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C.A. VAIDIALINGAM, J
(1) proper interpretation of Section 11-A of the Industrial Disputes Act; and
. – In these appeals, by special leave, two common questions arise for
consideration—
(2) whether the above section applies to industrial disputes which have already been
referred to for adjudication and were pending as on December 15, 1971.
- Section 11-A was incorporated in the Industrial Disputes Act, 1947 (hereinafter referred to as the
Act) by Section 3 of the Industrial Disputes (Amendment) Act, 1971 (hereinafter referred to as the
Amendment Act). The Amendment Act passed by Parliament received the assent of the President on
Decembers, 1971. Sub-section (2) of Section 1 provided for its coming into force on such date as the
Central Government by notification in the official Gazette appoints. The Central Government by
Notification No. F.S. 110-13/1/71-LRI, dated December 14, 1971, appointed the 15th day of December
1971, as the date on which the said Act would come into force. Accordingly, the Amendment Act came
into force with effect from December 15, 1971. The Amendment Act introduced various amendments to
the Act. In particular by Section 3, it inserted the new Section 11-A in the Act. - Regarding Section 11-A, in the Statement of Objects and Reasons it is stated as follows:
“In Indian Inn and Steel Company Limited v. Their Workmen [AIR 1958 SC 130 at 138],
the Supreme Court, while considering the Tribunal’s power to interfere with the management’s
decision to dismiss, discharge or terminate the services of a workman, has observed that in case
of dismissal on misconduct, the Tribunal does not act as a court of appeal and substitute its own
judgment for that of the management and that the Tribunal will interfere only when there is want
of good faith, victimisation, unfair labour practice, etc., on the part of the management.
The International Labour Organisation, in its recommendation (No. 119) concerning
termination of employment at the initiative of the employer, adopted in June 1963, has
recommended that a worker aggrieved by the termination of his employment should be entitled to
appeal against the termination among others, to a neutral body such as an arbitrator, a court, an
arbitration committee or a similar body and that the neutral body concerned should be
empowered to examine the reasons given in the termination of employment and that other
circumstances relating to the case and to render a decision on the justification of the termination.
The International Labour Organization has further recommended that the neutral body should be
empowered (if it finds that the termination of employment was unjustified) to order that the
worker concerned, unless reinstated with unpaid wages, should be paid adequate compensation or
afforded some other relief.
In accordance with these recommendations, it is considered that the Tribunal’s power in an
adjudication proceeding relating to discharge or dismissal of a workman should not be limited
and that the Tribunal should have the power in cases wherever necessary to set aside the order of
discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if
any, as it thinks fit or give such other reliefs to the workman including the award of any letter
punishment in lieu of discharge or dismissal as the circumstances of the case may require. For
this purpose, a new Section 11-A is proposed to be inserted in the Industrial Disputes Act,
1947….” - There is no controversy that in all the four appeals, the reference had been made long before the
date of coming into force of Section 11-A and the Industrial Disputes were pending adjudication at the
hands of the concerned authorities on December 15, 1971. In respect of such disputes the concerned
Labour Court or Tribunal had to consider the question whether Section 11-A applies to those proceedings
and also the further question as to the powers to be exercised by them in respect of such disputes. On
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behalf of the companies, it appears to have been urged that the section does not apply to the disputes
which had already been referred to for adjudication and that the management had a right to adduce
evidence to justify the action taken against the workmen even though no enquiry had been held before the
order of discharge or dismissal had been passed and also in cases were the enquiry held is found to be
defective. This claim was resisted on behalf of the labour on the ground that the section applies to all
proceedings which were pending as on December 15, 1971 and that the management, if it had not held
any enquiry or if the enquiry conducted by it was found to be defective, has no right to adduce evidence
before the authority to justify its action. Different views have been expressed by the Tribunals concerned
as will be seen from what is stated below. - In Civil Appeal No. 1461 of 1972, the Reference (I.T.) No. 307 of 1968, related to the question of
reinstatement of a number of workmen, who had been dismissed. The Industrial Tribunal, Maharashtra,
Bombay considered the question whether Section 11-A applies to the reference, which had been made as
early as August 12, 1968. The Industrial Tribunal b its order, dated April 21, 1972, has held that the
restrictions imposed upon the powers of the Labour Court or Tribunal to interfere with orders of dismissal
passed by the management, have been removed by Section 11-A, which has the effect of affecting the
substantive part of the law of master and servant and, therefore, the said section has no retrospective
effect. The Tribunal has held that the concerned reference will have to be disposed of as though Section
11-A was not in the statute. The workmen have come up in appeal. - Civil Appeal No. 1995 of 1972 arises out of the order, dated June 28, 1972 of the Fifth Labour
Court at Bombay in Reference (I.D.A.) No. 268 of 1970. The Labour Court has held that Section 11-A
applies even to all proceedings pending adjudication as on December 15, 1971, as it only deals with
matters of procedure. The said Court has further held that the new section makes it clear that there must
be a proper enquiry by an employer before dismissing or discharging a workman and that if no enquiry
has been held or if the enquiry held is found to be defective, there is no option but to reinstate the
employee. In this view, the Labour Court has further held that an employer under those circumstances has
no right to adduce evidence in the adjudication proceedings to justify his action. Against all these three
orders the company has filed appeals.
7-8. The management and the workmen concerned in certain other disputes have also intervened in
these appeals and they have placed before us copies of the orders passed by other authorities. It will be
useful to refer to the views expressed by some of those authorities. In Reference (IDA) No. 79 of 1971,
the Second Labour Court in its order, dated April 13, 1972, has held as follows:
Section 11-A gives power to the Labour Court to scrutinise domestic enquiries similar to that
of an appellate court. The said section comes into play only after the court has come to a
conclusion that the enquiry held by an employer was proper. Both parties have still a right to
adduce evidence to prove the legality or otherwise of the domestic enquiry. Even if no enquiry
has been held by an employer or if the enquiry is held to be defective, reinstatement cannot be
ordered straight away as urged by the labour. On the other hand, an employer has got a right to
adduce evidence to justify the action taken by him. But Section 11-A deals only with procedural
matters and, therefore, it operates retrospectively. - Similarly in Reference (IDA) No. 41 of 1966, the First Labour Court Bombay in its order, dated
January 3, 1973, has held that the section is retrospective in its operation and that the employer has got a
right to lead evidence before the Labour Court, if the domestic enquiry has not been held or is found to be
defective. - From what is stated above, it is clear that there is a very wide divergence of views expressed by
the various authorities, both regarding the applicability of the section to pending proceedings as well as
the interpretation to be placed on the said section. - We will first take up the question regarding the proper interpretation to be placed on Section 11-
A. The contentions of Mr Deshmukh, learned counsel, who advanced the main arguments in this regard
on behalf of the workmen are as follows.
78 - Originally limitation had been placed by Judicial decisions in respect of the jurisdiction of the
Labour Tribunals when considering the action of an employer in the matter of discharge or dismissal of a
workman. If a domestic enquiry had been held by an employer on the basis of which a workman is
dismissed or discharged, the Labour Courts can interfere with the decision of the management only if the
domestic enquiry is vitiated by the circumstances mentioned by this Court in Indian Iron and Steel Co.
Ltd. v. Their Workmen. Once the Tribunals hold that the domestic enquiry has been conducted properly
and the action of an employer is bona fide and the conclusions arrived at therein are plausible, they had no
jurisdiction to substitute their own judgment. In cases where the misconduct is found to be proved by a
valid and proper domestic enquiry, the Tribunal bad no power to alter the punishment imposed by an
employer. Even in cases where the domestic enquiry is held to be defective or even if no domestic
enquiry had been conducted by an employer before passing an order of termination or discharge, the
employer was given an opportunity to adduce evidence before the Tribunal to justify his action. Once the
Tribunal accepts that evidence and holds that the misconduct is proved, it had no power to interfere with
the discretion of the management regarding the quantum of punishment. - The above position has been completely changed by Section 11-A. It is now obligatory on an
employer to hold a proper domestic enquiry in which all material evidence will have to be adduced. When
a dispute is referred for adjudication and it is found that the domestic enquiry conducted by the
management is defective or if it is found that no domestic enquiry at all had been conducted, the order of
discharge or termination passed by the employer becomes, without anything more, unjustified and the
Labour Tribunals have no option but to direct the reinstatement of the workman concerned, as his
discharge or dismissal is illegal. Even in cases where a domestic enquiry has been held and finding of
misconduct recorded, the Labour Tribunals have now full power and jurisdiction to reappraise the
evidence and to satisfy themselves whether the evidence justifies the finding of misconduct. Even if the
enquiry proceedings are held to be proper and the finding of misconduct is also accepted, the Tribunal has
now power to consider whether the punishment of dismissal or discharge was necessary for the type of
misconduct of which the workman is found guilty. In such circumstances, the Tribunal can also give any
other relief to the workman, including the imposing of a lesser punishment. In case’s where an employer
had not conducted any enquiry or when the enquiry conducted by him is held to be defective, the
employer will not be given any opportunity to adduce evidence before the Labour Tribunal for justifying
his action. Various decisions of this Court have emphasised that there is an obligation on the part of an
employer to hold a proper enquiry before dismissing or discharging a workman. And it has also been
stated that the enquiry should conform to certain well defined principles and that it should not be an
empty formality. If the management, being fully aware of this position in law, does not conduct an
enquiry or conducts a defective enquiry, the order passed by it is illegal and it cannot take advantage of
such illegality or wrong committed by it and seek a further opportunity before the Tribunal of adducing
evidence for the first time. Generally, the Standing Orders also provide for the conduct of an enquiry
before imposing a punishment. The Standing Orders have been held to be statutory terms of conditions of
service. If an employer does not conform to the provisions of the Standing Orders, he commits an
illegality and an order passed, which is illegal, has only to be straight-away set aside by the Tribunal.
