Holding

The High Court erred in interfering with the Labour Court’s factual findings; the dismissal was justified and the Tribunal may admit fresh evidence when the inquiry is defective but cannot substitute its own assessment of the punishment.

Summary

The case involved a workman (Respondent No. I) who was dismissed for threatening senior officers and inciting a strike. The Labour Court found the domestic inquiry defective but allowed the employer to adduce fresh evidence, ultimately upholding the dismissal. The High Court, exercising writ jurisdiction, set aside the Labour Court’s findings and ordered reinstatement with back‑wages. On appeal, the Supreme Court held that the High Court could not interfere with the Labour Court’s factual findings, as the Tribunal may only intervene when the inquiry is perverse or the employer’s action is mala fide. The Court reiterated that when an inquiry is defective, the Tribunal may permit the employer to present new evidence, but it cannot substitute its own judgment on the quantum of punishment. Consequently, the dismissal was deemed justified and the High Court’s order was reversed, with the appellant directed to pay a full and final settlement of Rs 1,25,000 to the respondent. The appeal was disposed of without any order as to costs.

Issues considered

The High Court’s jurisdiction to interfere with factual findings of a Labour Court in a dismissal case
Whether a defective domestic inquiry permits the Tribunal to admit fresh evidence from the employer
Whether the punishment of dismissal was proportionate to the misconduct alleged

Legislation cited

Subjects

dismissaldomestic inquirylabour courtwrit jurisdictionindustrial disputeSection 11Anatural justicereinstatementback wagesindustrial peace

Judgment

MIS. AMRIT VANASPA Tl CO.LTD. A
v.
KHEM CHAND AND ANR.

JULY 12, 2006

[DR. AR. LAKSHMANAN AND LOKESHWAR SINGH PANTA, JJ.] B

Constitution of India, 1950-Article 226-Judicial review-Scope of-
Dismissal of workman for serious misconduct-Labour Court upheld
dismissal-Writ petition-High Court interfered with the findings of Labour C
Court and ordered reinstatement with back-wages-Justification of-Held:
High Court not justified in interfering with the factual findings of the Labour
Court which were based on appreciation of facts adduced. before it by
leading evidence-Labour Laws.

Labour Laws-Jurisdiction of Labour Court while adjudicating dispute D
relating to dismissal-Dismissal pursuant to inquiry-Labour Court found
that the inquiry conducted was irregular-Permitted the Management to
produce additional evidence before Court to prove the charges-Justification
of-Held, Justified.

There was strike in the factory of Appellant. Respondent No.I-workman E
allegedly threatened to kill senior officers of the factory like Chemist and
other co-workmen willing to work, and thereby obstructed work in the factory.
Based on the inquiry report, Disciplinary Authority dismissed Respondent
No.I. Labour Court found the inquiry to be defective but permitted the
management to adduce additional evidence and, on finding the charges against F
Respondent No. I to be proved, upheld the order of dismissal.

High Court ordered re-instatement with backwages and other benefits
by allowing the writ petition of Respondent No.I. Hence the present appeal.

Disposing of the appeal, the Court
G
HELD: I. Even if no inquiry has been held by the employer or the inquiry
held 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
481 H
482 SUPREME COURT REPORTS (2006] SUPP. 3 S.C.R.

· A evidence for the first time justifying his action, and it is open to the employee
to adduce evidence contra. Hence, the submission of Respondent No.I, that
the Labour Court having held that the domestic inquiry was irregular and
illegal, ought not to have permitted the Management to produce additional
evidence before the Court to prove the charges, has no merit. (488-D, E(

B The Workmen of Mis Firestone Tyre & Rubber Co. of India (Pvt.) Ltd
etc. v. The Management & Ors. etc., (1973( I SCC 813, relied on.

2.1. The Labour Court in the concluding part of its award has held that
the charges framed against the workman are charges of misconduct of serious
C nature and, therefore, it agreed with the argument of Management that it was
not in the interest of Management and industrial peace to retain such a person
in service who was guilty of creating indiscipline in the factory which affects
the production of the factory adversely. On the basis of the aforesaid
discussion, the Labour Court came to the conclusion that the Management
had succeeded in proving the charges against the workman before the Court.
D Hence, the Labour Court held the dismissal of the work1.1an from service by
the Management as justified, proper and lawful and the concerned workman
was held to be not entitled to receive any benefit or relief. However, the High
Court interfered with the factual and categorical findings of the Labour Court
and ordered reinstatement with back wages and other benefits. (488-F-H(

