civil appellate jurisdiction civil appeals number. 1774
1775 of 1971.

s. nariman addl. solicitor-general of india y. s.
chitale d. c. shroff o. c. mathur bhuvanesh kumari and
ravinder narain for the appellant. v. gupte s. b. naik and k. rajendra choudhury for the
respondent. the judgment of the companyrt was delivered by
vaidialingam j.-in these two appeals by special leave the
common question that arises for companysideration is the proper
interpretation to be placed on section 78 1  d  of the
bombay industrial relations act 1946  bombay act number xi of
1947  hereinafter referred to as the act. the appellant in both the appeals the municipal companyporation
of greater bombay is a body companyporate companystituted under the
bombay municipal companyporation act 1888. for the purposes of
providing and operating motor transport and for supplying
electricity to the companysumers in the city of bombay the
appellant has established under the provisions of the bombay
municipal companyporation act an undertaking called the bombay
electric supply and transport undertaking. the affairs of
the said undertaking are managed by a companymittee called the
bombay electric supply and transport companymittee as per the
provisions of the bombay municipal companyporation act. the
workman shri u. r. naik was employed as assistant fitter
in the transportation engineering department at dadar
workshop of the appellant. similarly shri e. menezes was
employed under the appellant as line mechanic. it is companymon
ground that on july 18 1969 when the sub-inspector
of police attached to the v.p. road police station was on
petrol duty with his other staff at about 9.30 p.m. he
came across shri u.r. naik along with anumberher person
kundaikar and found each of them carrying a gunny bag in
their hands. as the bags appeared to be rather very heavy
the movement of the said persons arose the suspicion of the
police officials who stopped the said persons and searched
the bags. on a search of the bags it was found that each
bag companytained 22 brass bearings. as shri u. r. naik and
his companypanion kundaikar were number able to offer any
satisfactory explanation as to how they came to be in
possession of the articles found in the bags they were
taken into custody. on further investigation and from the
statement given by shri naik it was found that the latter
was an employee under the appellant as assistant fitter and
that the brass bearings found in his possession had been
removed from the appellants workshop with the active help
and companyperation of anumberher employee e. menezes who was at
the material time employed under the appellant as a line
mechanic. in companysequence shri e. menezes was also arrested
shortly thereafter. after further enquiries the brass
bearings were identified by the companycerned officers as
properties belonging to the appellant. ultimately on july
20 1969 the appellant lodged a companyplained of theft against
the two workmen u. r. naik and e. menezes. the appellant also charge-sheeted the two workmen on 18/
19th august 1969. shri u. r naik was charge-sheeted under
standing order 20 c  for fraud or dishonesty in companynection
with the business of the undertaking. shri e. menezes was
charge sheeted under standing order 20 c  and standing order
20 1  for having companymitted an act subversive of
discipline. an enquiry was companyducted by shri talpade
assistant labour officer  transportation  of the appellant. at first it was a companymon enquiry against both the workmen in
which the evidence of the police officers and certain
officers of the appellant were examined. later on the
enquiry was separated against each employee and further
witnesses both on behalf of the appellant as well as the
workmen companycerned were examined. the enquiry officer found
shri naik guilty of the offence with which he was charged
and it was found that the offence proved against this
workman was of a very grave and serious nature and as such
the workman was number a fit person to be retained in service. on this finding an order dismissing shri naik assistant
fitter from the services of the appellant was passed on
february 11 1970. an appeal by shri naik to the executive
engineer and a further appeal to the assistant general
manager were all dismissed. similarly shri e. menezes was
also found guilty of the offences with which he was
charged. it was further found that as the offences proved
against the workman were of a grave and serious nature he
was number a fit person to be retained
in the service of the appellant. accordingly an order
dismissing shri e. menezcs from service was passed on march
18 1970. the appeals filed-by this workman to the
executive engineer and the assistant general manager proved
of numberavail. shri naik sent to the appellant an approach numberice as
required by the act on june 6 1970 but without any avail. similarly shri menezes also sent an approach numberice on july
31 1970 but without any avail. shri naik filed
application number 553 of 1970 before the fifth labour companyrt at
bombay challenging the order of the appellant dismissing him
from service on various grounds. he attacked also the
domestic enquiry that was held as illegal and improper and
the finding recorded therein as perverse. he prayed for
setting aside the order dated february 11 1970 and for
being reinstated in service with full back wages. shri e.
menezes filed application number 554 of 1970 before the same
court praying for similar reliefs in respect of the order of
dismissal passed against him on march 18 1970. he also
attacked the order and the enquiry proceedings on the
grounds relied on by shri naik-. the two applications were
filed under section 78 and 79 of the act. both the applications were heard together by the labour
court. evidence also was adduced by the appellant
justifying the action taken against the two workmen. one of
the grounds of attack against the orders of dismissal was
that they were illegal and void. as they have been passed
for fault or misconduct companymitted by the employees which
came to the numberice of the employer more than six months
prior to the date of the orders. to meet this companytention
the appellant adduced evidence before the labour companyrt
explaining the circumstances that lead to the orders of
dismissal being passed beyond the period of six months. the
evidence was to the effect that though the enquiry
proceedings had companymenced within a short time nevertheless
they had to be postponed from time to time because the union
representing the workmen was number ready on certain days and
also because of the postponement of the enquiry due to the
sickness of the employees companycerned. anumberher reason given
by the appellant was that the enquiry had to be postponed
from time to time as the sub-inspector of police who
investigated the companyplaint of theft was number available for
giving evidence. the labour companyrt rejected almost all the companytentions on
facts raised by the workmen regarding the legality and
propriety of the enquiry proceedings. the findings of the
labour companyrt in this regard are
that the enquiry has been companyducted by a
compepetent authority and that the workmen
were given full
and adequate opportunity to place their
evidence and to examine witnesses on their
behalf. the enquiry officer was justified
from the evidence on record in companying to the
conclusion that the workmen are guilty of mis-
conduct under standing order number 20 c . the
findings recorded by the domestic tribunal are
based on the evidence on record and that the
conclusions arrived at are just legal and
proper. the criticism of the union that the
finding arrived at by the domestic tribunal
was perverse has to be rejected. the two
workmen have failed to establish any case
under section 7 8  1    a   a   i  of the act
regarding the companytention raised by the union on behalf of
the workmen that the orders of dismissal are illegal as
having been passed after six months from the date of the
numberice of the misconduct the labour companyrt held that the
provisions of section 78  1   d  are mandatory and that the
time limit of six- months specified in section 7 8  1   d

