Case Note & Summary
This appeal by special leave arose out of proceedings initiated by the appellant under Section 41 of the Andhra Pradesh Shops and Commercial Establishments Act, 1966. The appellant, a clerical grade probationer in the respondent-bank, challenged the termination of his services. The Authority and Labour Court had ruled in his favour, but a Division Bench of the High Court reversed the Single Judge and upheld the termination. The appellant then approached the Supreme Court. The appellant was appointed on probation for six months on March 21, 1970, joined on April 6, 1970, and had his probation extended by three months. Before expiry of the extended period, the bank terminated his services on January 2, 1971, informing him of one month's salary and allowances in lieu of notice. The amount was credited to his savings account on January 5, 1971. The appellant alleged that no defect in his work was pointed out and that termination was due to his joining the union on December 2, 1970. The bank contended the Act did not apply and that conditions were governed by Sastry and Desai Awards, and that unsatisfactory work justified termination. The Authority under the Act held the termination illegal for want of reasonable cause and non-compliance with Section 40, ordering reinstatement with full back wages. The Labour Court dismissed the bank's appeal, confirming that no reason was given and that payment in lieu of notice was not made at the time of termination. The bank filed a writ petition in the High Court; a Single Judge dismissed it, holding that Section 40 required simultaneous payment and that the bank had failed to show reasonable cause. The Division Bench allowed the bank's letters patent appeal, construing Section 40 differently: it treated the termination and the crediting of wages three days later as part of the same transaction and thus satisfied, but did not disturb the finding of no reasonable cause. Before the Supreme Court, the appellant argued that the Division Bench erred in holding the termination legal without upsetting the concurrent findings of no reasonable cause, and that payment of one month's wages in lieu of notice must be simultaneous with termination. The Supreme Court found considerable force in the appellant's submission that the Division Bench could not uphold termination without disturbing the findings of the Authority and Labour Court. It referred to precedents establishing that a probationer cannot be terminated before expiry of probation except for misconduct or sufficient reasons, and that in the absence of evidence of unsatisfactory work, the termination is illegal. The Court also examined the interpretation of Section 40 regarding simultaneity of payment, noting the competing approaches under Section 25-F and Section 33(2)(b) of the Industrial Disputes Act. The provided excerpt ends before the final operative order, but the Court's reasoning strongly indicated that the Division Bench's judgment was flawed.
Headnote
A) Labour Law - Termination of Probationer - Requirement of Reasonable Cause - Andhra Pradesh Shops and Commercial Establishments Act, 1966, Section 40 - The Authority and Labour Court concurrently held that the respondent-bank failed to establish any reasonable cause for terminating the appellant's services during probation, and the Division Bench did not disturb that finding. The Supreme Court held that an employer cannot terminate a probationer before expiry of the probation period except on grounds of misconduct or sufficient reasons, and without evidence of unsatisfactory work the termination is illegal; the Division Bench could not uphold the termination as legal without upsetting the concurrent finding of no reasonable cause (Paras 9-11). B) Labour Law - Payment of Wages in Lieu of Notice - Simultaneity Requirement - Andhra Pradesh Shops and Commercial Establishments Act, 1966, Section 40 - The dispute concerned whether crediting one month's wages to the employee's bank account three days after termination satisfied the requirement of payment in lieu of notice under Section 40. The Single Judge held that payment must be simultaneous with termination, applying principles from Section 25-F of the Industrial Disputes Act, while the Division Bench held the entire transaction was one and complied; the Supreme Court found considerable force in the appellant's submission that simultaneous payment was required but the final interpretation was not included in the excerpt (Paras 6-8, 12). C) Labour Law - Applicability of Shops Act to Banks - Statutory Protection vs Awards - Andhra Pradesh Shops and Commercial Establishments Act, 1966, Sections 40, 41 - The respondent-bank contended that the Act did not apply and that service conditions were governed by Sastry Award and Desai Award; the Authority held that the appellant was governed by the Act and the bank's right to terminate was subject to Section 40. This finding was not overturned by the Division Bench (Paras 4-5). D) Labour Law - Appeal Under Section 41 - Scope of Interference - Andhra Pradesh Shops and Commercial Establishments Act, 1966, Section 41 - The appellant filed an appeal under Section 41 challenging termination as victimisation for joining a union; the Authority set aside termination and granted reinstatement with back wages. The Supreme Court's reasoning indicates that appellate courts cannot ignore concurrent findings of statutory authorities (Paras 1, 4, 9).
Issue of Consideration
Whether the Division Bench of the High Court erred in holding that the termination of the appellant's service was legal under Section 40 of the Andhra Pradesh Shops and Commercial Establishments Act, 1966 despite concurrent findings of the Authority and Labour Court that no reasonable cause was established; and whether crediting one month's wages to the employee's account three days after termination satisfied the requirement of simultaneity under Section 40.
Final Decision
Not mentioned - the provided excerpt ends before the final operative order, but the Supreme Court found considerable force in the appellant's submissions and was examining the interpretation of Section 40.
Law Points
- Section 40 of Andhra Pradesh Shops and Commercial Establishments Act
- 1966 requires one month's notice or payment of wages in lieu thereof
- payment of wages in lieu of notice must be simultaneous with termination
- termination of probationer before expiry of probation period requires misconduct or sufficient reasons
- employer cannot rely on unsatisfactory work without evidence
- appellate court cannot uphold termination without disturbing concurrent findings of no reasonable cause
- principles under Section 25-F of Industrial Disputes Act
- 1947 and Rule 5 of Central Civil Services (Temporary Service) Rules
- 1965 require simultaneous payment
- Section 33(2)(b) of Industrial Disputes Act allows payment and application to be part of same transaction