Decisions of this Court, while recognising that an opportunity has to be given to an employer to adduce
evidence before the Tribunal for the first time, have not given due importance to the effect of a breach of
a statutory obligation committed by an employer in not conducting a proper and valid enquiry as per the
Standing Orders. This anomaly has now been removed by the Legislature. - The above is the line of argument adopted by Mr Deshmukh. He referred us to certain decisions
of this Court in support of his contentions that the opportunity that was so far directed to be given to an
employer to adduce evidence for the first time before the Tribunal was not by way of recognising a right
in an employer but really for the benefit of the workman, who will otherwise be jeopardised by a further
enquiry being conducted by the employer after filling up the lacunae that are found in the original
enquiry. He pointed out that when the Tribunals have now been clothed with full power to reappraise the
evidence adduced in the domestic enquiry, which an employer is under obligation to conduct, and when
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they have been clothed with powers to hold as unjustified an order of termination because of the enquiry
proceeding being defective or on the ground that no enquiry at all was conducted, the basis for giving an
employer an opportunity to adduce evidence before the Tribunal no longer survives Mr Deshmukh was
prepared to accept that even now it is open to the parties to adduce evidence before the Tribunal, strictly
limited to the validity or otherwise of a domestic enquiry conducted by an employer. The counsel relied
very heavily on the proviso to Section 11-A in support of his contention that it is obligatory now for an
employer to conduct a proper and valid enquiry before passing an order of dismissal or discharge. - The above contentions of Mr Deshmukh have been adopted by Miss Indra Jai Singh, Mr Madan
Mohan and Mr Bhandare, counsel appearing for certain other workmen. Mr Bhandare, however, was
prepared to take a slightly different stand regarding the proviso to Section 11-A. According to him only
such evidence, which could and should have been produced by the parties in the domestic enquiry, is not
allowed to be adduced before the Tribunal. - Mr Damania, learned counsel, who advanced the leading arguments on behalf of the employers
broadly contended as follows:
The restrictions imposed upon the jurisdiction exercised by the Labour Tribunals in respect
of disputes arising out of orders passed by way of dismissal or discharge, as laid down by this
Court in a number of decisions over a period of years, have not been altered by the new section.
The right of an employer to manage his affairs in his own way, provided he does not act
arbitrarily, is kept intact. The common law relationship of master and servant was recognised,
except to the extent that it was modified by the decision of this Court in Indian Iron and Steel
Co. Ltd. and Another v. Their Workmen. An employer is expected to hold a domestic enquiry
before an order of dismissal or termination is passed. He is also bound to follow, in such cases,
the principles of natural justice and the procedure laid down by the relevant Standing Orders. The
Tribunal will not interfere with the finding recorded by an employer in a proper enquiry merely
on the ground that it would have come to a different conclusion. The punishment to be meted out
was entirely within the powers and jurisdiction of an employer and it was no part of the
jurisdiction of a Tribunal to decide whether the said punishment was justified except in very rare
cases where the punishment imposed is so grossly out of proportion, so as to suggest
victimisation or unfair labour practices. This was the position vis-a-vis the management as on
December 15, 1971. But under Section 11-A, after the Tribunal holds that the enquiry has been
conducted properly by an employer and that the finding about misconduct is correct, it has
jurisdiction to consider whether the punishment requires modification. If it holds that the
punishment has to be modified, it has power to do so and award a lesser punishment. Section 11-
A comes into effect only at the time when the Tribunal considers about the punishment to be
imposed. While previously the Tribunal had no power to interfere with the punishment, it is now
clothed with such a power. This is the only modification regarding the powers of the
management that has been introduced by Section 11-A. Neither the fact that no enquiry at all has
been held by an employer nor the circumstances that the enquiry, if any held, is found to be
defective, stands in the way of an employer adducing evidence before the Tribunal for the first
time to justify his action taken against a workman. - Mr Setalvad, learned counsel, appearing for Larsen and Toubro Ltd. adopted these contentions of
Mr Damania. He, however, referred us to the provisions of Section 33 of the Act. According to him when
the previous permission or an approval for dismissing or discharging a workman has been obtained under
Section 33, the Tribunal concerned would have applied its mind and satisfied itself at least prima facie
that the proposed action of the employer was justified. Such satisfaction may be arrived at on perusal of
the records of domestic enquiry, if one had been conducted or on the basis of evidence placed before the
Tribunal by an employer for the first time. The said order of dismissal or discharge can nevertheless be
the subject of an industrial dispute. When such dispute is being adjudicated by the Tribunal, the records
pertaining to the proceedings under Section 33 will be relied on by an employer as material on record. It
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will lead to an anomaly if it is held that the Tribunal can straight-away order reinstatement merely
because no domestic enquiry has been held or the domestic enquiry conducted is defective for one reason
or other. Therefore, he pointed out that the proper way of interpreting Section 11-A would be to hold that
it comes into play after a Tribunal has held the enquiry proceedings conducted by the management to be
proper and the finding of guilt justified. It is then that the Tribunal can consider whether the punishment
imposed is justified. If it is of the opinion that the punishment is not justified, it can alter the same. - We have broadly indicated above the stand taken on behalf of the workmen and the employers
regarding the interpretation of Section 11-A. - Before we proceed to consider the contents of the section, having due regard to the arguments
advanced before us, it is necessary to indicate the legal position, as on December 15, 1971, regarding the
powers of a Labour Court or Tribunal when deciding a dispute arising out of dismissal or discharge of a
workman. There are several decisions of this Court, as also of the Labour Appellate Tribunal laying down
the principles in this regard, but we will refer only to a few of them. - In discussing the nature of the jurisdiction exercised by an Industrial Tribunal when adjudicating a
dispute relating to dismissal or discharge, it has been emphasised by this Court in Indian Iron Steel and
Co. Ltd., as follows:
“Undoubtedly, the management of a concern has power to direct its own internal
administration and discipline; but the power is not unlimited and when a dispute arises, Industrial
Tribunals have been given the power to see whether the termination of service of a workman is
justified and to give appropriate relief. In cases of dismissal on misconduct, the Tribunal does
not, however, act as a Court of appeal and substitute its own judgment for that of the
management. It will interfere: (i) when there is want of good faith; (ii) when there is victimisation
or unfair labour practice; (iii) when the management has been guilty of a basic error or violation
of a principle of natural justice, and (iv) when on the materials the finding is completely baseless
or perverse.” - This is the decision which has been referred to in the Statement of Objects and Reasons already
adverted to. It may be noted that the four circumstances pointed out by this Court justifying interference
at the hands of the Tribunal are substantially the same as laid down by the Labour Appellate Tribunal in
Buckingham and Carnatic Company case. - Following the decision in Indian Iron and Steel Co. Ltd. case, this Court in Punjab National
Bank Ltd. v. Its Workmens, held:
“In cases where an industrial dispute is raised on the ground of dismissal and it is referred to
the tribunal for adjudication, the tribunal naturally wants to know whether the impugned
dismissal was preceded by a proper enquiry or not. Where such a proper enquiry has been held in
accordance with the provisions of the relevant standing orders and it does not appear that the
employer was guilty of victimisation or any unfair labour practice, that tribunal is generally
reluctant to interfere with the impugned order.”
It was further emphasised that:
“There is another principle which has to be borne in mind when the tribunal deals with an
industrial dispute arising from the dismissal of an employee. We have already pointed out that
before an employer can dismiss his employee he has to hold a proper enquiry into the alleged
misconduct of the employee and that such an enquiry must always begin with the supply of a
specific charge-sheet to the employee.”
The effect of an employer not holding an enquiry has been stated as follows:
“But it follows that if no enquiry has in fact been held by the employer, the issue about the
merits of the impugned order of dismissal is at large before the tribunal and, on the evidence
adduced before it, the tribunal has to decide for itself whether the misconduct alleged is proved,
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and if yes, what would be proper order to make. In such a case the point about the exercise of
managerial functions does not arise at all.” - In M/s Bharat Sugar Mills Ltd. v. Shri Jai Singh, the question arose regarding the powers of an
Industrial Tribunal to permit an employer to adduce evidence before it justifying its action after the
domestic enquiry was held to be defective. It was contended on behalf of the workmen that when once the
domestic enquiry was found to be defective, the tribunal had no option but to dismiss the application filed
by an employer for approval and that it cannot allow an employer to adduce evidence before it justifying
its action. This Court rejected this contention as follows:
“When an application for permission for dismissal is made on the allegation that the
workman has been guilty of some misconduct for which the management considers dismissal the
appropriate punishment the Tribunal has to satisfy itself that there is a prima facie case for such
dismissal. Where there has been a proper enquiry by the management itself the Tribunal, it has
been settled by a number of decisions of this Court, has to accept the finding arrived at in that
enquiry unless it is perverse and should give the permission asked for unless it has reason to
believe that the management is guilty of victimisation or has been guilty of unfair labour practice
or is acting mala fide. But the mere fact that no enquiry has been held or that the enquiry has not
been properly conducted cannot absolve the Tribunal of its duty to decide whether the case that
the workman has been guilty of the alleged misconduct has been made out. The proper way of
performing this duty where there has not been a proper enquiry by the management is for the
Tribunal to take evidence of both sides in respect of the alleged misconduct. When such evidence
is adduced before the Tribunal the management is deprived of the benefit of having the findings
of the domestic tribunal being accepted as prima facie proof of the alleged misconduct unless the
finding is perverse and to prove to the satisfaction of the Tribunal itself that the workman was
guilty of the alleged misconduct. We do not think it either just to the management or indeed even
fair to the workman himself that in such a case the Industrial Tribunal should refuse to take
evidence and thereby drive the management to make a further application for permission after
holding a proper enquiry and deprive the workman of the benefit of the Tribunal itself being
satisfied on evidence adduced before it that he was guilty of the alleged misconduct.” - In the above decision, this Court quoted with approval the decision of the Labour Appellate
Tribunal in Buckingham and Camatic Company Ltd., holding that the materials on which a Tribunal acts
may consist of—
“(i) entirely the evidence taken by the management at the enquiry and the proceedings of the
enquiry, or
(2) that evidence and in addition thereto further evidence led before the Tribunal, or
(3) evidence placed before the Tribunal for the first time in support of the charges.”