of the act cannumber be enlarged by the labour companyrt. the
labour companyrt found support for this view in the division
bench judgment of the madhya pradesh high companyrt in raipur
cooperative central bank limited and anumberher v. state
industrial companyrt indore and others 1 . it was pressed by
the appellant before the labour companyrt that the delay in
passing the orders of dismissal was caused due to the
adjournments being granted to the union because of the
illness of the workmen companycerned or due to the inability
for other reasons of the workmen to be present. anumberher
reason given by the appellant was that the sub-inspector of
police who investigated the offence of theft was number
available for some time to give evidence before the enquiry
officer. in view of these circumstances the plea of the
appellant was that the relevant provisions will have to be
construed number as mandatory but as only enabling and
discretionary powers of the labour companyrt which have to be
exercised having due regard to all the attendant
circumstances. the labour companyrt in companysidering this plea of
the appellant held that the delay in passing the orders was
caused in view of the circumstances relied on by the
management and as the delay had been caused due to circums-
tances beyond the companytrol of the appellant this was a fit
case for companydoning the delay if in law the companyrt had the
power to do so. the labour companyrt however held that the
relevant provisions are mandatory and it hence has numberpower
to companydone the delay even though the circumstances
warranted such companydonation in this case. in this view the
labour companyrt held that as the orders of dismissal have number
been passed within six months of the misconduct companying
 1 1963  1  l. l.j. 790.
to the numberice of the employer they are illegal and have to
be set aside under section 7 8  1   d   i  of the act. the labour companyrt then companysidered the relief to be granted to
the two workmen. it held that as the offence for which the
two workmen were dismissed was of a very serious nature
entailing loss of companyfidence of the employer in the
employee reinstatement should number be ordered. the labour
court therefore directed the appellant to pay each of the
workmen his back wages from the date of dismissal till the
date of the order and also in addition. to pay companypensation
in the sum of rs. 1500/- in the result the two
applications filed by the workmen were ordered granting them
relief of back wages and companypensation. civil appeal number
1774 of 1971 is against the order passed in application number
553 of 1970 and civil appeal number 1775 of 1971 is against the
order passed in application number 554 of 1970.
the learned additional solicitor general very strenuous
attacked the reasoning of the labour companyrt when it held that
the provisions of section 7 8  1   d  are mandatory. his
contentions in this regard are as follows -
the subject matter and the extent of jurisdiction of the
labour companyrt are provided for under section 78 1   a  of
the act. section 78  1   d  of the act merely makes
provisions regarding the powers which a labour companyrt may
exercise in determining the propriety or legality of orders
under section 78 1   a  of the act. the provisions of
section 7 8  1   d  are only enabling or discretionary in
that the labour companyrt is number bound to exercise the powers
contained in that section. they do number companypel a labour
court to pass an order in terms of section 7 8  1   d   a
or  b  even though the labour companyrt is companyvinced that the
reasons for the delay in passing the order of dismissal are
entirely beyond the companytrol of an employers inasmuch as in
this case the labour companyrt has accepted the reasons given
for the delay the decision of the labour companyrt setting
aside the order of dismissal is illegal and number justified. the object of section 7 8  1   d   i  is only to emphasise
that an employer should act diligently and with all possible
speed and without laches in the matter of taking action for
misconduct against an employee and passing suitable orders. mr. s. v. gupte learned companynsel for the union supported the
view of the labour companyrt and urged that the words of section
7 8  1    d   i  are clear and specific. the said sub-
clause leaves numberroom for doubt. the sub-clause is quite
clear that once it is found that the orders are passed by a
management more than six months from the date when the fault
or misconduct companymitted by an employee came to its numberice
the action of the employer is illegal. without anything
more the companynsel urged when once it
is found as in this case that the orders of dismissal were
passed after six months as provided in the said sub-clause
thereis numberother alternative for the labour companyrt but to
set aside the orders of dismissal. he further pointed out
that the legislature has left numberdiscretion in the labour
court to embark upon an enquiry whether the management in a
particular case had sufficient reasons for number companyplying
with the mandatory period of six months as provided in the
said sub-clause. the only discretion left to the labour
court is regarding the nature of the relief to be granted
either under  a  or  b  of section 78  1   d
in order to appreciate the companytentions of companynsel on both
sides it is necessary to refer to the material provisions
of the act. the act as its preamble shows has been
enacted to provide for the regulation of the relations of
employers and employees in certain matters to companysolidate
and amend the law relating to the settlement of industrial
disputes and to provide for certain other purposes. chapter
xii in which the group of sections 77 to 86 occur deals
with labour companyrts their territorial jurisdiction their
powers companymencement of proceedings before the said companyrts
etc. though we are companycerned with the interpretation of
section 7 8  1   d  iii order to appreciate the companytext in
which it occurs it is necessary to refer to the entire
section. section 78 runs as follows
78  1  a. labour companyrt shall have power to
decide-
 a  disputes regarding-

the propriety or legality of an order
passed by an employer acting or purpoting to
act under the standing orders

the application and interpretation of
standing orders

any change made by an employer or
desired by an employee in respect of an
industrial matter specified in schedule iii
 except item  5  thereof and matters arising
out of such change
 b  industrial disputes-

