Holding

The appellate authority under the Tamil Nadu Shops and Establishments Act has jurisdiction to record fresh evidence at the appellate stage and must decide applications for such evidence; its failure to do so constitutes a grave error.

Summary

The respondent, K.G. Sangameswaran, an accountant employed by United Planters Association, was dismissed for alleged misappropriation. He appealed the dismissal under Section 41(2) of the Tamil Nadu Shops and Establishments Act, 1947, claiming that no domestic enquiry had been held. The Appellate Authority set aside the dismissal, directing reinstatement, on the ground that the dismissal was illegal without a domestic enquiry, but refused the appellant's request to lead fresh evidence. The Supreme Court held that the order of dismissal was punitive, that the appellate authority under the Act has wide jurisdiction to record fresh evidence and must decide applications for such evidence, and that the authority erred by not doing so. Consequently, the Court set aside the Appellate Authority's order and remanded the matter for fresh disposal, allowing the appeal.

Issues considered

Whether the employer and employee are covered by the Tamil Nadu Shops and Establishments Act, 1947.
Whether the dismissal complied with the procedural requirements of Section 41(1), i.e., a domestic enquiry.
Whether the order of dismissal is a punitive dismissal requiring compliance with Section 41(1).
Whether the appellate authority under the Act may record fresh evidence at the appellate stage and must consider applications for such evidence.

Legislation cited

Industrial Disputes Act, 1947s. 11A
Tamil Nadu Shops and Establishments Act, 1947s. 41(1), s. 41(2)

Subjects

dismissaldomestic enquiryappellate authorityfresh evidenceTamil Nadu Shops and Establishments ActIndustrial Disputes Actnatural justicepunitive dismissal

Judgment

·~.

A THE UNITED PLANTERS ASSOCIATION OF SOUTHERN INDIA
v.
KG. SANGAMESWARAN AND ANR.

MARCH 6, 1997

B (S.C. AGRAWAL ANDS. SAGHIR AHMAD, JJ.]

Labour Law

Tamil Nadu Shops and Establishment Act, 1947-Sec. 41(1) &
C (2)-Tamil Nadu Shops and Establishment Rules, 1948-Sec. 9(3)-In-
dustrial Disputes Act 1947-llA-Dismissal-On appeal-Appellate
Authority set aside dismissal order-Evidence at the appellate stage not
allowed-Held, Appellate authority has jurisdiction to take evidence to come
to its own conclusion-Grave en-or committed in not allowing employee to
lead evidence---Order of appellate authority set aside.
D
The respondent, employed with the appellant, was dismissed fr,om ·
service for serious misconduct. The order of dismissal was chalknged by
the respondent before the Appellate authority under sec. 41(2) of the1'amil
Nadu Shops and Establishment Act, 1947. The appeal was allowed and his
dismissal was set aside on the ground that no enquiry was held. Applica-
E tion of the appellant to lead evidence was not allowed. Hence the presen("
appeal. <

The contention of the appellant was that the appellate authority
should have allowed them to lead ~l!.lence as it had jurisdiction and power
to record evidence at the appellate stage. It was further contended that the
F
order by which the services of the respondent were brought to an end was '
not an order of dismissal and therefore there was no requirement to hold
a domestic enquiry.

The contention of the respondent was that if an opportunity of
G hearing was not given at the initial stage during the domestic enquiry, the
-
defect could not be cured by giving opportunity at the appellate stage.