It was further emphasised that:
“For a long time now, it has been settled law that in the case of an adjudication of a dispute
arising out of a dismissal of a workman by the management (as distinct from an application for
permission to dismiss under Section 33), evidence can be adduced for the first time before the
Industrial Tribunal. The important effect of the omission to hold an enquiry is merely this, that
the Tribunal would not have to consider only whether there was a prima facie case but would
decide for itself on the evidence adduced whether the charges have really been made.”
The observations made by this Court in The Punjab National Bank Ltd. case, were quoted with
approval. It was further held that the reasons for which it is proper for a Tribunal to take evidence itself as
regards the alleged misconduct when adjudicating upon a dispute arising out of an order of dismissal are
equally present in a case where the management makes an application for permission to dismiss an
employee without holding a proper enquiry. Ultimately, this Court upheld the order of the Tribunal
allowing the employer to adduce evidence before it in support of if application for permission to dismiss
an employee even though the domestic enquiry held by it was held to be highly defective.
82 - The powers of a Tribunal when a proper enquiry has been held by an employer as well as the
procedure to be adopted when no enquiry at all has been held or an enquiry held was found to be
defective, again came up for consideration in Management of Ritz Theatre (P) Ltd. v. Its Workmen.
Regarding the powers of a Tribunal when there has been a proper and fair enquiry, it was held:
“It is well settled that if an employer serves the relevant charge or charges on his employee
and holds a proper and fair enquiry, it would be open to him to act upon the report submitted to
him by the enquiry officer and to dismiss the employee concerned. If the enquiry has been
properly held, the order of dismissal passed against the employee as a result of such an enquiry
can be challenged if it is shown that the conclusions reached at the departmental enquiry were
perverse or the impugned dismissal is vindictive or mala fide, and amounts to an unfair labour
practice. In such an enquiry before the Tribunal, it is not open to the Tribunal to sit in appeal over
the findings recorded at the domestic enquiry. This Court has held that when a proper enquiry has
been held, it would be open to the enquiry officer holding the domestic enquiry to deal with the
matter on the merits bona fide and come to his own conclusion.”
Again regarding the procedure to be adopted when there has been no enquiry or when there has been a
defective enquiry, it was stated:
“It has also been held that if it appears that the departmental enquiry held by the employer is
not fair in the sense that proper charge had not been served on the employee or proper or full
opportunity had not been given to the employee to meet the charge, or the enquiry has been
affected by other grave irregularities vitiating it, then the position would be that the Tribunal
would be entitled to deal with the merits of the dispute as to the dismissal of the employee for
itself. The same result follows if no enquiry has been held at all. In other words, where the
Tribunal is dealing with a dispute relating to the dismissal of an industrial employee, if it is
satisfied that no enquiry has been held or the enquiry which has been held is not proper or lair or
that the findings recorded by the enquiry officer are perverse, the whole issue is at large before
the Tribunal. This position also is well settled.”
It was further held that it is only where a Tribunal is satisfied that a proper enquiry has not been held
or that the enquiry having been held properly the finding recorded is perverse that the Tribunal derives
jurisdiction to deal with merits of the dispute, when permission has to be given to an employer to adduce
additional evidence. - The right of an employer to lead evidence before the Tribunal to justify his action was again
reiterated in Khardah Co. Ltd. v. Their Workmen, as follows:
“It is well settled that if the enquiry is held to be unfair, the employer can lead evidence
before the Tribunal and justify his action, but in such a case, the question as to whether the
dismissal of the employee is justified or not, would be open before the Tribunal, and the Tribunal
will consider the merits of the dispute and come to its own conclusion without having any regard
for the view taken by the management in dismissing the employee.” - In Workmen of Motipur Sugar Factory (P) Ltd. v. Motipur Sugar Factory the employer bad
charge-sheeted certain workmen and without conducting any enquiry, as required by the standing orders,
passed orders discharging the workmen. Before the Tribunal, the employer adduced evidence justifying
the action taken against the workmen. The workmen were also given an opportunity to adduce evidence
in rebuttal. After a consideration of such evidence, the Tribunal held that the workmen were guilty of
misconduct alleged against them and that the orders of discharge paced by the employer were fully
justified. Before this Court it was contended on behalf of the workmen that when no enquiry whatsoever
had been conducted by the employer, as required by the standing orders, before passing an order of
dismissal or discharge, the Tribunal had no jurisdiction to hold an enquiry itself by permitting the
employer to adduce evidence before it for the first time. In rejecting this contention, it was held:
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“It is now well-settled by a number of decisions of this Court that where an employer has
failed to make an enquiry before dismissing or discharging a workman it is open to him to justify
the action before the tribunal by leading all relevant evidence before it. In such a case the
employer would not have the benefit which he had in cases where domestic enquiries have been
held. The entire matter would be open before the tribunal which will have jurisdiction not only to
go into the limited question open to a tribunal where domestic enquiry has been properly held…
but also to satisfy itself on the facts adduced before it by the employer whether the dismissal or
discharge was justified…. If the enquiry is defective or if no enquiry has been held as required by
standing orders, the entire case would be open before the Tribunal and the employer would have
to justify on facts as well that its order of dismissal or discharge was proper…. A defective
enquiry in our opinion stands on the same footing as no enquiry and in either case the tribunal
would have jurisdiction to go into the facts and the employer would have to satisfy the tribunal
that on facts the order of dismissal or discharge was proper.”
28-A. The reasons for allowing an employer to lead evidence before the Tribunal justifying his action
have been stated thus:
“If it is held that in cases where the employer dismisses his employee without holding an
enquiry, the dismissal must be set aside by the industrial tribunal only on that ground, it would
inevitably mean that the employer will immediately proceed to hold the enquiry and pass an
order dismissing the employee once again. In that case, another industrial dispute would arise and
the employer would be entitled to rely upon the enquiry which he had held in the meantime. This
course would mean delay and on the second occasion it will entitle the employer to claim the
benefit of the domestic enquiry. On the other hand, if in such cases the employer is given an
opportunity to justify the impugned dismissal on the merits of his case being considered by the
tribunal for itself and that clearly would be to the benefit of the employee. That is why this Court
has consistently held that if the domestic enquiry is irregular, invalid or improper, the tribunal
may give an opportunity to the employer to prove his case and in doing so the tribunal tries the
merits itself. This view is consistent with the approach which industrial adjudication generally
adopts with a view to do justice between the parties without relying too much on technical
considerations and with the object of avoiding delay in the disposal of industrial disputes.
Therefore, we are satisfied that no distinction can be made between cases where the domestic
enquiry is invalid and those where the enquiry has in fact been held.” - The rights of an employer to avail itself of an opportunity to satisfy the Tribunal by adducing
evidence, when an enquiry held by it was found to be defective or when no enquiry at all has been held,
have been stated in State Bank of India v. R.K. Jain as follows:
“It should be remembered that when an order of punishment by way of dismissal or
termination of service is effected by the management, the issue that is referred is whether the
management was justified in discharging and terminating the service of the workman concerned
and whether the workman is entitled to any relief. In the present case, the actual issue that was
referred for adjudication to the industrial Tribunal has already been quoted in the earlier part of
the judgment. There may be cases where an inquiry has been held preceding the order of
termination or there may have been no inquiry at all. But the dispute that will be referred is not
whether the domestic inquiry has been conducted properly or not by the management, but the
larger question whether the order of termination, dismissal or the order imposing punishment on
the workman concerned is justified. Under those circumstances it is the right of the workman to
plead all infirmities in the domestic inquiry, if one has been held and also to attack the order on
all grounds available to him in law and on facts. Similarly the management has also a right to
defend the action taken by it on the ground that a proper domestic inquiry has been held by it on
the basis of which the order impugned has been passed. It is also open to the management to
justify on facts that the order passed by it was proper. But the point to be noted is that the inquiry
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that is conducted by the Tribunal is a composite inquiry regarding the order which is under
challenge. If the management defends its action solely on the basis that the domestic inquiry held
by it is proper and valid and if the Tribunal holds against the management on that point, the
management will fail. On the other hand, if the management relies not only on the validity of the
domestic inquiry, but also adduce evidence before the Tribunal justifying its action, it is open to
the Tribunal to accept the evidence adduced by the management and hold in its favour even if its
finding is against the management regarding the validity of the domestic inquiry. It is essentially
a matter for the management to decide about the stand that it proposes to take before the
Tribunal. It may be emphasised, that it is the right of the management to sustain its order by
adducing also independent evidence before the Tribunal. It is a right given to the management
and it is for the management to avail itself of the said opportunity.” - This Court in its recent decision in Delhi Cloth and General Mills Co. Ltd. v. Ludh Budh Singh
after a review of all the earlier cases, has summarized the principles flowing out of those decisions. It has
been emphasized that when no enquiry has been held by an employer or when the enquiry held has been
found to be defective, the employer has got a right to adduce evidence before the Tribunal justifying its
action. The stage at which the employer should invoke the jurisdiction of the Tribunal to allow him to
adduce evidence before it, has also been discussed in the said decision. - We have exhaustively referred to the various decisions of this Court, as they give a clear picture
of the principles governing the jurisdiction of the Tribunals when adjudicating disputes relating to
dismissal or discharge. - From those decisions, the following principles broadly emerge:
(1) The right to take disciplinary action and to decide upon the quantum of punishment are
mainly managerial functions, but if a dispute is referred to a Tribunal, the latter has power to see
if action of the employer is justified.
(2) Before imposing the punishment, an employer is expected to conduct a proper enquiry in
accordance with the provisions of the Standing Orders, if applicable, and principles of natural
justice. The enquiry should not be an empty formality.