E 2.2. The High Court while exercising powers under writ jurisdiction
cannot deal with aspects like whether the quantum !Jf punishment meted out
by the Management to a workman for a particular misconduct is sufficient or
not. This a part, the High Court while exercising powers under the writ
jurisdiction cannot interfere with the factual findings of the Labour Court
F which are based on appreciation of facts adduced before it by leading evidence.
The High Court has gravely erred in holding that the evidence of respondent
no. I was not considered by the Labour Court and had returned finding that
the evidence ofrespondent no.I did not inspire any confidence. The High Court
is not right in intefering with the well considered order passed by the Labour
Court confirming the o.rder of dismissal. (488-H; 489-A, Bl
G
3. Respondent no. I has now retired from service on superannuation on
30.9.1996. He was dismissed from service for the misconduct alleged and
proved against him by the Management on 8.3.1976. He had been without any
employment or wi!hout any income whatsoever. Taking a sympathetic and
lenient view of the matter and peculiar facts and circumstances of this case,
H even though the factory unit of the appellanf-is closed, the appellant-
AMRIT YANASPAT! CO. LTD. v. KHEM CHAND [LAKSHMANAN, J.] 483

Management is directed to pay a sum of Rs.1,25,000/- in full and final quit of A
all the claims of the appellant and the respondents. 1489-C-DJ

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6677 of2004.

From the Judgment and Order dated 9.10.2003 of the High Court of
Judicature at Allahabad, in Civil Misc. i,y.P. No. 8594/1990. B
Raj Birbal, Rohina Nath, J. Muzarffar and Umesh Kumar Khaitan for the
Appellant.

S. Borthakur (for Sunil Kumar Jain (N.P.), Pradeep Misra and Malvika
Trivedi for the Respondents. C
The Judgment of the Court was delivered by

DR. AR. LAKSHMANAN, J. This appeal is directed against the final
judgment and order dated 9.10.2003 passed by the High Court of Judicature
at Allahabad in Civil Misc. Writ Petition no.8594 of 1990, by which the High D
Court allowed the writ petition filed by the respondent no. I and directed the
appellant Management to pay to the respondent no. I herein back wages to
the extent of 75% till the date of superannuation or till the date of closure of
the unit along with closure compensation and other admissible benefits. The
appellant is the employer of respondent no. I herein. He was appointed as a
fitter with the appellant in its factory on 1.6.1956. The following charge-sheet E
dated 22.1.1976 was issued to the respondent no. I.

"Charge Sheet for misconducts.

The following charges are framed against you:-
F
That on 22.1.76 you were on duty in the shift from 12 night to
8 a.m. At about 4.30 a.m you unauthorisedly left your place of
work and leaving your department you came to the boiler.
2 That at that moment when you reached at the boiler you shouted
loudly Ramphal you throw both the new coolie into boiler. We G
would stop the work. As such, you threatened other workers and
incited them to stop work.
3 That when you were uttering the aforesaid words loudly, Shri
Devraj Batura, Shift Chemist also came there. Shift Chemist in a
very humble manner told you that you should go to your H
484 SUPREME COURT REPORTS [2006] SUPP. 3 S.C.R.

A department and should not speak like that. Whereupon, you told
him in anger - tomorrow I would also throw you in the boiler.
After saying this, you returned to your department and while
going, beckoned at Shri Ram Phal, Boiler Attendant. •
Your aforesaid acts amount to gross misconduct under the standing
B orders and in all other respect.

You are directed to submit reply within 24 hours of receipt of this
letter as to why disciplinary action should not be taken against you.
If your reply is not received within prescribed time, it will be presumed
that you accept the charges and appropriate action would be taken.
c Whereas charges framed against you are of serious nature, hence
you are placed under suspension during the course of enquiry. During
the period of suspension, you are required to come for attendance on
all the working days at 11 a.m. so that the correspondence could be
made. If you change your residence during suspension period, you
D immediately inform the same to us. Please note that in case of violation
of orders regarding attendance and residence, no subsistence allowance
would be payable to you.
For Amit Vanaspati Company Ltd.
Sd/- Illeg. Factory Manager."
E The respondent sent reply to the charges made against him. The
explanation of the respondent was found unsatisfactory and an inquiry into
the matter was ordered by the appellant. An Inquiry Officer was also appointed.
The Inquiry Officer concluded the inquiry and submitted the Inquiry report.
The Inquiry Officer found all the charges against the respondent proved and
F held him guilty of the act of misconduct. Based on the inquiry report, the
services of the respondent no. I herein were dismissed by the Disciplinary
Authority. After the order of dismissal, respondent no. I raised an industrial
dispute as the conciliation proceedings between the parties failed. The
respondent no.2 vide notification of date referred the dispute of termination
of the services of the employment of respondent no. I to respondent no.3
G herein. To add the charge of strike against respondent no. I, an application
was also moved by the appellant Management, but the same was dismissed
by the Labour Court. The Labour Court passed an order holding that the
domestic inquiry against respondent no. I was not free and fair. The Labour
Court was of the view that the evidence of the witnesses was not examined
H in isolation and when the examination of one of the witnesses was being
AMRIT VANASPATI CO. LTD. v. KHEM CHAND [LAKSHMANAN, J.J 485

