Holding

The Labour Court has no power to re‑appraise evidence or set aside a fair domestic enquiry and the punishment of reversion unless the findings are perverse or there is unfair labour practice, and bias must be pleaded and proved; therefore the appeal is dismissed.

Summary

The South Indian Cashew Factories Workers' Union challenged the domestic enquiry and subsequent reversion of a manager, S. Sivasankara Pillai, for alleged misconduct. The enquiry was conducted by the corporation's Assistant Personnel Manager, who found the employee guilty and recommended reversion to clerk. The Labour Court held the employee was a workman, the enquiry was proper and the findings not perverse, but set aside the enquiry on the basis that the officer was biased because he was a management employee and made unnecessary observations. The Kerala High Court overturned the Labour Court’s order, upholding the punishment. On appeal, the Supreme Court held that the Labour Court cannot re‑appraise evidence or set aside a fair enquiry absent perverse findings or unfair labour practice, that Section 11A of the Industrial Disputes Act applies only to dismissal, and that bias must be specifically pleaded and proved. Consequently, the High Court’s judgment was affirmed and the appeal dismissed.

Issues considered

Whether the Labour Court has power under Section 11A of the Industrial Disputes Act to re‑appraise the evidence and set aside a domestic enquiry and the punishment of reversion.
Whether the fact that the enquiry was conducted by a management officer renders the enquiry biased and vitiated.
Whether the Labour Court can interfere with a punishment of reversion in the absence of allegations of unfair labour practice or perverse findings.

Legislation cited

Industrial Disputes Act, 1947s. 11A

Subjects

Industrial disputeLabour CourtSection 11ADomestic enquiryBiasReversionNatural justicePerverse findingsUnfair labour practice

Judgment

A THE GENERAL SECRETARY, SOUTH INDIAN CASHEW
FACTORlES WORKER'S UNION
V,

THE MANAGING DIRECTOR, KERALA ST ATE CASHEW
DEVELOPMENT CORPORATION LTD. AND ORS.

B MAY 12, 2006

[ARIJJT PASAYAT AND TARUN CHATTERJEE, JJ.]

Labour Laws:

c Industrial Disputes Act, I 947-~ Section 1IA- Re-appraisal ofevidence
adduced in enquiry to determine the correctness of the findings of enquiry1
officer and interference with the punishment of reversion of workman, by
Industrial Tribunal-Power of-Held: There was no allegation of unfair
labour practice or victimization on part of the Management, findings were
not perverse and principles of natural justice were complied with while
D conducting the enquiry---Thus, Labour Court has no power to interfere.

The question which arose for consideration in this appeal was
whether in the industrial dispute under the Industrial Disputes Act,
1947, the Labour Court has power to re-appraise the evidence and
E determine whether the findings of the enquiry officer are correct or not
or whether the punishment imposed is adequate or not.

Dismissing the appeal, the Court

HELD: I. I Finding of the Labour Court that enquiry was vitiated
F because it was conducted by an officer of the Management cannot be
sustained. The only other ground found by the Labour Court against
the enquiry officer is that he made some unnecessary observations and,
therefore, he was biased. The plea that enquiry officer was biased was
not raised during the enquiry or pleadings before the Labour Court or
in earlier proceedings before the High Court. The bias of the enquiry
G officer has to be specifically pleaded and proved before the adjudicator.
Labour Court itself found that the enquiry officer relied on the evidence
adduced in the enquiry; that the enquiry was properly held and there
was no violation of the principles of natural justice and that the findings
were not perverse. In such circumstances, the preliminary order of the
H Labour Court setting aside the enquiry on the ground that enquiry was
488
r THE GEN. SECY., SOUTil INDIAN CASHEW FACTORIES WORK'S UNION v. THE MANAGING
DIRECTOR, KERALA STATE CASHEW DEVELOPMENT CORPN. LTD. 489

conducted by an officer of the Management and he had made some A
observations in the enquiry report which were not warranted in the case
is not a vitiating factor and these reasons are not sufficient to set aside
the enquiry. The vitiating facts found by the Labour Court against the
enquiry are erroneous and are liable to be set aside. When enquiry is
conducted fairly and properly, in the absence of any allegations of
B
victimization or unfair labour practice, the Labour Court J:tas no power
to interfere with the punishment imposed. In the instant case, there is
no allegation of unfair labour practice, victimisation etc.
[494-D-G, 495-B-D)

