A) ABSTRACT / HEADNOTE

The Supreme Court in Mckenzie & Co. Ltd. v. Its Workmen and Others addressed the jurisdiction and scope of Industrial Tribunals and Labour Appellate Tribunals in reviewing disciplinary actions undertaken by management against workmen for misconduct during pendency of industrial disputes. The dispute arose when employees of Mckenzie & Co. Ltd. confined their works manager during an illegal strike and refused to resume work, leading to their dismissal following an enquiry by the management. After the Industrial Tribunal refused permission to dismiss many workers under Section 33 of the Industrial Disputes Act, 1947, a second enquiry was held, resulting in termination of several employees. The Labour Appellate Tribunal overturned these dismissals on the ground that the management’s evidence lacked credibility. The Supreme Court ruled that Tribunals cannot sit as appellate bodies over managerial decisions unless the enquiry violates natural justice or amounts to victimisation or unfair labour practice. The Court emphasized that findings under Section 33 do not operate as res judicata for subsequent industrial adjudication under Section 10.

Keywords: Industrial Disputes Act, Section 33, Res Judicata, Industrial Tribunal, Labour Appellate Tribunal, Managerial Enquiry, Natural Justice, Illegal Strike, Dismissal, Jurisdiction.

B) CASE DETAILS

i) Judgement Cause Title
Mckenzie & Co. Ltd. v. Its Workmen and Others

ii) Case Number
Civil Appeal No. 500 of 1957

iii) Judgement Date
October 17, 1958

iv) Court
Supreme Court of India

v) Quorum
J. L. Kapur, J.; S. K. Das, J.; Jafer Imam, J.

vi) Author
Justice J. L. Kapur

vii) Citation
[1959] Supp. SCR 222

viii) Legal Provisions Involved
Industrial Disputes Act, 1947 – Section 10, Section 33, Section 33A

ix) Judgments overruled by the Case
None

x) Case is Related to which Law Subjects
Labour Law, Industrial Law, Administrative Law, Constitutional Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case centered on a disciplinary action by Mckenzie & Co. Ltd. following grave misconduct by its workmen during an ongoing industrial dispute. The company faced an illegal strike wherein employees unlawfully confined the acting works manager E. L. D’Cruz. Subsequently, the management initiated disciplinary proceedings culminating in dismissals after conducting enquiries. However, the Industrial Tribunal and Labour Appellate Tribunal diverged on their interpretations of managerial discretion, prompting this appeal to the Supreme Court. The decision underscores judicial limits on interfering with internal disciplinary actions when managerial processes respect due process and natural justice.

D) FACTS OF THE CASE

During the pendency of a reference under Section 10 of the Industrial Disputes Act, 1947, the workers of Mckenzie & Co. Ltd. engaged in unlawful conduct. On August 3, 1953, they forcibly confined E.L. D’Cruz, the acting works manager, from 9:15 a.m. to 2:15 p.m. inside the factory. This confrontation emerged due to disagreement over the Puja bonus payment.

The company immediately issued notices calling for resumption of work, but workers defied these directions. A lockout was declared after police intervention. The company issued charge sheets demanding explanations, but none were provided. The initial enquiry found workers guilty of gross misconduct warranting dismissal.

Pursuant to Section 33 of the Industrial Disputes Act, 1947, the company sought tribunal permission to dismiss 170 workmen. It later withdrew proceedings against most, pursuing dismissal against 67 employees. Ultimately, permission was granted for dismissing three workers while permission was denied for the others due to doubts over their identity and complicity.

Following the denial, the company initiated fresh proceedings, issuing new charge sheets through registered post and by affixing notices on notice boards. Despite these efforts, many notices returned unserved. The management completed its enquiry and dismissed 64 employees on June 22, 1955.

This led to a fresh reference under Section 10 of the Industrial Disputes Act. Sixteen employees resigned, one pleaded guilty, and proceedings continued against 47 workers. The Industrial Tribunal upheld dismissals of some workers but ordered reinstatement of others citing improper notice. The Labour Appellate Tribunal later overturned these dismissals, holding that management’s findings were unreliable.

E) LEGAL ISSUES RAISED

i) Whether the Labour Appellate Tribunal erred by setting aside the dismissals while acting beyond its jurisdiction.

ii) Whether the management complied with principles of natural justice and standing orders in conducting the enquiry.

iii) Whether the second enquiry was barred by principles of res judicata under Section 33 of the Industrial Disputes Act, 1947.

iv) Whether the dismissed workmen were entitled to back wages or compensation.

F) PETITIONER/ APPELLANT’S ARGUMENTS

i) The counsels for Petitioner / Appellant submitted that

The company, represented by M.C. Setalvad, Attorney-General of India, asserted that the management fully complied with its standing orders and the principles of natural justice. Notices were served by registered post and through affixation on notice boards inside and outside factory premises, as per the company’s rules.

The management emphasized that the Labour Appellate Tribunal incorrectly reviewed evidence as if sitting in appeal, exceeding its jurisdiction established under Indian Iron and Steel Co. Ltd. v. Their Workmen, AIR 1958 SC 130, which restricted Tribunal intervention to instances of bad faith, victimisation, discrimination, or violation of natural justice.

