to parties or the case raises an important principle of industrial law requiring elucidation and final decision by this Court or discloses such other exceptional or special circumstances which merit the consideration of this Court......" These observations were reiterated by the Supreme Court in Hindustan Tin Works Pvt. Ltd. v. Its Employees, AIR 1979 SC 75 : (1978 Lab IC 1667). 12. In the Manager, Hotel Imperial New Delhi v. Chief Commr., Delhi, AIR 1959 SC 1214 , it was said by the Supreme Court that in a reference made under S. 10(1) of the Industrial Disputes Act, 1947, the dispute which was referred for adjudication was ".......between the employer, namely, the management of the Hotel and its employees, which were mentioned as its workmen........That, however, did not preclude the workmen, if they wanted to be represented by any other union, to apply to the tribunal for such representation or even to apply for being made parties individually." It also said that : "....It is......unnecessary for the purposes of S. 10 where the dispute is of a general nature relating to the terms of employment or conditions of labour of a body of workmen, to mention the names of particular workmen who might have been responsible for the dispute. It is only where a dispute refers to the dismissal etc. It is only where a dispute refers to the dismissal etc. of particular workmen as represented by the union that it may be desirable to mention the names of the workmen concerned........." Dealing with the powers of the State Government under S. 10(5), B.N. Banerjee, J. of the Calcutta High Court said in Kesoram Cotton Mills Ltd. v. Second Labour Court, AIR 1963 Cal 348 that new party could not be added by the State Government to a reference already made by it although it was open to the State Govt. to make an additional reference to the same tribunal in respect of those workmen so that both the references could be considered together. Earlier, in 1961, D.N. Sinha, J. of the same Court held in Anil Kumar Upadhya v. P.K. Sarkar, (1961) 3 Fac LR 139: ( AIR 1961 Cal 60 ) that the Tribunal had implied powers under S. 18(3)(b) of the Act to summon parties, other than the parties to the order of reference, to appear in the proceedings as parties to the dispute. (b) The wider principle : 13. Jamwant Singh had been promoted with effect from Jan. 1, 1972. A reference, on account of this promotion was made through notification of Aug. 23, 1974. In between, he had functioned as a Branch Manager and continued doing so till the award published on Oct. 11, 1977 became enforceable after expiry of thirty days therefrom. Promotion had been made on the ground that he was a graduate. The understanding of the rule of promotion by the Executive Committee of the Bank, as reflected in its resolution 5 of Nov. 25, 1971 (Annexure `2' to the writ petition), was that apart from experience, the promotion to the post of Branch Manager could be made from amongst persons who had Bachelor's Degree from a recognised University. The promotion of Jamwant Singh through the resolution could clothe him with a `legitimate expectation' that the promotion given to him, as aforesaid, would entitle him to avail of the benefits of promotion. The promotion of Jamwant Singh through the resolution could clothe him with a `legitimate expectation' that the promotion given to him, as aforesaid, would entitle him to avail of the benefits of promotion. The fact that this promotion was set aside by the Labour Court, accepting the case presented before it on behalf of the workmen of the Bank that the necessity of being a graduate for appointment as a Branch Manager was enjoined by the rules only in the case of direct appointment and not in the case of promotion, was arrived at without affording opportunity to Jamwant Singh, the person directly affected by the order made by the Labour Court. The Bank, amongst other defences, pleaded before the Labour Court that Ramesh Chandra Srivastava had, at all material time, been working on a substantive post of clerk and was never promoted to the substantive post or rank of a Branch Manager and that he was junior employee of the Bank holding the post of a clerk so that he had no claim of promotion to the post of a Branch Manager even on the ground of seniority. Also, that he did not have the qualification for the post of Branch Manager as contained in the Service Rules as he was not a graduate and had passed only the Intermediate Examination. The workmen in their plea before the Labour Court said that Jamwant Singh was junior to Ramesh Chandra Srivastava as a clerk who has been superseded on extraneous consideration. Also, that rules referred to by the Bank related to those persons who are to be appointed directly. The fact that the employer, namely the Bank, had placed before the Labour Court the plea which could possibly have been placed by Jamwant Singh himself and that Jamwant Singh cannot be said to have been prejudiced in any manner is pressed into aid on behalf of the contesting respondents with some emphasis. If, however, on some principle it can be said that Jamwant Singh was entitled to be heard by the Labour Court, like principles of natural justice, absence of any prejudice having actually been caused to him may not be very material. If, however, on some principle it can be said that Jamwant Singh was entitled to be heard by the Labour Court, like principles of natural justice, absence of any prejudice having actually been caused to him may not be very material. To quote the words of the Supreme Court in S. L. Kapoor v. Jagmohan, AIR 1981 SC 136 , "the principles of natural justice know of no exclusionary rules dependent on whether it would have made any difference if natural justice had been observed. The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary .......... The same view was reiterated in Olga Tellis v. Bombay Municipal Corporation, (1985) 3 SCC. 545 : AIR 1986 SC 1801. 