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1988 DIGILAW 401 (KER)

POULOSE v. CATHOLIC SYRIAN BANK LTD.

1988-08-18

BHASKARAN NAMBIAR, MALIMATH

body1988
Judgment :- 1. The short question that arises for determination in all these cases is whether appeals under the Kerala Shops and Commercial Establishments Act, 1960, could be continued against scheduled commercial Banks after these Banks were exempted "from all the provisions of the said Act" by a general notification issued during the pendency of the appeal. A learned single judge of this Court in Catholic Syrian Bank Ltd. v. Appellate Authority (1986 KLT.1394) ruled that there was no jurisdiction for the appellate authority to proceed with the appeal. Writ Appeal No. 860 of 1986 is against this decision. There are two writ petitions filed by another Back, and raising the same question. They have been referred to a Division Bench to be heard along with the Writ Appeal. We shall, therefore advert to the relevant facts in the writ appeal. 2. The appellant was an employee of the Catholic Syrian Bank, a scheduled commercial Bank, His services were terminated by the Bank on 22nd September, 1978 and immediately thereafter he filed an appeal under S.18 of the Act before the Appellate Authority, the Deputy Labour Commissioner, Kozhikode. In 1982, the Government exempted all scheduled Commercial Banks from all the provisions of the Kerala Shops and Commercial Establishments Act (the Act). The Bank, the employer, therefore, contended that appellate authority has lost its jurisdiction to proceed with the appeal and the appeal had to be dismissed as not maintainable on that ground. The authority overruled the preliminary objection regarding jurisdiction and decided the appeal on merits, set aside the order of termination passed against the appellant, directed his re-instatement with continuity of service and back wages amounting to Rs. 32,095/- If the appellant was not reinstated, the Bank was directed to pay a further sum of Rs. 70,000/- as compensation in addition to the back wages. The Back challenged these orders in a writ petition filed under Art.226 of the Constitution. This writ petition was allowed by the learned judge holding that the appellate authority ceased to have jurisdiction over the subject-matter of appeal, in view of the general exemption notified by the Government. This appeal, therefore, raises only the question of jurisdiction of the appellate authority dependant on the exemption notification. 3. The appeal against termination of services of an employee of a commercial establishment is provided in S.18 of the Act. This appeal, therefore, raises only the question of jurisdiction of the appellate authority dependant on the exemption notification. 3. The appeal against termination of services of an employee of a commercial establishment is provided in S.18 of the Act. S.18 (1), (2) & (3), relevant for our purpose, reads thus: "18. Notice of Dismissal.-(1) No employer shall dispense with the services of an employee employed continuously for a period of not less than six months, except for a reasonable cause and without giving such employee at least one month's notice or wages in lieu of such notice, provided however that such notice shall not be necessary where the services of such employee are dispensed with on a charge of misconduct supported by satisfactory evidence recorded at an inquiry held for the purpose. (2) Any employee whose services are dispensed with may appeal to such authority and within such time as may be prescribed either on the ground that there was no reasonable cause for dispensing with his services or on the ground that be had not been guilty of misconduct as held by the employer. (3) The appellate authority may, after giving notice in the prescribed manner to the employer and the employee, dismiss the appeal or direct the reinstatement of the employee with or without wages for the period he was kept out of employment or direct payment of compensation without reinstatement or grant such other relief as it deems fit in the circumstances of the case." 4. It is admitted that the Catholic Syrian Bank was a "commercial establishment" as defined in the Act. On the date when the appellant's services were terminated and on the date when the appeal was filed under the Act, the provisions of the Act applied to the Bank and the appeal was competent under the Act. 5. On 20th April, 1982, the Government published a notification under S.5 of the Act: "In exercise of the powers conferred by S.5 of the Kerala Shops and Commercial Establishments Act, 1960 (34 of 1960), the Government of Kerala, being satisfied that public interest go requires, hereby exempt the Scheduled Commercial Banks from all the provisions of the said Act". 6. The appeal of the appellant was disposed of on 1st November, 1982. Does the exemption granted in 1982 affect the appeal filed in 1978? 6. The appeal of the appellant was disposed of on 1st November, 1982. Does the exemption granted in 1982 affect the appeal filed in 1978? Can the appellate authority issue directions enforceable under the Act to any establishment not covered by the Act? 7. We shall advert to two judgments before we state our reasons and conclusions. The first is that of the Supreme Court in Mohanlal v. Tribhovan (AIR. 1963 SC. 538) which is nearer to the point. The second is an old decision of Justice Asutosh Mookerjee in Jyotish Prasad v. Bagla Kant (AIR. 1922 Calcutta 274) which is for all practical purposes apposite. 