Allowing the appeal, this Court

HELD : 1. The order of dismissal, ex-facie is punitive in nature as
H the respondent has been held guilty of misconduct including misap·
756
UNITED PLANTERS ASSN. OF SOUTHERN INDIA v. KG. SANGAMESWARAN 757

propriation. The order is not an innocuous order and cannot be treated A

- as an order by which services of the respondent were simply terminated.
He was in fact dismissed from service. [761-D]

2. Section UA of Industrial Disputes Act, 1947 was introduced by
Parliament, wherein it was provided that the Tribunal had not only the B
power to set aside the order of dismissal and direct reinstatement of the
workmen, it had also the power to award lesser punishment. The proviso
to sec.· llA, however, provided that the Tribunal would rely only on the
material already on record and shall not take fresh evidence. But where
the enquiry was defective, the Tribunal could take fresh evidence to decide
the merits of the charges. [763-A-B, DJ C

3. The jurisdiction of the Appellate Authority to record evidence and
to come to its own conclusion is very wide. Even if the evidence is recorded
in the domestic enquiry and the order of dismissal is passed thereafter, it
will still be open to the Appellate Authority to record, if needed, such D
evidence as may be produced by the parties. Conversely, also if the domestic
enquiry is ex-parte or no evidence was recorded during the proceedings, the
Appellate Authority would be justified in taking additional evidence to come
to its own conclusions on the vital question whether the employee was guilty
or not of the charges framed against him. Thus the appellate authority has
jurisdiction to take evidence at the appellate stage; and it had come to its E
own conclusion about the guilt of the delinquent employee. [765-B-C]

4. The appellate authority has interfered with the order of dis-
charge/dismissal of the respondent only on the ground that domestic
enquiry was not held. It did not decide the application of the appellant for F
recording evidence. The appellate authority, therefore, committed grave
error in the exercise of its jurisdiction by not disposing of the application
of the appellant for additional evidence and proceeding to dispose of the
appeal on the ground that the order of dismissal having been passed
without holding a domestic enquiry, was bad in law. [767-1<'-G]
G
5. The appellate authority had to come to its own conclusion on the
basis of the evidence recorded by it, irrespective of the findings recorded
in the domestic enquiry and the opportunity of hearing which is being
provided to the respondent at the appellate stage will sufficiently meet the
demand for a just and proper enquiry. [768-H, 769-A] H
758 SUPREME COURT REPORTS [1997] 2 S.C.R.

A 17le Workmen of Mis. Firestone Tyre & Rubber Co. of India Pvt. Ltd.
v. The Management & Ors., AIR (1973) SC 1227 and Chainnan, Mis Brooke
Bond India Pvt. Ltd. v. Chandra Nath Choudhary, [1969] 1 SCR 919, relied -
on.

Mis. Indian Iron & Steel Co. Ltd. v. Their Workmen, AIR (1958) SC
B 130; Mis Bharat Sugar Mills Ltd. v.Jai Singh, [1962] 3 SCR 684; Buckincham
and Camatic Co. Ltd. v. Workers of the Company, (1952) Lab IC 490;
Management of Ritz Theatre (P) Ltd. v. Its Workmen, [1963] 3 SCR 461;
Khardah Co. Ltd. v. Their Workmen, [1964] 3 SCR 506; Workmen of Motipur
Sugar Factory (P) Ltd. v. Motipur Sugar Factory, [1965] 3 SCR 588; State
C Bank of India v. R.K. Jain & Ors., [1972] 1 SCR 755; Delhi Cloth & General
Mills Company Ltd. v. Ludh Budh Singh, (1972) 1 Labour Law Journal 180
SC; The East India Hotels v. Their Workmen & Ors., AIR (1974) SC 696;
The Cooper Engineering Ltd. v. P.P. Mundhe, AIR (1975) SC 1900; Ruston
& Hornsby Ltd. v. T.B. Kadam, AIR (1975) SC 2025; Bharat Forge Co. Ltd.
v. A.B. Zodge & Anr., [1996] 4 SCC 374; Remington Rand of India Ltd. v.
D Thiru R. Jambulingam, [1975] 2SCR17; Union of India &Anr. v. Tutsi Ram
Patel, [1985] 3 SCC 398; Menka Gandhi v. Union of India & Anr., [1978] 1
SCC 248 and Liberty Oil Mills & Ors. v. Union of India & Ors., [1984] 3
sec 465, referred to.
E Salem-Shevapet Sri Venkateswara Bank Ltd. v. Krishnan (KK) and
another, (1959) 2 LW 797 and Srirangam Janopakara Bank Ltd. v. Ran-
garajan (S.) and another, (1964) 1 LLJ 221, approved.