(3) When a proper enquiry has been held by an employer, and the finding of misconduct is a
plausible conclusion flowing from the evidence, adduced at the said enquiry, the Tribunal has no
jurisdiction to sit in judgment over the decision of the employer as an appellate body. The
interference with the decision of the employer will be justified only when the findings arrived at
in the enquiry are perverse or the management is guilty of victimisation, unfair labour practice or
mala fide.
(4) Even if no enquiry has been held by an employer or if the enquiry held by him is found to
be defective, the Tribunal in order to satisfy itself about the legality and validity of the order, had
to give an opportunity to the employer and employee to adduce evidence before it. It is open to
the employer to adduce evidence for the first time justifying his action, and it is open to the
employee to adduce evidence contra.
(5) The effect of an employer not holding an enquiry is that the Tribunal would not have to
consider only whether there was a prima facie case. On the other band, the issue about the merits
of the impugned order of dismissal or discharge is at large before the Tribunal and the latter, on
the evidence adduced before it, has to decide for itself whether the misconduct alleged is proved.
In such cases, the point about the exercise of managerial functions does not arise at all. A case of
defective enquiry stands on the same footing as no enquiry.
(6) The Tribunal gets jurisdiction to consider the evidence placed before it for the first time
in justification of the action taken only, if no enquiry has been held or after the enquiry
conducted by an employer is found to be defective.
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(7) It has never been recognised that the Tribunal should straight away, without anything
more, direct reinstatement of a dismissed or discharged employee, once it is found that no
domestic enquiry has been held or the said enquiry is found to be defective.
(8) An employer, who wants to avail himself of the opportunity of adducing evidence for the
first time before the Tribunal to justify his action, should ask for it at the appropriate stage. If
such an opportunity is asked for, the Tribunal has no power to refuse. The giving of an
opportunity to an employer to adduce evidence for the first time before the Tribunal is in the
interest of both the management and the employee and to enable the Tribunal itself to be satisfied
about the alleged misconduct.
(9) Once the misconduct is proved either in the enquiry conducted by an employer or by the
evidence placed before a Tribunal for the first time, punishment imposed cannot be interfered
with by the Tribunal except in cases where the punishment is so harsh as to suggest victimisation.
(10) In a particular case, after setting aside the order of dismissal, whether a workman should
be reinstated or paid compensation is, as held by this Court in Management of Panitole Tea
Estate v. The Workmen within the judicial decision of a Labour Court or Tribunal.
32-A. The above was the law as laid down by this Court as on December 15, 1971, applicable to all
industrial adjudications arising out of orders of dismissal or discharge. - The question is whether Section 11-A has made any changes in the legal position mentioned
above and if so, to what extent? The Statement of Objects and Reasons cannot be taken into account for
the purpose of interpreting the plain words of the section. But it gives an indication as to what the
legislature wanted to achieve. At the time of introducing Section 11-A in the Act, the legislature must
have been aware of the several principles laid down in the various decisions of this Court referred to
above. The object is stated to be that the Tribunal should have power in cases, where necessary, to set
aside the order of discharge or dismissal and direct reinstatement or award any lesser punishment. The
Statement of Objects and Reasons has specifically referred to the limitations on the powers of an
Industrial Tribunal, as laid down by this Court in Indian Iron and Steel Co. Ltd. case. - This will be a convenient stage to consider the contents of Section 11-A. To invoke Section 11-A,
it is necessary that an industrial dispute of the type mentioned therein should have been referred to an
Industrial Tribunal for adjudication. In the course of such adjudication, the Tribunal has to be satisfied
that the order of discharge or dismissal was not justified. If it comes to such a conclusion, the Tribunal
has to set aside the order and direct reinstatement of the workman on such terms as it thinks fit. The
Tribunal has also power to give any other relief to the workman including the imposing of a lesser
punishment having due regard to the circumstances. The proviso casts a duty on the Tribunal to rely only
on the materials on record and prohibits it from taking any fresh evidence. Even a mere reading of the
section, in our opinion, does indicate that a change in the law, as laid down by this Court has been
effected. According to the workmen the entire law has been completely altered; whereas according to the
employers, a very minor change has been effected giving power to the Tribunal only to alter the
punishment, after having held that the misconduct is proved. That is, according to the employers, the
Tribunal has a mere power to alter the punishment after it holds that the misconduct is proved. The
workmen, on the other hand, claim that the law has been re-written. - We cannot accept the extreme contentions advanced on behalf of the workmen and the employers.
We are aware that the Act is a beneficial piece of legislation enacted in the interest of employees. It is
well settled that in construing the provisions of a welfare legislation, courts should adopt, what is
described as a beneficent rule of construction. If two constructions are reasonably possible to be placed on
the section, it follows that the construction which furthers the policy and object of the Act and is more
beneficial to the employees, has to be preferred. Another principle to be borne in mind is that the Act in
question which intends to improve and safeguard the service conditions of an employee, demands an
interpretation liberal enough to achieve the legislative purpose. But we should not also lose sight of
another canon of interpretation that a statute or for the matter of that even a particular section, has to be
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interpreted according to its plain words and without doing violence to the language used by the
legislature. Another aspect to be borne in mind will be that there has been a long chain of decisions of this
Court, referred to exhaustively earlier, laying down various principles in relation to adjudication of
disputes by industrial courts arising out of orders of discharge or dismissal. Therefore it will have to be
found from the words of the section whether it has altered the entire law, as laid down by the decisions,
and, if so, whether there is a clear expression of that intention in the language of the section. - We will first consider cases where an employer has held a proper and valid domestic enquiry
before passing the order of punishment. Previously the Tribunal had no power to interfere with its finding
of misconduct recorded in the domestic enquiry unless one or other infirmities pointed out by this Court
in Indian Iron & Steel Co. Ltd. case, existed. The conduct of disciplinary proceedings and the
punishment to be imposed were all considered to be a managerial function with which the Tribunal had
no power to interfere unless the finding was perverse or the punishment was so harsh as to lead to an
inference of victimisation or, unfair labour practice. This position, in our view, has now been changed by
Section 11-A. The words “in the course of the adjudication proceeding, the Tribunal is satisfied that the
order of discharge or dismissal was not justified” clearly indicate that the Tribunal is now clothed with the
power to reappraise the evidence in the domestic enquiry and satisfy itself whether the said evidence
relied on by an employer establishes the misconduct alleged against a workman. What was originally a
plausible conclusion that could be drawn by an employer from the evidence, has now given place to a
satisfaction being arrived at by the Tribunal that the finding of misconduct is correct. Tile limitations
imposed on the powers of the Tribunal by the decision in Indian Iron & Steel Co. Ltd. case, can no
longer be invoked by an employer. The Tribunal is now at liberty to consider not only whether the finding
of misconduct recorded by an employer is correct; but also to differ from the said finding if a proper case
is made out. What was once largely in the realm of the satisfaction of the employer, has ceased to be so;
and now it is the satisfaction of the Tribunal that finally decides the matter. - If there has been no enquiry held by the employer or if the enquiry is held to be defective, it is
open to the employer even now to adduce evidence for the first time before the Tribunal justifying the
order of discharge or dismissal. We are not inclined to accept the contention on behalf of the workmen
that the right of the employer to adduce evidence before the Tribunal for the first time recognised by this
Court in its various decisions, has been taken away. There is no indication in the section that the said right
has been abrogated. If the intention of the legislature was to do away with such a right, which has been
recognised over a long period of years, as will be noticed by the decisions referred to earlier, the section
would have been differently worded. Admittedly, there are no express words to that effect, and there is no
indication that the section has impliedly changed the law in that respect. Therefore, the position is that
even now the employer is entitled to adduce evidence for the first time before the Tribunal even if he had
held no enquiry or the enquiry held by him is found to be defective. Of course, an opportunity will have to
be given to the workman to lead evidence contra. The stage at which the employer has to ask for such an
opportunity, has been pointed out by this Court in Delhi Cloth and General Mills Co. Ltd. can. No doubt,
this procedure may be time consuming, elaborate and cumbersome. As pointed out by this Court in the
decision just referred to above, it is open to the Tribunal to deal with the validity of the domestic enquiry,
if one has been held as a preliminary issue. If its finding on the subject is in favour of the management,
then there will be no occasion for additional evidence being cited by the management. But if the finding
on this issue is against the management, the Tribunal will have to give the employer an opportunity to cite
additional evidence justifying his action. This right in the management to sustain its order by adducing
independent evidence before the Tribunal, if no enquiry has been held or if the enquiry is held to be
defective, has been given judicial recognition over a long period of years. - All parties are agreed that even after Section 11-A, the employer and employee can adduce
evidence regarding the legality or validity of the domestic enquiry, if one had been held by an employer. - Having held that the right of the employer to adduce evidence continues even under the new
section, it is needless to state that, when such evidence is adduced for the first time, it is the Tribunal
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which has to be satisfied on such evidence about the guilt or otherwise of the workman concerned. The
law, as laid down by this Court that under such circumstances, the issue about the merits of impugned
order of dismissal or discharge is at large before the Tribunal and that it has to decide for itself whether
the misconduct alleged is proved, continues to have full effect. In such a case, as laid down by this Court,
the exercise of managerial functions does not arise at all. - Therefore, it will be seen that both in respect of cases where a domestic enquiry has been held as
also in cases where the Tribunal considers the matter on the evidence adduced before it for the first time,
the satisfaction under Section 11-A, about the guilt or otherwise of the workman concerned, is that of the
Tribunal. It has to consider the evidence and come to a conclusion one way or other. Even in cases where
an enquiry has been held by an employer and a finding of misconduct arrived at, the Tribunal can now
differ from that finding in a proper case and hold that no misconduct is proved. - We are not inclined to accept the contentions advanced on behalf of the employers that the stage
for interference under Section 11-A by the Tribunal is reached only when it has to consider the
punishment after having accepted the finding of guilt recorded by an employer. It has to be remembered
that a Tribunal may hold that the punishment is not justified because the misconduct alleged and found
proved is such that it does not warrant dismissal or discharge. The Tribunal may also hold that the order
of discharge or dismissal is not justified because the alleged misconduct itself is not established by the
evidence. To come to a conclusion either way, the Tribunal will have to re-appraise the evidence for
itself. Ultimately it may hold that the misconduct itself is not proved or that the misconduct proved does
not warrant the punishment of dismissal or discharge. That is why, according to us. Section 11-A now
gives full power to the Tribunal to go into the evidence and satisfy itself on both these points. Now the
jurisdiction of the Tribunal to reappraise the evidence and come to its conclusion enures to it when it has
to adjudicate upon the dispute referred to it in which an employer relies on the findings recorded by him
in a domestic enquiry. Such a power to appreciate the evidence and come to its own conclusion about the
guilt or otherwise was always recognised in a Tribunal when it was deciding a dispute on the basis of
evidence adduced before it for the first time. Both categories are now put on a par by Section 11-A.