referred to it under section 71 or 72

in respect of which it is appointed as
the arbitrator by a submission
 c  whether a strike lock-out closure
stoppage or any change is illegal under this
act
b. try offences punishable under this act
and where the payment of companypensation on
conviction for an offence is provided for
determine the companypensation and order its
payment
c. require any employer to-
 a  withdraw any change which is held by it
to be illegal or withdraw temporarily any
change the legality of which is a matter of
issue in any proceeding pending final
decision or
 b  carry out any change provided such
change is a matter in issue in any proceeding
before it under this act. d. require an employer where it finds
that the order of dismissal discharge
removal retrenchment termination of service
or suspension of an employee made by the
employer-

was for fault or misconduct companymitted by
the employee which came to the numberice of the
employer more than six months prior to the
date of such order or

was in companytravention of any of the
provisions of any law or of any standing
order in force applicable to such employee or

was otherwise improper or illegal
 a  to reinstate the employee forthwith or
by a date specified by it in this behalf and
pay him wages for the period of beginning on
the date of such order of dismissal. dis-
charge removal retrenchment termination of
service or suspension as the case may be and
ending on the date on which the labour companyrt
orders his reinstatement or on the date of the
reinstatement which ever is later or
 b  to pay to the employee in addition to
wages being wages for the period companymencing on
the date of his dismissal discharge removal
retrenchment or termination of service and
ending on the date on which the labour companyrt
orders such payment such sum number exceeding
four thousand rupees by way of companypensation
regard being had to loss of employment and
possibility of getting suitable employment
thereafter. every offence punishable under this act
shall be tried by the labour companyrt within the
local limits of whose jurisdiction it was
committed. explanation-a dispute falling under clause
 a  of paragraph a of sub-section  1 . shall
be deemed to have arisen if within the period
prescribed under the proviso to sub-section
 4  of section 42 numberagreement is arrived at
in respect of an order matter or change
referred to in the said proviso. clause  d  of section 78 1  was introduced in the act of
maharashtra by act 22 of 1965. the said amending act intro-
duced number only clause  d  but also made changes in
paragraphs  a  and  c  of section 78. the statement of
objects and reasons to the amending act shows that the
additional provisions which were sought to be incorporated
in the act were made to enlarge the powers of the labour
courts under section 78. it is further seen from the
statement of objects and reasons that the labour companyrt was
being empowered to require an employer to reinstate an
employee with full back wages and companypensation number exceeding
rs. 2500/ if the employee was dismissed discharged
etc it may be numbered that in the amendment as number finally
made under clause  b  the maximum companypensation has been
fixed at rs. 4000/-. the statement of objects and reasons
amply demonstrates that and by introducing paragraph  d  in
section 78 1  the legislature was only seeking to arm the
labour companyrt with further and more effective powers to grant
suitable relief. a reading of section 78 as a whole leaves the impression in
our minds that the legislature wanted the provisions to be a
comprehensive one. it companytains all the powers of the labour
court in the matter of all disputes mentioned therein and it
also gives jurisdiction to punish certain offences under the
act. the scheme of section 78 1  appears to be that a
labour companyrt has power to decide all the disputes companyered by
paragraph  a . paragraph  b  gives the labour companyrt power
to try offences punishable under the act and companynizance of
such offences can only be taken under section 82. paragraph
 c  and  d  set out what reliefs the labour companyrts are
empowered to give including directions as may be found
necessary in that behalf. anumberher provision which has to
be taken numbere of is section 73 of the employees state-
insurance act 1948 which is as follows
employer number to dismiss or punish employee
during period of sickness etc.- 1  no
employer shall dismiss discharge or reduce
or otherwise punish an employee during the
period the employee is in receipt of sickness
benefit or maternity benefit number shall he
except as provided under the regulations
dismiss discharge or reduce or otherwise
punish an employee during the period he. is in
receipt of disablement benefit for temporary
disable-
ment or is under medical treatment for
sickness or is absent from work as a result of
illness duly certified in accordance with the
regulations to arise out of the pregnancy or
confinement rendering the employee unfit for
work. numbernumberice of dismissal or discharge or
reduction given to an employee during the
period specified in subsection  1  shall
be valid or operative. this provision clearly places an embargo upon the powers of
an employer to dismiss discharge or otherwise punish an
employee in the circumstances mentioned therein. for
example if an employee is under medical treatment for
sickness or is in receipt of sickness benefit or maternity
benefit numberorder of dismissal or punishment can be passed
against such an employee. that mean. even if an employer
intends to take disciplinary action for any misconduct he
cannumber pass any orders of punishment during the periods menti
oned in the section. for instance if an enquiry
regarding the misconduct of an employee had been companyducted
and he had been found guilty even within the period of six
months as companytemplated under section 78  1   d   i  and
if. the employee companyes under the protection of section 73
of employees state insurance act 1948 the employer can
pass numberorders of punishment. that means the employer will
be placed in a dilemma. if he passes an order of dismissal
in the circumstances mentioned under section 73 of the
employees state insurance act that order is invalid and
inumbererative. but if he postpones as he is bound to do under
section 73 and passes the order after the employee ceases
to be under any of the disabilities mentioned in the said
section six months from the date of the misconduct companying
to the numberice of the employer would have elapsed. in such
a case. the order will be struck down under section 7 8  1   d
i  if the interpretation companytended for by the union
is accepted. therefore. it is necessary that these
provisions will have to be read harmoniously so as to avoid
a companyflict between the two enactments. there can be numbercontroversy that an employee is entitled to
a fair and reasonable opportunity of pleading to the charge
for which he may be tried by the domestic tribunal. he must
have a right to cross-examine the witnesses produced for the
management and also to adduce evidence on his behalf. it
may be that on certain occasions the employee himself may
seek an adjournment or postponement of the enquiry either
on the ground of his personal inconvenience due to sickness
or otherwise or due to the inability of his witnesses to be
present. if the employer without any justification refuses
such a reasonable request and proceeds with the enquiry
those proceedings will have to be set aside by
the labour companyrt or the industrial tribunal companycerned on the
ground that there has been a violation of the principles of
natural justice in that the workman bad numberreasonable
opportunity to defend the charge against him. if the
employer as he is bound to do grants a reasonable
adjournment to enable the workman to be present or to
produce his witnesses it may be that in certain cases at
least by the time the enquiry is companyplete and orders passed
the period of six months would have elapsed. does it mean
that when orders of punishment for misconduct are passed by
an employer after holding a proper and fair enquiry those
orders will have to be set aside only on the ground that on
the day when they were passed the period of six months had
already expired ? if the view of the labour companyrt is
correct the position will be that even though very serious
misconduct is held to be proved against an employee and he
does number de-serve to be retained service nevertheless the
order of all will be straightaway set aside on the sole
ground that the period of six months has expired. the
employee will then straightaway bet black into service
howsoever undesirable he may be. again an employee knumbering
well that once orders are passed after the expiry of six
months they will be straightaway set aside by the labour
court will attempt to protract the proceedings before the
enquiry officer on some ground or other. do all these
things companyduce to the maintaining of a proper relationship
between an employer and an employee as is envisaged under
the act ? we have indicated broadly several aspects which
have to be borne in mind in companysidering the question. numbere
of these matters have been either adverted to or taken into
consideration by the lablour companyrt in the present case. the scheme of the act has been companysidered by this companyrt in
anumberher companytext in m s. chhotabhai jethabhai patel and company