8. To understand the principle stated by the Supreme Court in AIR. 1963 SC. 358, (a decision of a Bench of 5 Judges), it is necessary to note the bare facts of that case. The Bombay Tenancy and Agricultural Lands Act (Bombay Act LXVII of 1948) in S.88 (I) (a) and (b) and (c) exempted certain lands and areas from the operation of the Act. S.88 (1) (d) authorised the Government to issue notification specifying certain areas to be outside the provisions of the Act. Thus S.88 (1) (a), (b) and (c) of the Bombay Act, provided that the Act would not apply to certain areas from its inception while S.88 (I) (d) provided that the Government could in future exempt certain areas from the purview of the Act. In that case, a notification under S.88 (1) (d) was issued on April 24,1951, after the suit was fried and the same was cancelled subsequently on 12tb January 1953 before the appeal was disposed of. If the provisions of the Act were applicable to the tenancy in question, the civil court had no jurisdiction to try the suit, the jurisdiction having been vested in the Revenue Courts. The contention, therefore, was that the notification under S.88 (1) (d) was only prospective in operation and could not affect a vested right which accrued to a tenant under the Act. The Supreme Court held that the provision in clause (d) of S.88 would 'in the context have retrospective operation in the sense that it would apply to land which could be covered by the notification to be issued by the Government from time to time so as to take those lands out of the operation of the Act, of 1948 granting the protection". Clarifying further, the Supreme Court stated, "But clause (d) is about the future and unless it has the limited retrospective effect indicated earlier, it will be rendered completely nugatory." The intention of the legislature obviously was to take away all the benefits arising out of the Act as soon as the notification was made under clause (d). The decision of the Bombay High Court that the notification under clause (d) had no retrospective operation, was not accepted as correct. 9. The further complication in that case was that the exemption notification of 1951 was also cancelled in 1953, before the decision in appeal. Adverting to this aspect, the Supreme Court held thus: "The Court was of the opinion that though the Appellate Court was entitled to take notice of the subsequent events, the suit had to be determined as on the state of facts in existence on the date of the suit, and not as they existed during the pendency of the appeal. In that view of the matter, the learned Appellate Court held that the tenants-defendants could not take advantage of the provisions of the Act. and could not resist the suit for possession. In our opinion, that was a mistaken view of the legal position. When the judgment of the lower Appellate Court was rendered, the position in fact and law was that there was no notification under cl. (d) of S.88(1) in operation so as to make the land in question immune from the benefits conferred by the Tenancy Law. In other words, the tenants could claim the protection afforded by the law against eviction on the ground that the term of the lease bad expired. But it was argued on behalf of the appellants that the subsequent notification, cancelling the first one, could not take away the rights which had accrued to them as a result of the first notification. In our opinion, this argument is without any force. If the landlords had obtained an effective decree and had succeeded in ejecting the tenants as a result of that decree, which may have become final between the parties, that decree may not have been reopened and the execution taken thereunder may not have been recalled. But it was during the pendency of the suit at the appellate stage that the second notification was issued cancelling the first. But it was during the pendency of the suit at the appellate stage that the second notification was issued cancelling the first. Hence, the Court was bound to apply the law as it found on the date of its judgment. Hence, there is no question of taking away any vested rights in the landlords". 10. It is relevant to note for our purpose that S.3 of the Kerala Act practically corresponded to S.88(1)(a), (b) and (c) of the Bombay Act referred to by the Supreme Court in that, both the provisions directed that the Act would not apply to certain cases from the very inception; the Act never applied to those cases. S.5 of the Kerala Act which enabled the Government to issue notifications in future after the commencement of the Act, exempting establishments, or class of persons to which or to whom this Act applied earlier was thus practically similar to the power conferred under clause (d) of S.88 of the Bombay Act. The interpretation by the Supreme Court of S.88(1)(d) of the Bombay Act regarding its applicability to pending appeals, applies, with equal force to S.5 of the Act and the applicability of the notification issued thereunder. 11. In the old Calcutta case, in Jyotish Prakas v. BagIa Kant (AIR 1922 Calcutta 274), Justice Asutosh Mookerjee, speaking for the Bench held thus: "This classification into territorial jurisdiction, pecuniary jurisdiction and jurisdiction of the subject matter is of a fundamental character. Jurisdiction has consequently reference to the power of the Court over the parties, over the subject matter, over the res or property in contest and to the authority of the Court to reader the judgment or decree which it assumes to make". "We see no reason to doubt the correctness of the view that a Court may lose its jurisdiction during the pendency of a proceeding, and that in such an event, if it proceeds to pronounce judgment such judgment must be regarded as void because made without jurisdiction". "In the case before us, the Settlement Officer bad jurisdiction when he was appointed to exercise bis power, to reduce the rent of the disputed tenancy which at that time fell within the class of areas held by Sonthal Chakdars. "In the case before us, the Settlement Officer bad jurisdiction when he was appointed to exercise bis power, to reduce the rent of the disputed tenancy which at that time fell within the class of areas held by Sonthal Chakdars. Before be could exercise his jurisdiction, the tenancy had passed into the bands of a non-Sonthal; consequently, the Settlement Officer lost his jurisdiction over the area and could no longer exercise the power conferred on him. The proceedings taken by him subsequent thereto were without jurisdiction and could not affect the subject matter of the litigation." 