They also argued that Section 33 proceedings do not constitute adjudication of disputes but merely involve the tribunal’s permission mechanism. Therefore, findings under Section 33 did not operate as res judicata for subsequent industrial disputes adjudicated under Section 10.

The management cited several precedents including Lakshmi Devi Sugar Mills Ltd. v. Pt. Ram Sarup, AIR 1957 SC 82 and Hanuman Jute Mills v. Amin Das, AIR 1957 SC 194, affirming that managerial findings on employee misconduct deserve deference if legally compliant.

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that

The workers, represented by Y. Kumar, argued that the second enquiry was barred under res judicata, as the Industrial Tribunal previously refused dismissal permission for most workers under Section 33.

They contended that the management failed to adequately serve notice upon workmen numbered 2 to 24. Since these workers were not in attendance, mere affixation of notices was insufficient and alternative methods such as newspaper publications or Union notifications should have been employed.

The counsel alleged basic errors in managerial evidence, particularly highlighting inconsistencies in the testimony of witness Sergeant Lourds, who testified that 100 to 130 persons were involved, while only 67 workmen faced proceedings. This, according to the respondents, suggested arbitrary targeting.

They sought compensation for the period of wrongful dismissal, citing that once dismissal was found wrongful, back wages must follow automatically.

H) RELATED LEGAL PROVISIONS

i) Industrial Disputes Act, 1947

• Section 10 – Reference of industrial disputes for adjudication.

• Section 33 – Conditions of service during pendency of proceedings.

• Section 33A – Complaint against contravention of Section 33 during pendency of proceedings.

I) JUDGEMENT

a. RATIO DECIDENDI

i) The Supreme Court ruled that the Labour Appellate Tribunal erred by exceeding its jurisdiction. Tribunals cannot review managerial decisions unless misconduct inquiries demonstrate bad faith, unfair labour practices, or breaches of natural justice, as established in Indian Iron and Steel Co. Ltd. v. Their Workmen, AIR 1958 SC 130.

The Court confirmed that managerial determination of misconduct based on factual enquiry is not appealable unless vitiated by procedural irregularity or mala fide intentions. The Labour Appellate Tribunal wrongly rejected E.L. D’Cruz’s testimony solely because it previously lacked evidence against certain workers.

The Court rejected the res judicata argument, clarifying that Section 33 does not involve adjudication of disputes but merely permission to effect disciplinary action. Hence, refusal of permission earlier did not preclude the company from conducting a second enquiry under separate proceedings initiated via Section 10.

The company followed its standing orders by affixing notices on the notice boards and attempting registered delivery. Workers cannot frustrate disciplinary processes by intentionally remaining untraceable.

The Court set aside both the Labour Appellate Tribunal’s ruling and Industrial Tribunal’s partial reinstatement order for workmen numbered 2 to 24.

b. OBITER DICTA 

i) The Court observed that workers cannot frustrate disciplinary processes by withholding addresses or avoiding service, as that would render standing orders meaningless. The employer had exhausted reasonable avenues for serving notices.

c. GUIDELINES 

• Industrial Tribunals cannot sit in appeal over managerial discretion in disciplinary actions.

• The employer’s compliance with standing orders is sufficient for service of notices.

• The Tribunal may interfere only where there is evidence of:

  • Lack of good faith.

  • Victimisation.

  • Discrimination.

  • Basic procedural errors violating natural justice.

• Proceedings under Section 33 do not bar fresh adjudication under Section 10.

• Mere refusal of permission under Section 33 is not res judicata for future disputes.

J) CONCLUSION & COMMENTS

This judgment fortifies managerial prerogative in internal disciplinary actions while drawing a strict boundary for judicial intervention. It safeguards employers from procedural manipulation by delinquent employees who evade service or exploit technicalities. The ruling balances natural justice with operational realities, emphasizing that judicial bodies must not micromanage managerial discretion unless substantive injustice is apparent.

The Supreme Court’s meticulous reasoning harmonizes multiple precedents, reinforcing a uniform jurisprudential approach under industrial law. It clarifies the limited nature of Section 33 proceedings, preventing its misuse as a perpetual shield for indiscipline.

K) REFERENCES

a. Important Cases Referred

i) Indian Iron and Steel Co. Ltd. v. Their Workmen, AIR 1958 SC 130 [5]
ii) Lakshmi Devi Sugar Mills Ltd. v. Pt. Ram Sarup, AIR 1957 SC 82 [5]
iii) Hanuman Jute Mills v. Amin Das, AIR 1957 SC 194 [5]
iv) Automobile Products of India Ltd. v. Rukmaji Bala, [1955] I SCR 1241 [5]
v) Atherton West & Co. Ltd. v. Suti Mill Mazdoor Union, [1953] SCR 780 [5]
vi) Buckingham and Carnatic Co. Ltd. v. Its workmen, (1952) L.A.C. 490 [5]

b. Important Statutes Referred

i) Industrial Disputes Act, 1947 – Sections 10, 33, 33A [5]
ii) Standing Orders under Industrial Employment (Standing Orders) Act, 1946 [5]