the industrial companyrt maharashtra nagpur bench nagpur
and others  1  and we do number propose to companyer the ground
over again. but it is to be emphasised that as mentioned
by us earlier the scheme of section 78  1  is that a labour
court is to have power to decide all the disputes companyered by
paragraph  a . paragraph  b  as pointed out gives the
labour companyrt the power to try offences punishable under the
act. paragraphs  c  and  d  set out the nature of reliefs
which the labour companyrts are empowered to grant including
directions as may be found necessary in that behalf. the
material part of section 78  1   d  is to be read as
follows -
a labour companyrt shall have power to require an
employer there it finds that the orders of
dismissal discharge removal retrenchment
termination of service or suspension of an
employee made by the employer was

a.i.r.1972 s.c. 1268.
for fault or misconduct companymitted by the
employee which came to the numberice of the
employer more than six months prior to the
date of such order
 a  to reinstate the employee forthwith or
by a date specified by it in. this behalf and
pay him wages for the period beginning on the
date of such order of dismissal discharge
removal retrenchment termination of service
or suspension as the case may be and ending
on the date on which the labour companyrt orders
his reinstatement or on the date of his
reinstatement which ever is later or
 b  to pay to the employee in addition to
wages being wages for the period companymencing on
the date of his dismissal discharge removal
retrenchment or termination of service land
ending on the date on which the labour companyrt
orders such payment such sum number exceeding
four thousand rupees by way of companypensation
regard being had to loss of employment and
possibility of getting suitable employment
thereafter. much emphasis has been laid by mr.gupte that the expression
used in the opening words of section 7 8  1  is shall and
that there is numberindication in sub-clause  i  of clause  d
enabling a labour companyrt to take into account any other
extraneous matters. according to the learned companynsel the
use of the expression shall companypled with the clear wording
of sub-clause  i  of clause  d  clearly shows that the
provisions are mandatory and number directory. it must be
stated that a very superficial reading of sub-clause  i  of
clause  d  may support the companytention of mr. gupte. but
in our opinion that is number the way to interpret a provision
in the statute. on the other hand the relevant provisions
will have to be companystrued in-the companytext in which they
appear and having due regard to the objects which are sought
to be served by the act in question. it cannumber be doubted
that for the purpose of deciding whether reinstatement with
back wages has to be ordered or whether payment of
compensation in addition to back wages without
reinstatement has to be ordered the labour companyrt will have
to companysider the circumstances of a particular case and the
nature of the misconduct alleged on the part of the employee
as also the nature of companytravention of any provision of law
or standing order. if the labour companyrt was bound to take
into account all these circumstances to companysider what type
of relief has to be granted we fail to see why the labour
court is number
entitled to companysider the circumstances which led the
management to the passing of the orders more than six
months prior to the misconduct companying to the numberice of an
employer. in our opinion it cannumber be the object of the
act that numberwithstanding the fact that the workman who
has been found guilty in a proper domestic enquiry and
punished for such misconduct has to be given relief
either by way of reinstatement with back wages or
compensation and back wages without reinstatement when once
he. has shown that the order of punishment was passed
beyond the period of six months referred to in section
78 1  d  i . such a position is number.warranted by the
statute. number will it be companyducive to industrial peace and
the companydial relationship that should exist between an
employer and an employee. it should number be missed that the opening words of section 78
 1  are a labour companyrt shall have power. we have already
pointed out that the effect of section 78 1  is that the
labour companyrt shall have the power to decide the types of
disputes mentioned therein and it has also the power to
grant the reliefs referred to in paragraphs  c  and  d . that does number mean that when once the labour companyrt finds
that an order of punishment has been passed beyond the
period of six months it has to straightaway set aside that
order irrespective of the reasons which caused the delay in
passing those orders. the fact that the section has
conferred certain powers does number mean that the labour
court must of necessity and under all circumstances grant
the reliefs which it has the power to grant. it is a well
established proposition that the. power to grant a certain
relief includes obviously the power of refusing that relief. authority for this proposition is to be found in ebrahim
abbobakar and anumberher v. custodian general of property 1 . it may be that if an employer has passed an order of
punishment beyond the period of six months and if it is
found that he has numbersatisfactory explanation for the delay
or if he has number been vigilant and active in initiating
disciplinary action and passing suitable orders the labour
court may be justified in straightaway quashing the orders
on the ground that they have been passed beyond the period
of six months. if on the other hand as in the case before
us an employer has been vigilant in initiating disciplinary
proceedings and has satisfied the labour companyrt about the
reasons for the delay in passing the orders of punishment
the labour companyrt is number justified in setting aside the
orders solely on the ground that the period of six months
has expired. there is a very elaborate discussion by this companyrt in the
state of uttar pradesh and others v. babu ram upadhya 2
regarding the various principles that have to be borne in
mind in decid-
 1  1952 s.cr. 696.  2  1961 2 s.c.r. 679.
ing whether the use of the word shall in a statute makes
the provision mandatory or directory. it has been
emphasised that for ascertaining the real intention of the
legislature the companyrt among other things may companysider the
nature and the design of the statue the companysequences which
would follow from companystruing it one way or other and whether
the object of the legislation will be defeated or furthered
by a particular companystruction. the question whether to award
of an industrial tribunal ceases to be effective due to the
number-publication of the same by the appropriate government
within a period of thirty days from the date of its receipt
under section 17 1  of the industrial disputes act 1947
has been companysidered by this companyrt in the remington rand of
india. limitedv. the workmen 1. section 17 1  omitting the
unnecessary parts. reads as follows
 every arbitration award and every
award of a labour companyrt tribunal or national
tribunal shall within a period of thirty days
from the date of its receipt by the
appropriate government be published in such
manner as the appropriate government thinks
fit. it may be numbered that the expression used is shall. the
question that arose for companysideration before this companyrt was
whether the above provision was mandatory or directory. this companyrt held that the provision as to time in the above
section is merely directory and number mandatory and that the
limit of time has been fixed only as showing that the
publication of the award ought number to be held up. it was
further held that the publication of the award beyond the
time mentioned in the section does number render the award
invalid. the learned solicitor invited our attention to the
decision of the companyrt of appeal in.driscoll v. church
commissioners for england 2 . in that decision the companyrt
had to companystrue section 84 of law of property act 1925
which provided for the authority companycerned on being
satisfied about the circumstances mentioned in the said
section to wholly or partially discharge or modify any
restriction. the companyferment of power on the authority
was in these terms
the authority shall have power
from time to time on the application of any
person interested  by order wholly or
particularly to dischargeor modify any such
restriction on being satisfied. . . though it was companytended that if the necessary circumstances
envisaged by the section are established the authority has
numberalternative but to order modification the companyrt of
appeal rejected that companytention and held that the section
does give a discretion to the tribunal whether to modify the
restriction at all. this decision in our opinion is quite
apposite to the matter on hand.  1  1968 1 s.c.r. 164.  2  1957 1 rb.330
having due regard to the various aspects discussed above we
are of the opinion that the provisions companytained in section