41-A. Another change that has been effected by Section 11-A is the power conferred on a Tribunal to
alter the punishment imposed by an employer. If the Tribunal comes to the conclusion that the
misconduct is established, either by the domestic enquiry accepted by it or by the evidence adduced
before it for the first time, the Tribunal originally had no power to interfere with the punishment imposed
by the management. Once the misconduct is proved, the Tribunal had to sustain the order of punishment
unless it was harsh indicating victimisation. Under Section 11-A, though the Tribunal may hold that the
misconduct is proved, nevertheless it may be of the opinion that the order of discharge or dismissal for the
said misconduct is not justified. In other words, the Tribunal may hold that the proved misconduct does
not merit punishment by way of discharge or dismissal. It can, under such circumstances, award to the
workman only lesser punishment instead. The power to interfere with the punishment and alter the same
has been now conferred on the Tribunal by Section 11-A. - Mr Deshmukh, rather strenuously urged that in all its previous decisions, this Court had not
considered a breach – or an illegality, as he calls it – committed by an employer in not holding a domestic
enquiry. The learned counsel urged that this Court has consistently held in several decisions that there is
an obligation on the part of an employer to conduct a proper domestic enquiry in accordance with the
Standing Orders before passing an order of discharge or dismissal. Hence an order passed without such an
enquiry is, on the face of it, illegal. The effect of such an illegal order deprives the employer of an
opportunity being given to him to adduce evidence for the first time before the Tribunal to justify his
action. These aspects, according to the learned counsel, have not been considered by this Court when it
recognised an opportunity to be given to an employer to adduce evidence before the Tribunal. - The above aspect was stressed before us by Mr Deshmukh in support of the contention that
Section 11-A has taken note of such an illegality committed by employers and has now made it obligatory
to conduct a domestic enquiry. According to him, if no such proper and valid domestic enquiry precedes
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the order imposing punishment, the Tribunal now has no alternative but to order reinstatement on that
ground alone. - We have already indicated our views regarding the scope of Section 11-A and held that the right
of an employer to adduce such evidence before the Tribunal has not been taken away. Mr Deshmukh
referred us to Section 23 of the Act prohibiting a workman from going on strike in the circumstances
mentioned therein and further pointed out that if a strike is illegal, it cannot be lawful. Similarly, an illegal
act of an employer in not holding a domestic enquiry cannot be made legal.
45-46. In our opinion, the analogy placed before us by the counsel cannot stand scrutiny. It is not
doubtful that Standing Orders, which have been certified under the Industrial Employment (Standing
Orders) Act, 1946, become part of the statutory terms and conditions of service between the employer and
his employee and that they govern the relationship between the parties. But there is no provision either in
this statute or in the the Act which states that an order of dismissal or discharge is illegal if it is not
preceded by a proper and valid domestic enquiry. No doubt it has been emphasised in the various
decisions of this Court that an employer is expected to hold a proper enquiry before dismissing or
discharging a workman. If that requirement is satisfied, an employer will by and large escape the attack
that he has acted arbitrarily or mala fide or by way of victimisation. If he has held a proper enquiry,
normally his bona fides will be established. But it is not correct to say that this Court, when it laid down
that an employer has a right to adduce evidence for the first time before the Tribunal, was not aware of a
breach committed by an employer of the provisions of the Standing Orders. A similar contention, though
in a different form, advanced on behalf of the workmen was rejected by this Court in Workmen of
Motipur Sugar Factory (Private) Limited. It was specifically contended before this Court by the
workmen therein that when an employer had held no enquiry, as required by the Standing Orders, it was
not open to him to adduce evidence before the Tribunal for the first time and justify the order of
discharge. This contention was rejected by this Court and it was held that if the enquiry was defective or
no enquiry had been held, as required by the Standing Orders, the entire case would be open before the
Tribunal and the employer would have to justify, on evidence as well that its order of dismissal or
discharge was proper. Therefore, this contention cannot be accepted. We may also state that the Industrial
Employment (Standing Orders) Act, 1946, applies only to those industrial establishments which are
covered by Section 1(3). But the field of operation of the Act is such wider and it applies to employers
who may have no Standing Orders at all. If the contention of Mr Deshmukh, regarding Standing Orders is
accepted, then the Act will have to be applied in a different manner to employers, who have no Standing
Orders, and employers who are obliged to have Standing Orders. That is certainly not the scheme of the
Act. - We will now pass on to consider the Proviso to Section 11-A. Mr Deshmukh relied on the terms
of the Proviso in support of his contention that it is now obligatory to hold a proper domestic enquiry and
the Tribunal can only take into account the materials placed at that enquiry. The counsel emphasised that
the Proviso places an obligation on the Tribunal ‘to rely only on the materials on record’ and it also
prohibits the Tribunal from taking ‘any fresh evidence’ in relation to the matters. According to him, the
expression ‘materials on records’ refers to the materials available before the management at the domestic
enquiry and the expression ‘fresh evidence’ refers to the evidence that was being adduced by an employer
for the first time before the Tribunal. From the wording of the Proviso he wants us to infer that the right
of an employer to adduce evidence for the first time has been taken away, as the Tribunal is obliged to
confine its scrutiny only to the materials available at the domestic enquiry.
48-49. We are not inclined to accept the above contention of Mr Deshmukh. The Proviso specifies
matters which the Tribunal shall take into account as also matters which it shall not. The expression
‘materials on record’, occurring in the Proviso, in our opinion, cannot be confined only to the materials
which were available at the domestic enquiry. On the other hand, the “materials on record’ in the Proviso
must be held to refer to materials on record before the Tribunal. They take in –
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(1) the evidence taken by the management at the enquiry and the proceedings of the enquiry,
or
(2) the above evidence and in addition, any further evidence led before the Tribunal, or
(3) evidence placed before the Tribunal for the first time in support of the action taken by an
employer as well as the evidence adduced by the workmen contra.
The above items by and large should be considered to be the ‘materials on record’ as specified in the
Proviso. We are not inclined to limit that expression as meaning only that material that has been placed in
a domestic enquiry. The Proviso only confines the Tribunal to the materials on record before it as
specified above, when considering the justification or otherwise of the order of discharge or dismissal. It
is only on the basis of these materials that the Tribunal is obliged to consider whether the misconduct is
proved and the further question whether the proved misconduct justifies the punishment of dismissal or
discharge. It also prohibits the Tribunal from taking any fresh evidence either for satisfying itself
regarding the misconduct or for altering the punishment. From the Proviso it is not certainly possible to
come to the conclusion that when once it is held that an enquiry has not been held or is found to be
defective, an order reinstating the workman will have to be made by the Tribunal. Nor does it follow that
the Proviso deprives an employer of his right to adduce evidence for the first time before the Tribunal.
The expression ‘fresh evidence’ has to be read in the context in which it appears namely, as distinguished
from the expression ‘materials on record’. If so read, the Proviso does not present any difficulty at all. - The legislature in Section 11-A has made a departure in certain respects in the law as laid down
by this Court. For the first time, power has been given to a Tribunal to satisfy itself whether misconduct is
proved. This is particularly so, as already pointed out by us, regarding even findings arrived at by an
employer in an enquiry properly held. The Tribunal has also been given power, also for the first time, to
interfere with the punishment imposed by an employer. When such wide powers have been now conferred
on Tribunals, the legislature obviously felt that some restrictions have to be imposed regarding what
matters could be taken into account. Such restrictions are found in the Proviso. The Proviso only
emphasises that the Tribunal has to satisfy itself one way or other regarding misconduct, the punishment
and the relief to be granted to workmen only on the basis of the ‘materials on record’ before it. What
those materials comprise of have been mentioned earlier. The Tribunal for the purposes referred to above,
cannot call for further or fresh evidence, as an appellate authority may normally do under a particular
statute, when considering the correctness or otherwise of an order passed by a subordinate body. The
‘matter’ in the Proviso refers to the order of discharge or dismissal that is being considered by the
Tribunal. - It is to be noted that an application made by an employer under Section 33(1) for permission or
Section 33(2) for approval has still to be dealt with according to the principles laid down by this Court in
its various decisions. No change has been effected in that section by the Amendment Act. It has been held
by this Court that even in cases where no enquiry has been held by an employer before passing an order
of dismissal or discharge, it is open to him to adduce evidence for the first time before the Tribunal.
Though the Tribunal is exercising only a very limited jurisdiction, under this section nevertheless, it
would have applied its mind before giving per mission or approval. Section 33 only imposes a ban. An
order of dismissal or discharge passed even with the permission or approval of the Tribunal can form the
subject of a dispute and as such referred for adjudication. Quite naturally, when the dispute is being
adjudicated, the employer will rely upon the proceedings that were already held before a Tribunal under
Section 33. They will form part of the materials on record before the Tribunal. The contention of Mr
Deshmukh, that if no enquiry is held, the order of dismissal will have to be set aside, if accepted, will lead
to very incongruous results. The Tribunal would have allowed an employer to adduce evidence before it
in proceedings under Section 33 for the first time, even though no domestic enquiry had been held. If it is
held that another Tribunal, which adjudicates the main dispute, has to ignore those proceedings and
straight away order reinstatement on the ground that no domestic enquiry had been held by an employer,
it will lead to very startling results. Therefore, an attempt must be made to construe Section 11-A in a
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reasonable manner. Thus is another reason for holding that the right to adduce evidence for the first time
recognised in an employer, has not been disturbed by Section 11-A - There may be other instances where an employer with limited number of workmen may himself
be a witness to a misconduct committed by a workman. He will be disabled from conducting an enquiry
against the workman because he cannot both be an enquiry officer and also a witness in the proceedings.