1.2 Section llA of the Industrial Disputes Act gives ample power C
to the Labour Court to re-appraise the evidence adduced in the enquiry
and also sit in appeal over the decision of the employer in imposing
punishment. Section llA is only applicable in the case of dismissal or
discharge of a workman. Section llA is not applicable in the instant
case, since the workman was reverted by Disciplinary Authority. Labour D
Court has no power to re-appraise the evidence to find out whether the
findings of the enquiry officer are correct or not or whether the
punishment imposed is adequate or not. Labour Court can interfere
with the findings if the findings are perverse. But, there is a clear finding
that the findings are not perverse and principles of natural justice were
complied with while conducting enquiry. Therefore, order of High
E
Court does not suffer from any infirmity to warrant interference.
(495-D-E, 495-H, 496-A-B)

Delhi Cloth and General Mills Co. Ltd v. Labour Court, 1970 (1) LLJ
23; Saran Motors ·(P) Ltd v. Vishwanath, (1964) II LLJ 139; Tata F
Engineering and Locomotive Co. Ltd v. S.C. Prasad, [1969) 3 SCC 372;
Indian Iron and Steel Co. Ltdv. Their Workmen, [1958)SCR 667; Workmen
of Firestone Tyre and Rubber Co. of India (Pvt.) Ltd v. The Management,
(1973) 1 sec 813, referred to.
G
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2521 of
2000.

From the Judgment and Order dated 15.01.1999 of High Court of
Kerala at Emakulam in W.A. No. 439/1994-I.
H
490 SUPREME COURT REPORTS [2006] SUPP. 2 S.C.R.

A B.V. Deepak and Dilip Pillai, Advs., for the Appellant.

E.M.S. Anam and Ms. Malini Poduval, Advs., for the Respondents.

The Judgment of the Court was delivered by

B ARIJIT PASA YAT, J. : Challenge in this appeal is to the legality of
judgment rendered by a Division Bench of the Kerala High Court setting
aside the judgment of a learned Single Judge. By the impugned judgment
it was held that the punishment of reversion passed by the disciplinary
authority was proper. The concerned workman was in the employment of
c Kerala State Cashew Development Corporation Ltd. (hereinafter referred to
as the Corporation) the respondent No. I in this appeal.

Background facts in a nutshell are as follows :

The appellant-Union raised an industrial dispute on behalf of one of
D its member questioning correctness of the order passed by respondent No. I
reverting the concerned workman Sh. S. Sivasankara Pillai, Manager, Grade
II. He was designated as Manager, Grade II in the respondent No.I's
establishment. He was charge-sheeted for misconduct of (I) causing willful
loss to the Corporation: (2) habitual breach of rules; (3) making false
E allegations against superior officers; (4) gross negligence of duty. The
essence of allegations raised against him was that by order dated 1.2 .1975
he was put in charge of filling and· packing section of that factory. On
8.9.1975 he did not arrange work in the filling section and that occasioned
considerable loss to the factory. On 11.9.1975 the filling work suffered for
about I Yz hours due to his indifferent attitude. On 16.9.1975 no work was
F
done in the filling and packing sections, though the workmen were ready to
work. Because of this non-cooperation and indifference, huge loss was
caused to the Corporation. Dissatisfied with the explanation submitted by
the employee, a domestic enquiry was conducted. The Assistant Personnel
Manager of the respondent establishment conducted the enquiry. The
G enquiry officer submitted a report holding that the charges were proved in
the enquiry. After considering the findings of the enquiry officer and
seriousness of the charges leveled against the employee, the Management
imposed a punishment by reverting the employee as factory clerk, but the
salary he was drawing was protected. According to the Respondent-
H Management, he was not dismissed from service by taking a lenient view,
THE GEN. SECY., SOUTH INDIAN CASHEW FACTORIES WORK'S UNION'· THE MANAGING
DIRECTOR, KERALA STATE CASHEW DEVELOPMENT CORPN. LTD. [PASAYAT, J.] 491

even though the misconducts proved in the enquiry were serious~ A
The appellant-Union filed statement before the Labour Court
questioning the enquiry as well as the punishment imposed, The responJent-
management in its pleadings raised three preliminary points:

( 1) Whether the order of reference is proper and valid. B

(2) Whether the enquiry held is proper and valid.

(3) Whether the findings of the enquiry officer are based on legal
evidence or whether the same are perverse? c
The Labour Court at first held that the concerned employee was not
a workman as defined under the Industrial Disputes Act, 1947 (in short the
'Act') and hence there is no valid industrial dispute. That order was set aside
by the Kerala High Court and remanded for reconsideration. After remand
the Labour Court in preliminary order found that the employee is a workman
D
as defined under the Act and Industrial dispute is validly raised. With regard
to the enquiry, it was found that enquiry was fair and proper and findings
are not perverse. But the Labour Court set aside the enquiry report on the
ground that the enquiry officer was biased as enquiry was conducted by an
employee of the Corporation and he also made certain observations against E
the workman, which were not necessary for considering whether there was
misconduct or not. The relevant portion of the preliminaiy order is as
follows:

"The workman challenges the validity of the enquiry. The
F
findings of the enquiry officers are also challenged by him. As such
first of all I shall see whether the enquiry held is proper and valid.
In the enquiry 4 witnesses are examined on the side of the
management and 19 documents were marked. Three documents
were marked on the side of the workman. A perusal of the enquiry
report and connected papers shows that the workman fully G
participated in the enquiry. The witnesses exainined by the
management were cross examined in extensor by the workman.
The requests made by the workman were allowed by the enquiry
officer. It has therefore to be said that principles of natural justice
have been complied with by the enquiry officer. In that sense it H
492 SUPREME COURT REPORTS [2006] SUPP. 2 S.C.R.