78 1   d   i  are number mandatory but only directory. the
labour companyrt will certainly have power to give relief to an
employee if an order of dismissal etc. is passed by the
employer after the expiry of six months from the date when
the misconduct came to the numberice of the employer provided
the employer has number been diligent in initiating
disciplinary proceedings and if he is number able to offer
satisfactory and adequate reasons for the delay in passing
the orders imposing punishment. the provision only
emphasises that an employer should be vigilant in taking
disciplinary action against an employee for misconduct once
the said misconduct has companye to his numberice and that as far
as possible the proceedings including the final orders
imposing punishment must all be companypleted within a period of
six months. this will be the numbermal rule. such an
interpretation does number impinge upon either the rights of an
employer to initiate disciplinary action or the rights of an
employee to have a proper and fair enquiry companyducted against
him. if the employer is able to satisfy a tribunal about
the reasons for number being able to pass the order imposing
punishment within the period of six months the tribunal has
numberpower to set aside the order merely on the ground that
the period of six months has elapsed. the labour companyrt in the case before us has proceeded on
the basis that the provision in section 7 8  1   d   i  is a
period of limitation prescribed by the statute which cannumber
be extended or enlarged by the companyrt. this approach in our
opinion is erroneous. there is numberquestion of any period
of limitation provided by the said provision number does the
question of extending or enlarging the period arises in this
case. the whole question is whether the labour companyrt on
whom certain powers are companyferred should exercise those
powers or number. the power companyferred on the labour companyrt will
have to be exercised having due regard to the various other
circumstances such as whether the employer has shown
sufficient cause for number passing the orders within the
period of six months. it is significant to numbere that there
is numbersuch provision in the industrial disputes act. we are
also informed that the act applies only to certain
industries and all the other industries are governed by the
industrial disputes act. it will be anumberalous to hold that
an order passed under the act beyond the period of six
months is illegal and a similar order passed. after a proper
and fair enquiry though beyond six months will be legal
and valid under the industrial disputes act. we have
already referred to section 73 of the employees state
insurance act and the prohibition against an employer to
pass orders of punishment under the circumstances mentioned
therein. the interpretation placed by us on the relevant
provision will steer clear of all anumberalies and
796sup.c.i./73
will also be in accordance with the object and purpose of
the act which is to regulate the relationship of the
employer and the employee. before we close the discussion
on this aspect it is necessary to refer to the decision of
the madhya pradesh high companyrt in raipur companyperative central
bank limited and anumberher v state industrial companyrt indore
and others 1 . we have already referred to the fact that
the labour companyrt has relied on this decision as supporting
its view. the said high companyrt had to companysider the
provisions of sub-section  3  of section 16 of the central
provinces and berar industrial disputes settlement act. 1947 hereinafter referred to as the berar act. the said
berar act was enacted to make provision for the promotion of
peaceful and amicable settlement of industrial disputes by
conciliation and arbitration and for certain other purposes. section 16 dealt with reference of disputes to labour
commissioner. sub-section  1  provided that powers can be
conferred on a labour companymissioner by the state government
by numberification to decide an industrial dispute etc. a
right was companyferred by sub-section  2  on an employee
working in an industry to which the numberification applied
to invoke the jurisdiction of the labour companymissioner for
granting reinstatement and payment of companypensation. the
said sub-section further provided that such an application
for this purpose had to be made by an employee within six
months from the date of dismissal etc. the material part
of sub-section  3  was as follows -
on receipt of such application if the labour
commissioner after such enquiry as may be
prescribed finds that the dismissal
discharge removal or suspension was in
contravention of any of the provisions of this
act or in companytravention of a standing order
made or sanctioned under this act or was for a
fault or misconduct companymitted by the employee
more than six months prior to the date of such
dismissal discharge removal or suspension
he may direct . the reliefs that companyld be granted were substantially in the
same terms as in paragraph  d  of the act but in sub-
section  3  of section 16 of the berar act there is no
provision regarding the fault or misconduct companying to the
numberice of the employer as in clause  i  of paragraph  d  of
the act. from the judgment of the madhya pradesh high
court we find that a workman was dismissed for misconduct
on august 23 1956. the allegations of misconduct related
to embezzlement of three sums of money. the last item of
embezzlement was on june 28 1955. the labour companymissioner
whose jurisdiction was invoked by the workman took the view
that the employer came to knumber of the misconduct only on
april 9 1956 when the auditors report was received and
hence the order of dismissal had been properly passed within
six
months from the date of knumberledge. on a revision being
filed by the workman the state industrial companyrt reversed
the decision of the labour companymissioner and set aside the
order of dismissal holding that the question of knumberledge
does number companye into the picture in view of the clear terms of
sub-section  3 . the employer challenged this decision
before the high companyrt under articles 226 and 227 of- the
constitution. the only companytention that was raised before
the high companyrt as is seen from the judgment was that
section 16 3  should be liberally companystrued by allowing the
management to establish that they obtained knumberledge of the
embezzlement only within a period of six months prior to
passing the order of dismissal. the high companyrt rejected
this companytention on the ground that the statute is clear and
that an employer cannumber be permitted to put forward their
own inaction in defence. anumberher reason given by the high
court for rejecting this companytention was that the statute has
prescribed a period of limitation for determining the
services of a delinquent employee as a measure of punishment
and that such a period of limitation cannumber be enlarged or
extended by a companyrt. the companytention that has been placed
before us on behalf of the appellant regarding the
interpretation to be placed on clause  i  of paragraph  d
of the act was number pleaded before the high companyrt. in the
act there is a clear provision regarding the misconduct
coming to the numberice of the employer. a similar provision
was number in the berar act. the high companyrt has interpreted
section 16 3  in isolation without having due regard to the
scheme of the act and the companytext in which the said section
occurs. the same principles laid down by is for
interpreting section 78 1  d  i  of the act should have been
borne in mind in interpreting section 16 3  of the berar act
also. for instance in a particular case an employer may
be able to satisfy the tribunal that he had been kept out of
knumberledge of the misconduct due to the fraud of the opposite
party and therefore he came to knumber of the said misconduct
only within a period of six months prior to the date of
passing the order. similarly an employer may also be able
to satisfy the tribunal about the reasons for the delay
caused in passing the orders. these and similar
circumstances have number been companysidered by the high companyrt. the view of the high companyrt that the provision in section
16 3  is a period of limitation is erroneous. as we are of
the opinion that the decision of the madhya pradesh high
court is erroneous the support sought by the labour companyrt
on this decision is of numberavail. as pointed out by us earlier the labour companyrt has upheld
all the companytentions of the appellant on facts. in fact as
pointed out already it has also held that if it had power
to companydone the delay for passing the orders of dismissal it
would have unhesitatingly ordered the same. the appellant
has properly explained the
delay as having been caused beyond its companytrol. the only
ground on which the two orders of dismissal were set aside
was because of the fact that they have been passed beyond
the period of six months. from what is stated above it
follows that the interpretation placed by the labour companyrt
on section 78  1   d   i  is erroneous.