14. Speaking for a constitution Bench, Chandrachud, C.J. referring to the above observations in S.L. Kapoor's case, said (in paragraph 48) that : "These observations sum up the true legal position regarding the purport and implications of the right of hearing." Earlier, in para 47, he said that : "The proposition that notice need not be given of a proposed action because, there can possibly be no answer to it, is contrary to the well recognised understanding of the real import of the rule of hearing. That proposition overlooks that justice must not only be done but must manifestly be seen to be done and confuses one for the other. The appearance of injustice is the denial of justice. It is dialogue with the person likely to be affected the proposed action which meets the requirement that justice must also be seen to be done...... 15. That the consequence of the award upon Jamwant Singh is to deprive him of the benefits that accrued to him on account of the promotion given in the year 1971-72, is not in doubt. The promotion carried with it not only pecuniary advantage but also the advantage of higher status being a Branch Manager, in relation to the status of a clerk. The consequence of loss of the benefits of promotion was adverse to him individually. Jamwant Singh had personal interest in the outcome of the decision made by the Labour Court. As far as the Bank was concerned, the interest that it had in the matter could not be equated with the individual interest which Jamwant Singh had. The consequence of loss of the benefits of promotion was adverse to him individually. Jamwant Singh had personal interest in the outcome of the decision made by the Labour Court. As far as the Bank was concerned, the interest that it had in the matter could not be equated with the individual interest which Jamwant Singh had. The extent of interest of Jamwant Singh was undoubtedly much more than that of the Bank which could, at best, be said to have a general interest in the upholding of the action taken by it in the matter of promotion before the Labour Court. The consequence of the decision of the Labour Court, in so far as it related to the Bank, could be no more than of a general concern. The seriousness and the gravity of the consequence of the decision, as far as it concerns Jamwant Singh, was undoubtedly such which entitled him to an opportunity of hearing by the Labour Court. The decision of the Labour Court has, unmistakably, deprived him of the benefits of promotion and has postponed his chances of promotion to a future date, inasmuch as, the process of selection for promotion has to be undergone afresh in terms of the award. The decision of the Labour Court visited Jamwant Singh with consequences which are grave enough for him to ask, on ground of fairness, that he should have been heard before the decision of the Labour Court was rendered against him. 16. That the Industrial Disputes Act does not envisage a hearing for a person like Jamwant Singh in the adjudication proceedings, as his interest is supposed to be looked after by the employer whose action is under challenge in the adjudication proceedings and that the concept of industrial adjudication being resolution of collective disputes between the employer and the workmen exclude any opportunity of hearing to an affected person like Jamwant Singh, is urged by the counsel appearing for the contesting respondents. Are these considerations enough to hold that the principles of natural justice are excluded. It seems to me that they are not. Are these considerations enough to hold that the principles of natural justice are excluded. It seems to me that they are not. "The principle of audi alteram partem which mandates that no one shall be condemned unheard, is part of the rules of natural justice........Natural justice is a great humanising principle intended to invest law with fairness and to secure justice..........The inquiry must, therefore always be : does fairness in action demand that an opportunity to be heard should be given to the person affected?" (P.N. Bhagwati, J. in Maneka Gandhi v. Union of India, AIR 1978 SC 597 ). The Passport Act, 1967 did not provide for hearing to a person whose passport was being impounded. A seven Judges Bench of the Supreme Court ruled in the case of Smt. Maneka Gandhi that the rules of natural justice provided for such hearing. Likewise, in National Textile Workers' Union v. P. R. Ramakrishnan, AIR 1983 SC 75 , Bhagwati, J., speaking for the majority, said "that the workers of a company, who had no right of presenting a winding up petition under S. 439 of the Indian Companies Act, 1956, had a locus to appear and be heard in a winding up petition both before the petition is admitted and an order for advertisement is made as also after the admission and advertisement of the petition until an order is made for winding up of the company. If an order is made for the winding up of the company and the workers feel aggrieved by it, they would also be entitled to prefer an appeal and contend that no winding up order should have been made." This was on the principle of audi alteram partem which has clearly been applied on the basis that it would be inequitable and contrary to the notion of fair-play to "permit the Court to make a winding up order which had the effect of bringing about termination of the services of the workers without giving them an opportunity of being heard against making of such order." 