A has to be said that the enquiry is proper and valid."

After holding that enquiry was proper and valid, with regard to the
findings, the Labour Court held as follows:

" ... The enquiry officer relied on the evidence of the 4 witnesses
B examined by the management. He believed them and found the
workman guilty of the charges. I do not say that the findings are
perverse."

Therefore, after holding that natural justice was complied with, enquiry
c held was proper and valid and that the findings are not perverse, the Labour
Court set aside the enquiry because enquiry officer was an interested
person and biased. Reasoning of the Labour Court as far as relevant is as
follows :

" ... As stated by me earlier the enquiry was conducted by the
D Assistant Personnel Manager of the Corporation. This I may state
was not proper. He is an employee of the corporation. As such
needless to say that he is an interested person, interested in the
corporation. He can and he will record a finding in favour of the
corporation only. The enquiry cannot therefore be said to be an
E impartial one. It is true that there is not legal bar in the management
holding an enquiry by any of its officers. But in fairness that task
could and should have been entrusted with some external agency.
This the management had not done. The enquiry cannot therefore
be said to be a proper and valid one."
F
The Labour Court also held that the enquiry officer made some
observations which are unwarranted and that shows that the enquiry officer
was biased towards the workman. Hence, he did not accept the report and
posted the case for fresh evidence.

G The Management challenged the preliminary order before the Kerala
Court by filing O.P. No.5185 of 1987 and by judgment that original petition
was dismissed holding that validity of the preliminary order can be canvassed
by the Management if the award goes against it. Thereafter, the witnesses
examined in the enquiry were again examined. No additional evidence was
H let in by the worker. Labour Court re-appraised the evidence and found that
THE GEN. SECY, SOtrlll INDIAN CASHEW FACTORIES WORK'S UNION v. THE MANAGING
DIRECTOR, KERALA STATE CASHEW DEVELOPMENT CORPN. LTD. [PASAYAT, I) 493

the charges were not proved and hence the punishment imposed was set aside A
by the award. Learned Single Judge found that the findings of the Labour
Court in the preliminary order.to the effect that the employee is a workman
as defined under the Act is based on evidence and there is valid industrial
dispute. With regard to the contention that enquiry was valid, no specific
finding was recorded. The contention of the Management that enquiry
cannot be said to be vitiated merely because the enquiry was conducted by
B
an officer of the Management was notconsidered by the learned Judge. The
learned Judge merely found that the entire matter was considered by the
Labour Court and Labour Court had jurisdiction to go into all the aspects
· of the dispute. Therefore, the original petition was dismissed. The learned
Single Judge, inter alia, held as follows : c
" .. .It was submitted that the first respondent was not justified to go
into the validity of the domestic enquiry of the findings arrived at
by the Enquiry Officer, which, it was submitted, were matters
outside the scope of Exh. P.5 (Rejoinder dt. 29.8.1978). I do not
D
}lgree that this submission is justified. The first respondent, in my
view has jurisdiction to go into all aspects of the dispute and to come
to conclusions based on the evidence and other materials."

The respondent No. I filed a writ appeal before the Division Bench
contending that the preliminary order of the Labour Court in setting aside E
the enquiry report was illegal. However, the said issue was not considered
by the learned Single Judge. Though it did not contest the finding that the
concerned employee is a workman as defined under the Act and that there
was valid preference for adjudication, it questioned the conclusion. It was
submitted that having found that the enquiry conducted was fair and proper,
F
there was no scope for reappraising the evidence or to consider the adequacy
of punishment. The Labour Court had erred in holding that since enquiry
was conducted by an officer of the Management, the enquiry was vitiated
and also because he made some observations against the workman that did
. affect the validity of the enquiry. The Division Bench accepted the stand
of the respondent No. I. Questioning correctness of the conclusions of the G
Division Bench, the present Appeal has been filed,

Learned counsel for the appellant submitted that the fact that the
enquiry officer was an officer of the management itself affected the fairness
of the enquiry. Further his biased approach was evident from the unnecessary H
494 SUPREME COURT REPORTS [2006] SUPP. 2 S.C.R.