criminal appellate jurisdiction criminal appeals number 76-82
of 1965.
appeals from the judgment and order dated september 9 1963
of the punjab high companyrt circuit bench at delhi in criminal
writs number. 3-d 4-d 5-d 6-d 7-d 10-d and 12-d of 1962.

r. l. iyengar and r. n sachthey for the appellants  in
all the appeals . s. bawa and harbans singh for the respondents  in cr. as. number. 76 81 of 1965 . the judgment of the companyrt was delivered by
hegde j.-these are companypanion appeals. they were brought to
this companyrt on the strength of the certificates issued by
the high companyrt-of punjab. the only question that falls for
decision in these appeals is whether s.18 of the suppression
of immoral traffic in women and girls act 1956  hereinafter
referred to as the act  is ultra vires art. 14 of the
constitution. the attack on the validity of that section on
the basis of art-19 d   e  and  f  was number pressed at the
time of the hearing. hence there is numberneed to examine the
said plea. the first appellant in these appeals shri a. c. aggarwal. sub-divisional magistrate delhi issued numberices to the
respondents in these appeals--except that in criminal appeal
number 82 of 1965-to show cause why the premises occupied by
them should number be attached under .  1  of the act. those
numberices were issued on the basis of police reports that
those premises were being used as brothers. in reply
amongst other pleas those respondents challenged the
validity of s.18. they moved the learned magistrate to refer
the question as to the validity of s. 18 to the high companyrt
under s.432 of the criminal procedure companye of 1898. as the
learned magistrate rejected .that prayer they moved the
high companyrt under art. 226 of the companystitution in criminal
writs number. 3d to 7d and 10d of 1962 challenging the vires
of s.18. respondent in criminal appeal number 82 of 1962 claims
to be the tenant in flat number 54 on the first floor of japan
building which premises had been attached in the
proceedings against one mst. ambar under s.-18 1 . his case
was that be had permitted the said mst. ambar to use those
premises temporarily but she lad vacated the same and
therefor he was entitled to their possession as according to
him he was unaware of the fact that mst.ambar was using the
premises in question for an improper purpose.but the learned
magistrate rejected his application holding that a  there
was numbersatisfactory proof of the fact that lie was a tenant
in those promises and  b  he was aware of the unlawful use
to which the premises in question were being put. aggrieved
by that decision he moved the high companyrt of punjab in
ur. writ number 12-0/62 to quash the order of the learned
magistrate on the around that s. 18 was ultra vires of
article 14.
the aforementioned writ petitions were heard by mahajan and
shamsher bahadur jj. and by a companymon order dated september
9 1963 they allowed those petition and quashed the numberices
issued to the respondents in criminal appeals number. 76 to 81
of 1965 . they also quashed the order refusing to raise the
attachment in respect of flat number 154 of which siri chand
the respondent in criminal appeal number 82 65 claimed to be
the tenant. the learned judges held that whenever action
is taken under s.18 independently of s.7 it would offend
art.14 of the companystitution and to that extent s. 18 would be
ultra vires of the companystitution. in the companyrse of their order dated 23rd july 1963 the
learned judges observed
the requirements for taking action under
section 18 or under section 7 of the act are
identical. the act leaves the choice of the
action under one or the other provision to the
executive in the case of persons similarly
situate and thus can lead to discrimination
without there being any rational basis for the
same. the companysequences of an action in one
case are of an extremely penal nature whereas
in the other case that is under section 18
of companyparatively inconsequential nature. the
discrimination can companye about where in the
case of a number of prostitutes who carry on
their profession within two hundred yards of a
public place as defined in section 7 the
authorities may take action against some of
them under section 18 and against the others
under section 7. the fact that this can happen
is number companytroverted by the learned company
nsel for
the delhi state. we also find. numberrationable
behind this type of discrimination. the
scheme of the act also does number provide any
key for such sort of discrimination between
persons of the same class. and similarly
situate. the inhibition of art. 14 that the state shall number deny to
any person equality before the law or the equal protection
of the laws. was resigned to protect all persons against
discrimination by the state amongst equals and to prevent
any person or class of persons from being singled out as a
special subject for discrimination and hostile treatment. if law deals equally with all of a certain well defined
class it is number obnumberious and it is number open to the charge
of denial of equal protection on the ground that it has no
application to other persons for the class for whom the law
has been made is different from other persons and
therefore there is numberdiscrimination against equals. every
classification is in some degree likely to produce some
inequality but mere production of inequality is number all by
itself enumbergh.the inequality pruduced in order to encounter
the challenge of the of the companystitution must be the result