12. Following the Calcutta decision, the Madras High Court in interpreting an identical provision in the Madras Shops and Establishments Act, in the decision in Trichy City Co-oper. Bank v. Addl. Commr. Workmen's Comp., Madras (1957) II MLJ.185) held thus: "Adopting the words of the learned judge and applying the principle laid down there, I hold the Additional Commissioner had jurisdiction when the appeal was presented to him under S.41(2) of the Act to render a decision under S 41(3). Before he could exercise his jurisdiction, the provisions of the Act ceased to apply to the petitioner and his employee, who was the appellant before the Additional Commissioner. Consequently the Additional Commissioner lost bis jurisdiction and could no longer exercise the power conferred upon him." 13. A contrary view is expressed in Supdt. Engineer, O.C.A.P.E B. v. Labour Officer (1977) 1 An. W R.170) by a Division Bench of the Andhra Pradesh High Court. Their Lordships were also considering a similar question interpreting the provisions of the Andhra Pradesh Shops and Establishments Act. It was held thus: "It would follow from the plain language of S.64(4) of the Act, read with the notification issued thereunder, that it is the establishment on which the exemption fastens, and not on any proceedings that may be pending. Their Lordships were also considering a similar question interpreting the provisions of the Andhra Pradesh Shops and Establishments Act. It was held thus: "It would follow from the plain language of S.64(4) of the Act, read with the notification issued thereunder, that it is the establishment on which the exemption fastens, and not on any proceedings that may be pending. Apart from this interpretation of the language of S.64(4) read with the notification in question, it is a fundamental principle, well settled by authority, that a right of appeal to a particular forum is a substantive right which is not lost by alteration in the law, unless a provision is made expressly in that behalf, or a necessary implication arises." "Neither the notification, nor S.64(4) under which it is issued makes any provision, expressly or by necessary implication, taking away the substantive right which the third respondent bad acquired to have his appeal which was pending before the Labour Officer decided by him, or to have the second appeal decided by the Labour Court" "The fact that the notification published under S.64(4) of the Act in the present, case does not contain any such provision for transfer of pending appeals from the authorities under the Act to any other authority is. is my opinion, also a strong indication that those pending appeals were not intended to be affected by the exemption which was brought in on the Stn December, 1971." 14. It is settled law that a right of appeal is a substantive right created by statute and is not inherently attached to any litigation. It follows, therefore, that the content and character of the appeal are controlled by the provisions of the statute providing for appeal. There is no vested right to have the appeal heard by a particular forum or by a particular number of Judges. Rights vested under a statute may be divested either expressly or by necessary implication, by subsequent statutory provisions. 15. It is, therefore, necessary to note the substance of the statutory right under S.18. An employer can dispense with the services of an employee if (a) there is a reasonable cause and (b) at least one month's notice or wages in lieu thereof is given. If reasonable cause is shown by satisfactory evidence recorded at an enquiry conducted on a charge of misconduct, no prior notice to dispense with the services is required. An employer can dispense with the services of an employee if (a) there is a reasonable cause and (b) at least one month's notice or wages in lieu thereof is given. If reasonable cause is shown by satisfactory evidence recorded at an enquiry conducted on a charge of misconduct, no prior notice to dispense with the services is required. The employee, aggrieved with the order of termination of his services, has a right of appeal to an appellate authority, the Deputy Labour Commissioner of the Labour Department. The appellate authority is empowered (a) to direct re-instatement of the employee with or without back wages or (b) to direct payment of compensation without reinstatement or grant such further relief as it deems fit. Contravention of the provisions of S.18 attracts the penal provisions in S.29. 16. The Act, however, exempted certain establishments and persons from the provisions of the Act under S.3 of the Act. To those establishments and persons, the Act bad no application at any time and the exemption operated from the very inception. The Government could also after the commencement of the Act exempt, in public interest, under S.S, any establishment or class of establishments or class of persons from all or any of the provisions of the Act. The exemption could be partial or total or on specified terms and conditions. Total exemption was granted in favour of scheduled commercial Banks and the provisions of the Act could not be enforced against these Banks from 20th April, 1982. Following the reasoning of the Supreme Court in Mohanlal v. Tribhovan (AIR. 1963 SC. 358), it is clear that the intention of the legislature obviously was to take away all the benefits and to remove all obstacles arising out of the Act as soon as the notification was made and the appellant, an employee of a scheduled commercial Bank cannot claim any relief against the Bank under S.18 when the Bank itself was released of all its obligations under the Act. The Bank was under no duty to reinstate the appellant and the appellate authority had no hold on the Bank when it purported to exercise jurisdiction in November, 1982. The jurisdiction of the appellate authority to proceed with the appeal ended when the scheduled commercial Bank was exempted from all the provisions of the Act including S.18. 