conducted other witnesses were also present. It was, therefore,· held that the A
domestic inquiry was held in violation of principles of natural justice.

By the same very order, the Labour Court allowed the prayer of the
management and permitted it to lead additional evidence for proving charges
against respondent no. I under the provisions of Section I IA of tlie U.P.
Industrial Disputes Act, 194 7. B

Against this order of the Labour Court, the respondent no. I filed writ
petition before the High Court, which was dismissed. The appellant-
management, thereafter, produced certain other witnesses to prove its case
against respondent no. I. It is seen from the record that the deposition of the C
witnesses duly corroborated the case of the appellant in all respects. All the
appellant's witnesses were cross-examined by the respondent no. I. The
respondent no. I got himself examined in support of his case.

On 7.12.1989, the Labour Court passed the award holding that the
charges against respondent no. I were found proved in the proceedings before D
the Labour Court ard the order dismissing him from the service was upheld.
The respondent no. I filed a writ petition before the High Court aggrieved by
the award dated 7.12.1989. The Management filed its counter affidavit to the
writ petition. The rejoinder affidavit was also filed by the Management. The
High Court by its order dated 9.10.2003 allowed the writ petition filed by the
respondent no. I herein and directed the Management to pay to the respondent E
no. I back wages to the extent of 75% till the date of superannuation or till
the date of closure of the unit along with closure compensation and other
admissible benefits. The Management was directed to deposit the amount as
aforesaid within a period of three months from the said date. Aggrieved
against the said order passed by the High Court, the appellant-Management F
has filed the instant special leave petition, in which leave was granted by this
Court on 8.10.2004.

We heard Mr. Raj Birbal, learned Senior Counsel for the appellant and
Mr. S. Borthakur, learned counsel for respondent no. I. The learned senior
counsel invited our attention to the relevant portion' of the ~leadings and of G
the two orders passed by the Labour Court and the order passed by the High
Court, which is impugned in this matter. The learned senior counsel submits
that the High Court was wrong in holding that the charges levelleo agamst
the respondent no. I were not so grave as to entail a punishment of dismissal
from service of respondent no. I, and the High Court has failed to appreciate
that serious charges of threatening to kill senior officers of the appellant unit H
486 SUPREME COURT REPORTS [2006] SUPP. 3 S.C.R.

A like Chemist and other co-workman willing to work by throwing them in the
boiler and obstructing the work in the factory were levelled against respondent
no. I. These serious charges of riotous nature, when there was a strike in the
factory, were found proved against respondent no. I by the Labour Court and
such serious and grave charges of misconduct found proved against respondent
no. J, if left unpunished or punished with a lesser punishment would have led
B to indiscipline in the factory and would have clearly been detrimental to the
industrial peace of the appellant's unit. Under these circumstances, learned
senior counsel submits, viewing the gravity of the charges levelled against
respondent no. I, the High Court fell in error in holding that the charges
against respondent no. I were not of such a nature as to entail punishment
C of dismissal from service.

Per contra, Mr. Borthakur, learned counsel for the respondent, submits
that the Labour Court has by its first order held that the domestic inquiry is
irregular and illegal and under such circumstances ought not have permitted
the Mar.agement to produce additional evidence before the Court to prove
D the charges. The learned counsel further submits that though the charges are
of very serious nature, the punishment imposed is disproportionate to the
charges levelled and proved against the workman.