Any enquiry held by him will not be in keeping with the principles of natural justice. But he will certainly
be entitled to take disciplinary action for which purpose he can serve a charge-sheet and, after calling for
explanation, impose the necessary punishment without holding any enquiry. This will be a case where no
enquiry at all has been held by an employer. But the employer will have sufficient material available with
him which could be produced before any Tribunal to satisfy it about the justification for the action taken.
Quite naturally, the employer will place before the Tribunal, for the first time, in the adjudication
proceedings material to support his action. That material will have to be considered by the Tribunal. But
if the contention of Mr Deshmukh is accepted, then the mere fact that no enquiry has been held, will be
sufficient to order reinstatement. Such reinstatement, under the circumstances mentioned above, will not
be doing justice either to the employer or to the workman and will not be conducive to preserving
industrial peace. - We have indicated the changes effected in the law by Section 11-A. We should not be understood
as laying down that there is no obligation whatsoever on the part of an employer to hold an enquiry before
passing an order of discharge or dismissal. This Court has consistently been holding that an employer is
expected to hold a proper enquiry according to the Standing Orders and principles of natural justice. It has
also been emphasised that such an enquiry should not be an empty formality. If a proper enquiry is
conducted by an employer and a correct finding arrived at regarding the misconduct, the Tribunal, even
though it has now power to differ from the conclusions arrived at by the management, will have to give
very cogent reasons for not accepting the view of the employer. Further by holding a proper enquiry, the
employer will also escape the charge of having acted arbitrarily or mala fide. It cannot be overemphasized
that conducting of a proper and valid enquiry by an employer will conduce to harmonious and healthy
relationship between him and the workmen and it will serve the cause of industrial peace. Further it will
also enable an employer to persuade the Tribunal to accept the enquiry as proper and the finding also as
correct. - Having dealt with the proper interpretation to be placed on Section 11-A, we will now proceed to
consider the second point regarding the applicability of the section to industrial disputes which had
already been referred for adjudication and were pending with the Tribunal on December 15, 1971. We
have earlier referred to the fact that the Amendment Act received the assent of the President on December
8, 1971. But the Amendment Act did not come into force immediately. It came into force only with effect
from December 15, 1971, as per the Notification issued by the Central Government on December 14,
1971, under Section 1, sub-section (2). - Miss Indra Jai Singh, learned counsel for the appellant-workmen, in Civil Appeal No. 1461 of
1972, advanced the main arguments in this regard. Mr Deshmukh appearing for the workmen in the other
appeals, adopted her arguments. According to the learned counsel, Section 11-A applies not only to
references, which are made on or after December 15, 1971, but also to all references already made and
which were pending adjudication on that date. It is pointed out that Section 11-A has been incorporated in
Chapter IV of the Act dealing with procedure, powers and duties of authorities. According to them,
Section 11-A deals with matters of procedure. Applying the well known canon of interpretation,
procedural laws apply to pending proceedings also. No right, much less any vested right, of the employers
has been taken away or affected by Section 11-A. Considerable stress has been laid on the use of the
expressions ‘has been referred’ occurring in Section 11-A, as conclusively indicating the applicability of
the section even to disputes already referred. It was stressed that even assuming that an employer has a
right to adduce evidence for the first time before the Tribunal, that right enures to him only after the
Tribunal had adjudicated upon the validity of the domestic enquiry. It cannot be characterized even as a
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right, much less a vested right, because it is contingent or dependent upon the Tribunal’s adjudication on
the domestic enquiry. The Tribunal, when it adjudicates a dispute on or after December 15, 1971, has to
exercise the powers conferred on it by Section 11-A, even though the dispute may have been referred
prior to that date. Hence it is clear that the section applies even to all proceedings pending adjudication on
December 15, 1971. - Mr Damania, learned counsel for the employers, contended that retrospective operation should not
be given unless it appears very clearly by the terms of the section or arise by necessary and distinct
interpretation. The counsel pointed out that the employers would have moulded their behaviour according
to the principles laid down by a series of decisions and if the rights recognised in an employer are to be
taken away, that can be done so only by a clear expression to that effect; or such intention to take away or
interfere with those rights must appear by necessary intendment. The words of the section clearly show
that it applies only to disputes in respect of which a reference is made after the section has come into
force i. e. December 15, 1971. The expressions ‘has been referred’ in the section only signify that on the
happening of a particular event, namely, a reference made in future, the powers given to the Tribunal,
whatever they may be, can be exercised. Mr M.G. Setalvad and Mr Tarkunde, learned counsel, appearing
for other employers, adopted the contentions of Mr Damania. A faint argument was also advanced that for
Section 11-A to apply, even the order of discharge or dismissal should be one passed on or after
December 15, 1971. But this was not pursued, quite rightly in our opinion, in view of the wording of the
section. But the main contention on the side of the employers is that the section applies only to disputes
which are referred for adjudication on or after December 15, 1971. - The learned counsel on both sides have referred us to several decisions where a statute or a
section thereof, has been held to be either retrospective or not. They have also referred us to certain
passages in text-books on interpretation thereof. It is needless to state that a decision has to be given one
way or other having regard to the scheme of the statute and the language used therein. Hence we do not
propose to refer to those decisions, nor to the passages in the text-books, as the principle is well
established that a retrospective operation is not to be given to a statute so as to impair an existing right.
This is the general rule. But the legislature is competent to pass a statute so as to have retrospective
operation, either by clearly expressing such intention or by necessary and distinct intendment. - Miss Indra Jai Singh, learned counsel, placed considerable reliance on the use of the expressions
‘has been referred’ in Section 11-A as indicating that the section applies even to all the references made
before December 16, 1971. In our opinion, those words cannot be isolated from the context. The said
expressions may have different connotations when they are used in different context. A reference may be
made to Section 7(3) and Section 7-A(3) of the Act, laying down qualifications for being appointed as a
Presiding Officer of a Labour Court or a Tribunal retrospectively. Sub-section 3 of Section 7 enumerates
the qualifications which a person should possess for appointment as Presiding Officer of a Labour Court.
The words ‘has been a Judge of a High Court’ denote a past event, on the date of his appointment, he
must have been a Judge of a High Court. Same is the position under clause (e) regarding the office
mentioned therein. A similar interpretation will have to be placed on the expressions ‘has been’ occurring
in sub-section (3) of Section 7-A regarding the qualifications to be possessed by a person for appointment
as Presiding Officer of a Tribunal. The words ‘has been’ occurring in these sub-sections, immediately
after the word ‘is’ or even separately clearly show that they refer to a past event. - The words ‘has been referred’ in Section 11-A are no doubt capable of being interpreted as
making the section applicable to references made even prior to December 15, 1971. But is the section so
expressed as to plainly make it applicable to such references? In our opinion, there is no such indication
in the section. In the first place, as we have already pointed out, the section itself has been brought into
effect only some time after the Act had been passed. The proviso to Section 11-A, which is as much part
of the section, refers to “in any proceeding under this section”. Those words are very significant. There
cannot be a “proceeding under this section”, before the section itself has come into force. A proceeding
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under that section can only be on or after December 15, 1971. That also gives an indication that Section
11-A applies only to disputes which are referred for adjudication after the section has come into force. - We have already expressed our view regarding the interpretation of Section 11-A. We have held
that the previous law, according to the decisions of this Court, in cases where a proper domestic enquiry
bad been held, was that the Tribunal bad no jurisdiction to interfere with the finding of misconduct except
under certain circumstances. The position further was that the Tribunal had no jurisdiction to interfere
with the punishment imposed by an employer both in cases where the misconduct is established in a
proper domestic enquiry as also in cases where the Tribunal finds such misconduct proved on the basis of
evidence adduced before it. These limitations on the powers of the Tribunals were recognised by this
Court mainly on the basis that the power to take disciplinary action and impose punishment was part of
the managerial functions. That means that the law, as laid down by this Court over a period of years, had
recognised certain managerial rights in an employer. We have pointed out that this position has now been
changed by Section 11-A. The section has the effect of altering the law by abridging the rights of the
employer inasmuch as it gives power to the Tribunal for the first time to differ both on a finding of
misconduct arrived at by an employer as well as the punishment imposed by him. Hence in order to make
the section applicable even to disputes which had been referred prior to the coming into force of the
section, there should be such a clear, express and manifest indication in the section. There is no such
express indication. An inference that the section applies to proceedings, which are already pending, can
also be gathered by necessary intendment. In the case on hand, no such inference can be drawn as the
indications are to the contrary. We have already referred to the Proviso to Section 11-A, which states ‘in
any proceeding under this section’. A proceeding under the section can only be after the section has come
into force. Further the section itself was brought into force some time after the Amendment Act was
passed. These circumstances, as well as the scheme of the section and particularly the wording of the
proviso indicate that Section 11-A does not apply to disputes which had been referred prior to December
15, 1971. The section applies only to disputes which are referred for adjudication on or after December
15, 1971. To conclude, in our opinion. Section 11-A has no application to disputes referred prior to
December 15, 1971. Such disputes have to be dealt with according to the decisions of this Court already
referred to. - In Civil Appeal No. 1461 of 1972, the Industrial Tribunal had considered only the question
regarding the applicability of the section to disputes which had been referred before the section came into
force. The Tribunal has held that the section does not apply to such disputes. This view is in accordance
with our decision and as such is correct. This appeal is hence dismissed. - In the three other orders, which are the subject of consideration in Civil Appeals Nos. 1995 of
1972, 1996 of 1972 and 2386 of 1972, the Labour Court, Bombay has held that Section 11-A applies even
to disputes which had been referred prior to December 15, 1971. This view, according to our judgment, is
erroneous. The Labour Court has also expressed some views on the construction to be placed on Section
11-A. Part of the views expressed therein is correct; but the rest are wrong. To the extent that the decision
of the Labour Court in the three orders are contrary to our decision on both the points, they are set aside
and the appeals allowed to that extent. The Tribunal and the Labour Courts concerned in all these appeals,
will proceed with the adjudication of the disputes in accordance with the views expressed in this
judgment. There will be order as to costs in these appeals.