A observations made by him. He, therefore, contended that the view of the
learned Single Judge was the correct one and should be restored. Learned
counsel for the respondent No. I on the other hand supported the impugned
order of the High Court.

In Delhi Cloth and General Mills Co. Ltd. v. Labour Court, [1970] 1
B LLJ 23 this Court has held that merely because the Enqmry Officer is an
employee of the Management it cannot lead to the assumption that he is
bound to decide the case in favour of the Management.

In Saran Motors (P) Ltd. v. Vishwanath, (1964] II LLJ 139 this Court
c held as follows :

"It is well-known that enquiries of this type are generally
conducted by officers of the employer companies and in the absence
of any special bias attributable of a particular officer, it has never
been held that the enquiry is bad just because it is conducted by an
D officer of the employer."

Therefore, finding of the Labour Court that enquiry was vitiated
because it was conducted by an officer of the Management cannot be
sustained.
E
The only other ground found by the Labour Court against the enquiry
officer is that he made some unnecessary observations and, therefore, he was
biased. The plea that enquiry officer was biased was not raised during the
enquiry or pleadings before the Labour Court or in earlier proceedings before
the High Court. The bias of the enquiry officer has to be specifically pleaded
F
and proved before the adjudicator. Such a plea was significantly absent
before the Labour Court. We also note that the Labour Court itself found
that the enquiry officer relied on the evidence adduced in the enquiry and
its findings were not perverse. After such a finding, even if he has stated
some unwarranted observations, it cannot be stated that report is biased. In
G Tata Engineering and Locomotive Co. Ltd. v. S.C. Prasad, (1969) 3 SCC
372 this Court held that :

"Industrial Tribunals, while considering the findings of domestic
enquiries, must bear in mind that persons appointed to hold such
H enquiries are not lawyers and that such enquiries are of a simple
THE GEN. SECY., SOUTH INDIAN CASHEW FACTORIES WORK'S UNION'· THE MANAGING
DIRECTOR, KERALA STATE CASHEW DEVELOPMENT CORPN. LTD. [PASAYAT, I.] 495

nature where technical rules as to evidence and procedure do not A
prevail. Such findings are not to be lightly brushed aside merely
because the enquiry officers, while writing their reports, have
mentioned facts which are not strictly borne out by the evidence
before them."

In this case for finding the employee guilty, the enquiry officer relied
B
on the evidence adduced in the enquiry and Labour Court itself found that
the findings were not perverse. In such circumstances, the preliminary order
of the Labour Court setting aside the enquiry on the ground that enquiry was
conducted by an officer of the Management and he had made some
observations in the enquiry report whii:h were not warranted in the case is c
not a vitiating factor and these reasons are not sufficient to set aside the
enquiry.

The Labour Court had earlier held that the enquiry was properly held
and there was no violation of the principles of natural justice and that the
findings were not perverse. The vitiating facts found by the Labour Court
D
against the enquiry are erroneous and are liable to be set aside. If enquiry
is fair and proper, in the absence of any allegations of victimization or unfair
labour practice, the Labour Court has no power to interfere with the
punishment imposed. Section I IA of the Act gives ample power to the
Labour Court to re-appraise .the evidence adduced in the enquiry and also E
sit in appeal over the decision of the employer in imposing punishment.
Section I IA of the Industrial Disputes Act is only applicable in the case of
dismissal or discharge of a workman as clearly mentioned in the Section
itself. Before the introduction of Section ! IA in Indian Iron and Steel Co.
Ltd. v. Their Workmen, (1958] SCR 667 this Court held that the Tribunal
F
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. There is no allegation ofunfair labour practice, victimisation
etc. •in this case. The powers of the Labour Court in the absence of Section
I IA is illustrated by this Court in Workmen of Firestone Tyre and Rubber G
Co. of India (Pvt.) Ltd. v. The Management, (1973] 1 SCC 813. When
enquiry was conducted fairly and properly, in the absence of any of the
allega~ions of victimisation or malajides or unfair labour practice, Labour
Court has no power to interfere with the punishment imposed by the
management. Since Section I IA is not applicable, Labour Court has no H
496 SUPREME COURT REPORTS [2006] SUPP. 2 S.C.R.

A power to re-appraise the evidence to find out whether the findings of the
enquiry officer are correct or not or whether the punishment imposed is
adequate or not. Of course, Labour Court can interfere with the findings if
the findings are perverse. But, here there is a clear finding that the findings
are not perverse and principles of natural justice were complied with while
conducting enquiry.
B
Above being the position the impugned judgment of the High Court
does not suffer from any infirmity to warrant interference.

The appeal is sans merit and is dismissed. No costs.
c
N.J. Appeal dismissed.