We are unable to countenance the submission made by the learned
counsel forthe respondent. This Court in a judgment reported in (1973] I SCC
E 8 J3 (The Workmen of Mis. Firestone Tyre & Rubber Co. of India (Pvt.) Ltd.
etc. v. The Management & Ors. etc.) exhaustively referred to various decisions
of this Court and gave a clear picture of the principles governing the jurisdiction
of the Tribunals when adjudicating disputes relating to dismissal or discharge.
Paragraph 32 of the said judgment is reproduced here:
F 32. From those decisions, the following principles broadly emerge:
I. 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.
G
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 ofnatural justice.
The enquiry should not he an empty formality.
H 3. When a proper enquiry has been held by an employer, and the
AMRIT VANASPATI CO. LTD. v. KHEM CHAND [LAKSHMANAN. J.] 487

findin~ of misconduct is a plausible conclusion flowing from the A
evidence, adduced at the said enquiry, the Tribunal has no
jurisdi~tion 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 ma/a fide. B
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 c
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 considtr only whether there was a
prima facie case. On the other hand, the issue about the merits D
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 E
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.
F
7. It has never been recognised that the Tribunal should
straightaway, 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.
G
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
H
488 SUPREME COURT REPORTS [2006] SUPP. 3 S.C.R.

A 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
B the first time, punishment imposed cannot be interferred with by
the Tribunal except in cases where the punishment is so harsh
as to suggest victimisation.
IO. In a particular case, after setting aside the order of dismissal,
whether a workman should be reinstated or paid compensation
C is, as held by this Court in The Management of Panitole Tea
Estate v. The Workmen, (1971] 1 SCC 742 within the judicial
decision of a Labour Court or Tribunal."

This Court in the above judgment held that even if no inquiry has been
held by the employer or the inquiry held is found to be defective, the Tribunal
D 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. Hence,
the submission made by the learned counsel for the respondent has no merit
in view of the above verdict of this Court and referred to above.
E
We have also perused the award dated 7.12.1989 passed by the Labour
Court. The Labour Court in the concluding part of its award has held that the
charges framed against the workman are charges of misconduct of serious
nature and, therefore, it agreed with the argument of Management that it was
F not in the interest of Management and industrial peace to retain such a
person in service who was guilty of creating indiscipline in the factory which
affects the production of the factory adversely. On the basis of the aforesaid
discussion, the Labour Court came to the conclusion that the Management
had succeeded in proving the charges against the workman before the Court.
Hence, the Labour Court held the dismissal of the workman from service from
G 8.3.76 by the Management as justified, proper and lawful and the concerned
workman was held to be not entitled to receive any benefit or relief. However,
the High Court, as stated earlier, interfered with the factual and categorical
findings of the Labour Court and ordered reinstatement with back wages and
other benefits. In our opinion, the High Court while exercising powers under
H writ jurisdiction cannot deal with aspects like whether the quantum of
AMRIT VANASPATI CO. LTD. v. KHEM CHAND [LAKSHMANAN, J.] 489

punishment meted out by the Management to a workman for a particular A
misconduct is sufficient or not This apart, the High Court while exercising
powers under the writ jurisdiction cannot interfere with the factual findings
of the Labour Court which are based on appreciation of facts adduced before
it by leading evidence. In our opinion, the High Court has gravely erred in
holding that the evidence of respondent no. I was not considered by the
Labour Court and had returned finding that the evidence of respondent no. I B
did not inspire any confidence. We are of the opinion that the High Court is
not right in intefering with the well considered order passed by the Labour
Court confirming the order of dismissal.

It is now stated that the respondent no. I has retired from service on C
superannuation on 30.9.1996. He was dismissed from service for the misconduct
alleged and proved against him by the Management on 8.3.1976. He had been
without any employment or without any income whatsoever. Taking a
sympathetic and lenient view of the matter and peculiar fucts and circumstances
of this case, even though the factory unit of the appellant is closed, we direct
the appellant·· Management to pay a sum of Rs.1,25,000/- in full and final quit D
of all the claims of the appellant and the respondents. A demand draft of
Rs.1,25,000/- shall be drawn in the name of the respondent no. I herein and
handed over to the learned counsel for the respondent within two weeks from
today. We make it clear that the parties will have no other claim against each
other. We also make it further clear that the respondent no. I is at liberty to E
withdraw the contributions made by him along with contributions made by
the Management to the Provident Fund, with interest, and approach the
appropriate authority for such withdrawal. If such an application is made,
concerned authority is directed to make payment to respondent no. I without
raising any objection.
F
The appeal is accordingly disposed of with no orders as to costs.

B.B.B. Appeal disposed of.