17. The Bank was under no duty to reinstate the appellant and the appellate authority had no hold on the Bank when it purported to exercise jurisdiction in November, 1982. The jurisdiction of the appellate authority to proceed with the appeal ended when the scheduled commercial Bank was exempted from all the provisions of the Act including S.18. 17. The contention that there was a vested right of appeal which accrued to the appellant when the appeal was filed in 1978 and that the right continued to exist, notwithstanding the exemption cannot also be accepted in the light of the principles stated by the Supreme Court in Mohanlal v. Tribhovan (AIR. 1963 SC 358). 18. If the appeal had already been disposed of before the exemption notification, and the appellant had been re-instated, that decision which became final could not have been reopened on the strength of the subsequent notification granting exemption. But, when during the appellate stage, a statutory notification is issued, the appellate authority is bound to take note of that notification and apply the law as it found on the date of its judgment. Moreover, the right to file the appeal was itself granted only by the Act. Till the appellate authority disposed of the appeal and decided against the employer, the order of termination continued to be in force. Any trace of any right to be reinstated by preferring an appeal vanished with the exemption notification and removing the statutory protection under S.18. An appellate authority authorised to sit in judgment over decisions of the scheduled commercial Bank ceased to exist. There was thus no vested right which could be asserted under S.18 after 20th April, 1982, the date of the Notification. 19. The appellate authority under the Act is a creature of the Statute. In can exercise only those powers which are conferred by or under the Act. The jurisdiction so conferred should necessarily have reference to the parties concerned in the dispute, the subject matter involved in the controversy and the processes required for enforcement of the orders of the authority. After the issuance of the exemption notification, the appellate authority ceased to have jurisdiction over the subject matter, over the establishment, the scheduled commercial Banks. The jurisdiction so conferred should necessarily have reference to the parties concerned in the dispute, the subject matter involved in the controversy and the processes required for enforcement of the orders of the authority. After the issuance of the exemption notification, the appellate authority ceased to have jurisdiction over the subject matter, over the establishment, the scheduled commercial Banks. When the authority thus lacked jurisdiction when it purported to exercise its powers under S.18, in November 1982, when its attention was called to that jurisdictional aspect, it was bound to refuse to proceed further and should have dismissed the appeal. The appellate authority became powerless; it became statutorily defunct to grant any relief to the appellant against the scheduled commercial Bank. It bad no authority to enforce its decision against that Bank and the Bank could not be penalised for violation of S.18, when it was exempted from the very operation of that section. If the appellate authority could not function so far as the scheduled commercial Banks were concerned, there was no other authority under the Act who could grant similar relief. The forum of an appeal under the Act is thus no longer available when the exemption operates, 20. We are, therefore, in respectful agreement with the decision of the Madras High Court in Tricky City Co-oper. Bank v. Addl. Commr. Workmen's Comp., Madras (1957) II M. L. J. 18V) and we are not inclined to agree, with respect, to the reasoning in Supdt. Engineer, O.C.A.P.E.B. v. Labour Officer (1977) 1 An. W. R.170). 21. We are, therefore, of the view that even though the appeals filed under S.18 against orders issued by scheduled commercial Banks were competent when they were filed, when the Act applied to those Banks, the appeals could not be continued after the Banks were exempted from the operation of the Act, when the authority became powerless and lost its jurisdiction over the subject matter of dispute and when it was bound in law to take note of the exemption notification at the time of disposal of the appeal. In the result, we affirm the decision of the learned single judge reported in Catholic Syrian Bank Ltd. v. Appellate Authority (1986 KLT 1394). 22. In the view we have taken regarding the competency of the appeal, the writ petitions filed by the Federal Bank, a scheduled commercial Bank, as OP. Nos. In the result, we affirm the decision of the learned single judge reported in Catholic Syrian Bank Ltd. v. Appellate Authority (1986 KLT 1394). 22. In the view we have taken regarding the competency of the appeal, the writ petitions filed by the Federal Bank, a scheduled commercial Bank, as OP. Nos. 32 and 33 of 1983 have to be allowed and Ext. P3 in both the writ petitions are quashed and it is declared that the appellate authority, the first respondent in these writ petitions, do not have jurisdiction to proceed with the Shop appeals, 88 of 1978 and 19 of 1982. 23. We, however, make it clear that nothing said in this judgment shall preclude the employees of these Banks from pursuing other remedies, if any, available to them under other laws. W.A. No. 860 of 1986 is dismissed and OP. Nos. 32 and 33 of 1983 are allowed as stated above. The parties shall bear their costs.