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Hombe Gowda Educational v. State of Karnataka
(2006) 1 SCC 430
S.B. SINHA, J
- The private institutions in the State of Karnataka are governed by the Karnataka Private
Educational Institutions (Discipline and Control) Act, 1975 (for short “the Act”).
. – One Venkappa Gowda, Respondent 3 herein, was at all material times a lecturer in
Kuvempu Mahavidyalaya, Appellant 2 herein. The said institution is under the management of Appellant
1. - Respondent 3 herein was subjected to a disciplinary proceeding on an allegation that he had
assaulted the Principal of Appellant 2 with a “chappal”. He was found guilty of the said charge and
dismissed from service. An appeal was preferred by him before the Educational Appellate Tribunal (“the
Tribunal”) in terms of Section 8 of the said Act. The said Tribunal is constituted in terms of Section 10
thereof. The proceeding before the said Tribunal by a legal fiction is treated to be a judicial proceeding. It
is not in dispute that Appellant 2 received grant-in-aid from the State of Karnataka in terms of the Grantin-Aid Code framed by the Karnataka Collegiate Education Department. Before the Tribunal, the State of
Karnataka as also the Director of Collegiate Education were impleaded as parties. A preliminary issue
was framed as to whether the departmental proceedings held against Respondent 3 were in consonance
with the provisions of Rule 14(2) of the CCS (CCA) Rules. While deciding the preliminary issue, it was
held that the departmental proceeding was invalid in law. The appellants, therefore, adduced evidence
before the Tribunal to prove the charges against Respondent 3. The Tribunal having regard to the
pleading of the parties formulated the following questions for its determination:
“1. Whether Respondents 1 and 2 have proved by acceptable evidence that the allegation that
the appellant had absented from duty unauthorisedly and as to whether his conduct was
unbecoming of a lecturer? - Whether the evidence establishes that the appellant had misbehaved on 18-9-1987 and as to
whether he had indulged in physical assault upon the Principal? - If so, whether the punishment of dismissal imposed upon the appellant is justified in this
case and if not what punishment is deserved?” - Upon consideration of the evidence adduced before it, the Tribunal held that the first charge had
not been satisfactorily proved by cogent and acceptable evidence. As regards the second charge, it was
found:
“RW 1 has himself stated that he did not permit the appellant to sign the attendance register
in the morning of 18-9-1987. It led to verbal altercation and then turned into a heated argument.
According to RW 1 the appellant abused him in vulgar language as: (Boli magane, mudi goobe,
neenyaru nnann, jekijethus). RW 1 pushed him. This particular part of his evidence is sought to
be corroborated to evidence of C.S. Dhanpal. Dhanpal has stated he was present in the chamber
of the Principal when the appellant arrived. He also says that the Principal refused to permit the
appellant to sign the attendance register. Dhanpal further stated that RW 1 told the appellant that
he will not permit him to sign even morning registers if he does not sign afternoon registers. After
hearing such talk Venkappa Gowda replied ‘It is not a proper conduct of Principal’ and rushed
towards him. Then the Principal took away the register from Venkappa Gowda. At that juncture
Venkappa Gowda caught hold of his collar. Simultaneously, the Principal, RW 1 pushed
Venkappa Gowda down which resulted in his fall. After falling down Venkappa Gowda got up
and hit the Principal with a chappal.” - It was held:
“Since I am only appreciating facts placed before me, it is but necessary that the facts so
projected should be considered collectively and not in isolation. Each fact spoken by the
witnesses has woven a web clearly indicating that all was not well between the Principal and the
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appellant and therefore, the incident on 18-9-1987 took a violent turn. The evidence has to be
weighed according to the norms of reasonable probabilities, but not in a tradesman’s scale. While
doing this exercise I have formed an opinion that the incident would not have occurred had the
Principal employed restraint upon his words and action. Any way even the act of the appellant in
using chappal to assault the Principal cannot under any circumstances be justified. Both persons
involved are teachers, what is taught should be practised. If what their action shows is any
indication, an impression is gathered that the Principal and the appellant have acted in an
undesirable manner and unbecoming of academicians, to say the least teachers, their acts are
demeaning to the profession they have adopted.” - Despite holding that although it could be said that Respondent 3 acted in retaliation to the action of
the Principal, but such conduct was not justifiable, he opined that the assault by Respondent 3 on the
Principal was proved. However, he awarded punishment of withholding of three increments only in place
of the order of dismissal passed by the appellants. - It was further held:
“The appellant shall be taken back to service and will be entitled to all pecuniary benefits like
salary and allowances retrospectively from the date of dismissal minus and subject to withholding
of three increments. Respondents 1 and 2 are held liable to make payment of amount due to the
appellant. I also hold Respondents 3 and 4 vicariously liable to discharge the claim of the
appellant.” - Aggrieved, the management, the State of Karnataka as also Respondent 3 preferred separate writ
petitions before the Karnataka High Court. - The High Court in its judgment came to the following findings:
“When the action of the petitioner in assaulting the Principal with chappal stands proved by
the evidence of RWs 1 to 5, whatever may be the provocation for such a conduct, the said
conduct of the petitioner cannot be justified under any circumstances. Therefore, the Tribunal was
fully justified in holding that the misconduct alleged against the petitioner stands proved partly.” - The High Court noticed that the punishment imposed by the Tribunal could not be given effect to
as Respondent 3 in the meantime reached the age of superannuation within three months from the date of
the order and, thus, held that the appellants should be directed to pay back wages to the extent of 60%
only. It was further held that though the primary liability to make such payment is that of the
management, when the management could claim the same by way of advance grant or by way of
reimbursement from the Government, its liability to pay the said amount cannot be disputed. - Mr R.S. Hegde and Mr S.R. Hegde, the learned counsel appearing on behalf of the appellants in
their respective appeals, would submit that as a finding of fact was arrived at both by the Tribunal as also
the High Court that the respondents committed a misconduct, which is grave in nature, there was
absolutely no justification in directing payment of 60% back wages after setting aside the order of
punishment of dismissal imposed by the management. - Mr S.N. Bhat, the learned counsel appearing on behalf of Respondent 3, on the other hand, would
contend that a finding of fact has been arrived at by the Tribunal which has been affirmed by the High
Court that it was the Principal who provoked Respondent 3. It is not in dispute, Mr Bhat submitted, that
the Principal was also at fault but curiously enough he was not proceeded against. As both Respondent 3
and the Principal of the College having been found guilty, it was argued, it was obligatory on the part of
the management to initiate a departmental proceeding against the Principal also. The management of the
institution being guilty of being selectively vindictive, Mr Bhat urged, it is a fit case where this Court
should not exercise its discretionary jurisdiction under Article 136 of the Constitution. - It was further submitted that the question should also be considered from the angle that Charge 1
framed against Respondent 3 was not proved. Our attention was also drawn to the fact that the
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management had sought for time for complying with the order of the High Court, which having been
granted, the appellants are estopped and precluded from maintaining this appeal. - It is now well settled that by seeking extension of time to comply with the order of the High Court
by itself does not preclude a party aggrieved to question the correctness or otherwise of the order of the
High Court as thereby a party to a lis does not waive his right to file an appeal before this Court. - Respondent 3 is a teacher. He was charge-sheeted for commission of a serious offence. He was
found guilty by the Tribunal. Both the Tribunal as also the High Court, as noticed hereinbefore, have
arrived at a concurrent finding of fact that despite grave provocation, Respondent 3 cannot be absolved of
the charges levelled against him. It may be true that no departmental disciplinary proceeding was initiated
against the Principal of the institution, but the same by itself would not be a relevant fact for imposing a
minor punishment upon the respondent. It may further be true that Respondent 3 committed the offence
under a grave provocation, but as noticed hereinbefore, the Tribunal as also the High Court categorically
held that the charges against him were established. - The Tribunal’s jurisdiction is akin to one under Section 11-A of the Industrial Disputes Act.
While exercising such discretionary jurisdiction, no doubt it is open to the Tribunal to substitute one
punishment by another; but it is also trite that the Tribunal exercises a limited jurisdiction in this behalf.
The jurisdiction to interfere with the quantum of punishment could be exercised only when, inter alia, it
is found to be grossly disproportionate. - This Court repeatedly has laid down the law that such interference at the hands of the Tribunal
should be inter alia on arriving at a finding that no reasonable person could inflict such punishment. The
Tribunal may furthermore exercise its jurisdiction when relevant facts are not taken into consideration by
the management which would have direct bearing on the question of quantum of punishment. - Assaulting a superior at a workplace amounts to an act of gross indiscipline. The respondent is a
teacher. Even under grave provocation a teacher is not expected to abuse the head of the institution in a
filthy language and assault him with a chappal. Punishment of dismissal from services, therefore, cannot
be said to be wholly disproportionate so as to shock one’s conscience. - A person, when dismissed from service, is put to a great hardship but that would not mean that a
grave misconduct should go unpunished. Although the doctrine of proportionality may be applicable in
such matters, but a punishment of dismissal from service for such a misconduct cannot be said to be
unheard of. Maintenance of discipline of an institution is equally important. Keeping the aforementioned
principles in view, we may hereinafter notice a few recent decisions of this Court. - In Krishnakali Tea Estate v. Akhil Bharatiya Chah Mazdoor Sangh [(2004) 8 SCC 200], this
Court held:
“29. This leaves us to consider whether the punishment of dismissal awarded to the workmen
concerned dehors the allegation of extortion is disproportionate to the misconduct proved against
them. From the evidence proved, we find the workmen concerned entered the Estate armed with
deadly weapons with a view to gherao the manager and others, in that process they caused
damage to the property of the Estate and wrongfully confined the manager and others from 8.30
p.m. on 12th of October to 3 a.m. on the next day. These charges, in our opinion, are grave
enough to attract the punishment of dismissal even without the aid of the allegation of extortion.