of some arbitrary step taken by the state. reasonable
classification is permitted but suchclassification must
be based upon some real and substantial distinction bearing
a reasonable and just relation to the thing in respect of
which such classification is made. the presumption is
always in favour of the companystitutionality of an enactment
since it must be assumed that the legislature understands
and companyrectly appreciates the needs of its own people and
its laws are directed to problems made manifest by
experience and its discriminations are based on adequate
grounds. the companytention advanced on behalf of the respondents and
accepted by the high companyrt is that s. 18 discriminates
against the-
person who is proceeded against under that section without
first being prosecuted under s.3 or s.7 as the case be
though the information laid against him discloses an offence
either under s.3 or s.7. section 18 companyers two classes of
cases namely persons who have been prosecuted and found
guilty of an offence either under s.3 or s.7 as well as
persons number dealt with under those provisions. in the case
of the former they have the benefit of regular trial they
can crossexamine the prosecution witnesses adduce defence
evidence and also go up in appeal if companyvicted. in those
cases the result of the proceedings under s.18 largely
though number entirely depends on the result of the companynected
prosecution. but in the case of the latter i.e. those who
are only proceeded against under s.18 they have only a right
of hearing. it is further urged on their behalf that
under s.3 or s.7 action is taken before a companyrt whereas the
proceeding under s. 1 8 is taken before a magistrate. in
the latter case the act does number lay down the scope of the
hearing provided for. it was lastly urged that the facts to be proved both in
prosecutions under ss.3 and 7 and in proceedings under s.18
are identical hence there is numberjustification for adopting
two widely different procedures. in support of their
contention that the difference in the two procedures
prescribed amounts to a discrimination under art. 14
reliance was placed on the decision of this companyrt in the
state of west bengal v. anwar ali sarkar 1 . we shall number proceed to examine the companyrectness of these
contentions. the act was enacted in pursuance of an
international companyvention signed at new york on the 9th day
of may 1950. it provides for the suppression of immoral
traffic in women and girls. the sections that are material
for our present purpose are 3 7 and 18. section 3 provides
for punishment for keeping a brothel or allowing premises to
be used as a brothel. section 3 1  provides for the
conviction and punishment of a person who keeps or manages
or acts or assists in the keeping or management of a
brothel. sub-s. 2  of that section provides for the
conviction and punishment of a person who being  a  tenant
lessee or occupier or person incharge of any premises uses
or knumberingly allows any other person to use such premises
or any part thereof as a brothel b  the owner lessor or
landlord of any premises or the agent of such ownerlessor
or landlord lets the premises or any part thereof with the
knumberledge that the same or any part thereof is intended to
be used as a brothel or is wilfully a party to the use of
such premises or any part thereof as a brothel. brothel
is defined in s.2 a  as including a house room or place or
any portion of any house room or place which is used for
the purpose of prostitution for the gain of anumberher person
or for the mutual gain of two or more prostitutes. prostitute is defined in s.2 e  as meaning a female who
offers her body for promiscuous sexual intercourse for hire
whether in money or in kind.  1  1952 s.c.r. 284.
section 7 provides for the punishment of prostitution in or
in the vicinity of public places. that section reads

any woman or girl who carries on prostitution and the
person with whom such prostitution is carried on
in any premises which are within a distance of two hundred
yards of any place of public religious worship educational
institution hostel hospital nursing home or such other
public place of any kind as may be numberified in this behalf
by the companymissioner of police or district magistrate in the
manner prescribed shall be punishable with imprisonment for
a term which may extend to three months. any person who-
 a  being the keeper of any public place
knumberingly permits prostitutes for purposes of
their trade to resort to or remain in such
place or
 b  being the tenant lessee occupier or
person in charge of any premises referred to
in sub-section  1  knumberingly permits
the same
or any part thereof to be. used for
prostitution or
 c  being the owner lessor or landlord of
any premises referred to in sub-section  1
or the agent of such owner lessor or
landlord lets the same or any part thereof
with the knumberledge that the same or any part
thereof may be used for prostitution or is
wilfully a party to such use shall be
punishable on first companyviction with
imprisonment for a term which may extend to
three months or with fine which may extend to
two hundred rupees or with both and in the
event of a second or subsequent companyviction
with imprisonment for a term which may extend
to six months and also with fine which may
extend to two hundred rupees
public place is defined in s. 2 h  as meaning any place
intended for use by or accessible to the public and includes
and public companyveyance. number we may refer to s. 18. it reads -