17. Absence of a provision enabling a party to notice notwithstanding, the gravity of the consequence to the affected person, was the rationale which commended itself to the Supreme Court in ruling that hearing be afforded to the person affected in these cases. Absence of a provision enabling a party to notice notwithstanding, the gravity of the consequence to the affected person, was the rationale which commended itself to the Supreme Court in ruling that hearing be afforded to the person affected in these cases. The consequences of the decision of the Labour Court, in the matter of promotion, to Jamwant Singh, certainly required that he be heard before a decision adverse to him is recorded. The legitimate expectation of Jamwant Singh of being undisturbed in the matter of status and pecuniary benefits, resulting from the order of promotion, could not be disturbed without giving him an opportunity of having his say in the matter, on principles of fair-play. The consequence of the decision was personal to him, unlike the Bank - the employer which had interest in it in a general manner. This also necessitated an opportunity of hearing to Jamwant Singh by the Labour Court. Considerations of fairness required that he be heard, irrespective of the fact that the matter of his promotion was specifically not referred for adjudication the reference being only about the legality and justifiability of the action of the employer. 18. The submission that the Labour Court would have transgressed the limits of its jurisdiction, as embodied in the question referred to it for adjudication, in case it had called upon Jamwant Singh to place his version before it, is not tenable. After all, the decision by the Labour Court was likely to result in prejudice to Jamwant Singh. The adjudication to be made by the Labour Court was therefore, to be made in a manner consistent with procedural fairness. The Labour Court should not have pronounced upon the promotion given to Jamwant Singh without giving him a hearing. The rule of audi alteram partem required it to do so on its own. 19. The pleadings before the Labour Court specifically talked of promotion having improperly and unjustifiably been given to Jamwant Singh. The question before the Labour Court was about non-promotion of Ramesh Chandra Srivastava on the basis of seniority. It was, according to the pleadings of the parties, the result of a promotion given to Jamwant Singh. 19. The pleadings before the Labour Court specifically talked of promotion having improperly and unjustifiably been given to Jamwant Singh. The question before the Labour Court was about non-promotion of Ramesh Chandra Srivastava on the basis of seniority. It was, according to the pleadings of the parties, the result of a promotion given to Jamwant Singh. The written statement of the workmen (Annexure `6' to the writ petition) specifically referred to the workman concerned (Ramesh Chandra Srivastava) having been superseded by Jamwant Singh who had been wrongly promoted and posted as Branch Manager by the management in place of the workman concerned. The rejoinder statement of the workman, Annexure `8' to the writ petition, also specifically talks of the illegality and impropriety of the promotion given to Jamwant Singh and the supersession by him of the workman concerned (Ramesh Chandra Srivastava). 20. When, as in this case, it is,found that there was an obligation to hear Jamwant Singh before making a decision adverse to him, the mere fact that during the pendency of the proceedings Jamwant Singh did not himself approach the Labour Court for being impleaded as a party or being heard in the matter, is not material. The obligation to act with fairness is cast upon the Labour Court by the rules of natural justice. The circumstance that the person likely to be affected by the decision of the Labour Court did not himself come out with a request for being heard would not absolve the Labour Court of its obligation of acting with fairness and not condemning a person unheard. 21. To quote the words of Bhagwati, J. in the National Textile Workers Union, ( AIR 1983 SC 75 ) again, "now it an elementary principle of law, well settled as a result of several decisions of this Court...... that no order involving adverse civil consequences can be passed against any person without giving him an opportunity to be heard against the passing of such order and this rule applies irrespective (of) whether the proceeding in which it is passed is a quasi-judicial or an administrative proceeding." This sentiment was reiterated by Chinnappa Reddy, J. in the same case when he said that, "there is a peculiar and surprising misconception of natural justice in some quarters, that it is, exclusively, a principle of administrative law. It is not. It is not. It is first a universal principle and, therefore, a rule of administrative law. It is that part of the judicial procedure which is imported into the administrative process because of its universality." 22. The observations in Manager, Hotel Imperial, New Delhi, ( AIR 1959 SC 1214 ) (supra), noticed earlier, are of no avail to the contesting respondents for what was being canvassed there was that the order of reference was bad because it said that an industrial dispute existed between the Management of the Hotel Imperial and its Workmen as represented by "Hotel Workers Union, Katra Shahanshahi, Chandni Chowk, Delhi". The Supreme Court said that the addition of these words was merely for the sake of convenience so that the Tribunal may know to whom it should give notice when proceeding to deal with the reference. The Supreme Court also said that "where the dispute was of a general nature relating to the terms of employment or condition of labour of a body of workmen, it was unnecessary for the purpose of Section 10 to mention the names of the particular workmen who might have been responsible for the dispute". The challenge to the order of reference on the ground of vagueness was repelled. The result : 23. In conclusion, it must be held that the Award of the Labour Court, in so far as it sets aside the promotion of Jamwant Singh, made through the resolution of the Executive Committee of the Bank dated Nov. 25, 1971, without giving him an opportunity of hearing is void for breach of the principles of natural justice. It is quashed to that extent. The petitioner succeeds as aforesaid but the parties are left to hear their own costs.