The fact that the management entered into settlement with some of the workmen who were also
found guilty of the charge would not, in any manner, reduce the gravity of the misconduct in
regard to the workmen concerned in this appeal because these workmen did not agree with the
settlement to which others agreed, instead chose to question the punishment.” - Yet again in Muriadih Colliery v. Bihar Colliery Kamgar Union [(2005) 3 SCC 331], the law
has been laid down in the following terms:
“13. It is well-established principle in law that in a given circumstance it is open to the
Industrial Tribunal acting under Section 11-A of the Industrial Disputes Act, 1947 has the
jurisdiction to interfere with the punishment awarded in the domestic inquiry for good and valid
96
reasons. If the Tribunal decides to interfere with such punishment it should bear in mind the
principle of proportionality between the gravity of the offence and the stringency of the
punishment. In the instant case it is the finding of the Tribunal which is not disturbed by the writ
courts that the two workmen involved in this appeal along with the others formed themselves into
an unlawful assembly, armed with deadly weapons, went to the office of the General Manager
and assaulted him and his colleagues causing them injuries. The injuries suffered by the General
Manager were caused by lathi on the head. The fact that the victim did not die is not a mitigating
circumstance to reduce the sentence of dismissal.” (See also Mahindra and Mahindra Ltd. v.
N.B. Narawade [(2005) 3 SCC 134]. - In V. Ramana v. A.P. SRTC [(2005) 7 SCC 338], relying upon a large number of decisions, this
Court opined:
“11. The common thread running through in all these decisions is that the court should not
interfere with the administrator’s decision unless it was illogical or suffers from procedural
impropriety or was shocking to the conscience of the court, in the sense that it was in defiance of
logic or moral standards. In view of what has been stated in Wednesbury case [Associated
Provincial Picture Houses Ltd. v. Wednesbury Corpn. (1948) 1 KB 223] the court would not go
into the correctness of the choice made by the administrator open to him and the court should not
substitute its decision for that of the administrator. The scope of judicial review is limited to the
deficiency in decision-making process and not the decision. - To put it differently unless the punishment imposed by the disciplinary authority or the
Appellate Authority shocks the conscience of the court/tribunal, there is no scope for interference.
Further to shorten litigations it may, in exceptional and rare cases, impose appropriate
punishment by recording cogent reasons in support thereof. In a normal course if the punishment
imposed is shockingly disproportionate it would be appropriate to direct the disciplinary authority
or the Appellate Authority to reconsider the penalty imposed.” - In Bharat Forge Co. Ltd. v. Uttam Manohar Nakate [(2005) 2 SCC 489], it was held:
“30. Furthermore, it is trite, the Labour Court or the Industrial Tribunal, as the case may be,
in terms of the provisions of the Act, must act within the four corners thereof. The Industrial
Courts would not sit in appeal over the decision of the employer unless there exists a statutory
provision in this behalf. Although its jurisdiction is wide but the same must be applied in terms of
the provisions of the statute and no other. - If the punishment is harsh, albeit a lesser punishment may be imposed, but such an order
cannot be passed on an irrational or extraneous factor and certainly not on a compassionate
ground. - In Regional Manager, Rajasthan SRTC v. Sohan Lal [(2004) 8 SCC 218], it has been
held that it is not the normal jurisdiction of the superior courts to interfere with the quantum of
sentence unless it is wholly disproportionate to the misconduct proved. Such is not the case
herein. In the facts and circumstances of the case and having regard to the past conduct of the
respondent as also his conduct during the domestic enquiry proceedings, we cannot say that the
quantum of punishment imposed upon the respondent was wholly disproportionate to his act of
misconduct or other wise arbitrary.” - In M.P. Electricity Board v. Jagdish Chandra Sharma [(2005) 3 SCC 401] this Court held:
“9. In the case on hand, the employee has been found guilty of hitting and injuring his
superior officer at the workplace, obviously in the presence of other employees. This clearly
amounted to breach of discipline in the organisation. Discipline at the workplace in an
organisation like the employer herein, is the sine qua non for the efficient working of the
organisation. When an employee breaches such discipline and the employer terminates his
services, it is not open to a Labour Court or an Industrial Tribunal to take the view that the
97
punishment awarded is shockingly disproportionate to the charge proved. We have already
referred to the views of this Court. To quote Jack Chan,
‘discipline is a form of civilly responsible behaviour which helps maintain social
order and contributes to the preservation, if not advancement, of collective interests of
society at large’.
Obviously this idea is more relevant in considering the working of an organisation like the
employer herein or an industrial undertaking. Obedience to authority in a workplace is not
slavery. It is not violative of one’s natural rights. It is essential for the prosperity of the
organisation as well as that of its employees. When in such a situation, a punishment of
termination is awarded for hitting and injuring a superior officer supervising the work of the
employee, with no extenuating circumstance established, it cannot be said to be not justified. It
cannot certainly be termed unduly harsh or disproportionate. The Labour Court and the High
Court in this case totally misdirected themselves while exercising their jurisdiction. The Industrial
Court made the correct approach and came to the right conclusion.” - In Divisional Controller, KSRTC (NWKRTC) v. A.T. Mane [(2005) 3 SCC 254], this Court held:
“9. From the above it is clear that once a domestic tribunal based on evidence comes to a
particular conclusion, normally it is not open to the Appellate Tribunals and courts to substitute
their subjective opinion in the place of the one arrived at by the domestic tribunal. In the present
case, there is evidence of the inspector who checked the bus which establishes the misconduct of
the respondent. The domestic tribunal accepted that evidence and found the respondent guilty.
But the courts below misdirected themselves in insisting on the evidence of the ticketless
passengers to reject the said finding which, in our opinion, as held by this Court in the case of
State of Haryana v. Rattan Singh [(1977) 2 SCC 491] is not a condition precedent.”
It was further held:
“12. Coming to the question of quantum of punishment, one should bear in mind the fact that
it is not the amount of money misappropriated that becomes a primary factor for awarding
punishment; on the contrary, it is the loss of confidence which is the primary factor to be taken
into consideration. In our opinion, when a person is found guilty of misappropriating the
corporation’s funds, there is nothing wrong in the corporation losing confidence or faith in such a
person and awarding a punishment of dismissal.” - In Municipal Board, Pratabgarh v. Mahendra Singh Chawla [(1982) 3 SCC 331], whereupon
reliance has been placed by Mr Bhat, the employee concerned, an overseer, having accepted a paltry
amount of Rs. 200 was convicted and sentenced under Section 161 IPC. Upon taking into consideration
various circumstances including the fact that he was advanced in age, this Court modified the sentence of
dismissal from withholding of back wages from 31-8-1965 till the date of reinstatement. No law had been
laid down therein. - It is no doubt true, as has been contended by Mr Bhat, in some cases, this Court may not exercise
its discretionary jurisdiction under Article 136 of the Constitution, although it may be lawful to do so; but
the circumstances mentioned by Mr Bhat for not exercising the said jurisdiction do not appeal to us to
accept the said contention. - Indiscipline in an educational institution should not be tolerated. Only because the Principal of the
institution had not been proceeded against, the same by itself cannot be a ground for not exercising the
discretionary jurisdiction by us. It may or may not be that the management was selectively vindictive but
no management can ignore a serious lapse on the part of a teacher whose conduct should be an example to
the pupils. - This Court has come a long way from its earlier viewpoints. The recent trend in the decisions of
this Court seek to strike a balance between the earlier approach to the industrial relation wherein only the
interest of the workmen was sought to be protected. With the avowed object of fast industrial growth of
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the country, in several decisions of this Court it has been noticed how discipline at the
workplace/industrial undertakings received a setback. In view of the change in economic policy of the
country, it may not now be proper to allow the employees to break the discipline with impunity. Our
country is governed by rule of law. All actions, therefore, must be taken in accordance with law. Law
declared by this Court in terms of Article 141 of the Constitution, as noticed in the decisions noticed
supra, categorically demonstrates that the Tribunal would not normally interfere with the quantum of
punishment imposed by the employers unless an appropriate case is made out therefor. The Tribunal
being inferior to this Court was bound to follow the decisions of this Court which are applicable to the
facts of the present case in question. The Tribunal can neither ignore the ratio laid down by this Court nor
refuse to follow the same. - In Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engg. Works (P) Ltd .[(1997) 6 SCC 450], it
was held:
“32. When a position, in law, is well settled as a result of judicial pronouncement of this
Court, it would amount to judicial impropriety to say the least, for the subordinate courts
including the High Courts to ignore the settled decisions and then to pass a judicial order which is
clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and
we strongly deprecate the tendency of the subordinate courts in not applying the settled principles
and in passing whimsical orders which necessarily have the effect of granting wrongful and
unwarranted relief to one of the parties. It is time that this tendency stops.” - Yet again in D. Navinchandra and Co. v. Union of India [(1987) 3 SCC 66], Mukharji, J. (as His
Lordship then was) speaking for a three-Judge Bench of this Court stated the law in the following terms:
“Generally legal positions laid down by the court would be binding on all concerned even
though some of them have not been made parties nor were served nor any notice of such
proceedings given.” - For the reasons aforementioned, the impugned judgments cannot be sustained, which are set aside
accordingly. The appeals are allowed.