a magistrate may on receipt of
information from the police or otherwise that
any house room place or any portion thereof
within a distance of two hundred yards of any
public place referred to in sub-section  1  of
section 7 is being run or used as a brothel
by any person or is being used by prostitutes
for carrying on their trade issue numberice on
the owner lessor
or landlord of such house room place or por-
tion or the agent of the owner lessor or
landlord or on the tenant lessee occupier
of or any other person in charge of such
house room place or portion to show cause
within seven days of the receipt of the numberice
why the same should number be attached for
improper user thereof and if after hearing
the person companycerned the magistrate is
satisfied that the house room place or
portion is being used as a brothel or for
carrying on prostitution then the magistrate
may pass orders-
 a  directing eviction of the occupier
within seven days of the passing of the order
from the house room place or portion
 b  directing that before letting it out
during the period of one year immediately
after the passing of the order the owner
lessor or landlord or the agent of the owner
lessor or landlord shall obtain the previous
approval of the magistrate
provided that if the magistrate finds that the owner
lessor or landlord as well as the agent of the owner lessor
or landlord was innumberent of the improper user of the house
room place or portion he may cause the same to be restored
to the owner lessor or landlord or the agent of the owner
lessor or landlord with a direction that the house room
place or portion shall number be leased out or otherwise given
possession of to or for the benefit of the person who was
allowing the improper user therein. a companyrt companyvicting a person of any offence under
section 3 or section 7 may pass orders under sub-section
 1  without further numberice to such person to show cause as
required in that sub-section. orders passed by the magistrate or companyrt under sub-
section  1  or sub-section  2  shall number be subject to
appeal and shall number be stayed or set aside by the order of
any companyrt civil or criminal and the said orders shall
cease to have validity after the expiry of one year
provided that where a companyviction under section 3 or section
7 is set aside on appeal on the ground that such house
room place or any portion thereof is number being run or used
as a brothel or is number being used by prostitutes for
carrying on their trade any order passed by the trial companyrt
under sub-section  1  shall also be set aside. numberwithstanding anything companytained in
any other law for the time being in force
when a magistrate passes an order under sub-
section  1  or a companyrt passes an order under
sub-section  2  any lease or agreement under
which the house room place or portion is
occupied at the time shall become void and
inumbererative. when an owner lessor or landlord or
the agent of such owner lessor or landlord
fails to companyply with a direction given under
clause  b  of sub-section  1  he shall be
punishable with fine which may extend to five
hundred rupees or when he fails to companyply with
a direction under the proviso to that sub-
section he shall be deemed to have companymitted
an offence under clause  b  of sub-section  2
of section 3 or clause  c  of sub-section  2
of section 7 as the case may be and
punished accordingly. sections 3 and 7 provide for the punishment of persons
guilty of the offences mentioned therein. any companytravention
of the provisions mentioned therein amounts to a companynizable
offence in view of section 14 whereas a proceeding under
s.18 is in numbersense a prosecution. it is a preventive
measure. it is intended to minimise the chance of a brothel
being run or prostitution being carried on in premises near
about public places. naturally in the case of
prosecutions a regular trial with a right of appeal is
provided for. the enquiry companytemplated by s.18 is summary
in character. the attachment companytemplated by that section can enure only
for a period of one year. under these circumstances
evidently the legislature thought that a regular trial and
an appeal against the order of the magistrate is number called
for. in these cases it is unnecessary for us to spell out
the scope of the expression hearing found in s.18. it is
necessary to remember that ss.3 and 7 deal with persons
guilty of offences whereas s.18 deals with the premises
mentioned therein. it is number companyrect to say that the set of
facts to be proved in prosecutions under ss.3 or 7 and in
proceedings under s.18 are identical. in the former the
prosecution to succeed has to establish either the intention
or knumberledge referred to therein but in the latter they are
number necessary ingredients. section 18 provides for two
classes of cases namely  1  those companying either under s. 3
or 7 as well as under s. 18 and  2  those companying only under
s. 18. they are two distinct classes of cases-a
classification which has reasonable relationship with the
object sought to be achieved and therefore falls outside the
rule laid down by this companyrt in anwar ali sarkars 1  case.  1  1962 s.c.r. 284.  n 1sci-15 a
from the companyies of the reports made in these cases to the
magistrate by the police-made available to us at the hearing
of these appeals-it is clear that they disclose offences
under s.3 against the respondents. therefore the question
is whether the magistrate can choose to ignumbere the
cognizable offence companyplained of and merely have recourse to
s.18 and thus deprive the parties proceeded against of the
benefit of a regular trial as well as the right of appeal in
the event of their companyviction. bearing in mind the purpose
of these provisions as well as the scheme of the act and on
a harmonious companystruction of the various provisions in the
act we are of the opinion that in cases like those before
us the magistrate who is also a companyrt as provided in s.22
must at the first instance proceed against the persons
complained against under the penal provisions in ss.3 or 7
as the case may be and only after the disposal of those
cases take action under s.18 if there is occasion for it. under s.190 1  b  of the companye of criminal procedure the
magistrate is bound to take companynizance of any companynizable
offence brought to his numberice. the words may. take companyni-
zance in the companytext means must take companynizance. he has
numberdiscretion in the matter otherwise that section will be
violative of art. 14. but as laid down in delhi
administration v. ram singh 1  only an officer mentioned in
s.13 can validly investigate an offence under the act. hence if the cases before us had been investigated by such
an officer there is numberdifficulty for the magistrate to
take companynizance of those cases. otherwise it is open to him
to direct fresh investigations by companypetent police officers
before deciding whether the facts placed before him disclose
any companynizable offence.