Institute of Chartered Accountants of India v. L.K Ratna & Ors.,
[1935] 4 sec 537, held in applicable.
F
ci'VIL APPELLATE JURISDICTION : Civil appeat No. 1786 of
1997.

·From the Judgment and Order dated 12.2.96 of the Appellate
G Authority under the Tamil Nadu Shops and Establishment Act/Deputy
-
Commissioner of Labour, Combatore in T.N.S.E. Case No. 6 of 1994.

G.B. Pai, O.C. Mathur and Ms. Meera Mathur for JBD. & Co., for .
the Appellant.

H K.V. Venktaraman for the Respondents.
UNITED PLANTERS ASSN. OF SOUTHERN INDIA'· K.G. SANGAMESWARAN [S. SAGHIRAHMAD, J.]759

The Judgment of the Court was delivered by A

S. SAGHIR AHMAD, J. Leave granted.

The respondent, K.G. Sangameswaran, who was employed with the
appellant as .an Accountant, was dismissed from service by order dated
5.7.1994. This order was passed for serious misconduct, including misap- B
propriation on the part of and by the respondent during the period 1986-87
to 1992-93, for which criminal proceedings were also initiated against .him.

2. This order was challenged by the respondent before the Appellate
Authority under Section 41(2) of the Tamil Nadu Shops & Establishments C
Act, 1947 (for short, the 'Act'). The Appellate Authority, by its judgment
dated 12.2.1996, allowed the appeal, set aside the order of dismissal and
directed reinstatement of the respondent with full back-wages. It is against
this judgment that the present appeal has been filed.

3. The order of dismissal by the appellant was set aside by th: D
Appellate Authority (Respondent No. 2), principally on the ground that
the order being an order of dismissal, could not have been pas-;cd under
Section 41(1) of the Act' without first holding a domestic enquiry into the
allegations made against him.

4. The appellant, in their written statement filed before the Appellate E
Authority, pleaded that the Act was not applicable to the respondent and
consequently the appeal itself was not maintainable. It was also pleaded
that when the charge-memo was issued to the respondent, he filed his reply
dated 24.1.1994 in which he denied the charges and made a request for
perusal of records before submitting his further reply. The appellant, by F
their subsequent letter dated 17.2.1994, wanted the details of the docu-
ments which the respondent wanted to inspect. The respondent, by his
letter dated 20.2.1994 is said to have pleaded not guilty and is further said
to have stated that no useful purpose would be served by participating in
the enquiry as the enquiry was bound to be biased. The appellant conse- G
quently proceeded to dismiss the respondent from service after perusal of
the documents and other relevant records indicating misappropriation and
misconduct by the respondent.

5. In view of the controversy raised before the Appellate Authority,.
two issues were framed as under :- ·H
760 SUPREME COURT REPORTS (1997] 2 S.C.R.

A 1. Whether the respondent/management and the appellant are
covered under the TNSE Act 1947?

· 2. Whether the respondent followed the provisions of Section
41( 1) before dismissing the appellant?

B 6. On issue No. 1, the finding n;corded by the Appellate Authority
was that since the United Planters Association of Southern India, which is
app,ellant before us, was declared as a commercial establishment by the
Tamil Nadu Government vide its Notification in G.O. Ms. No. 6265 dated
20.12.1948 issued under Section 2(3) of the Act, it would be governed by
C the Act. It was further held that since the respondent was employed as an
Accountant in that establishment, he would fall within the definition of
''person employed" as set out in Section 2(12) of the Act. On issue No. 2, -
it was found by the Appellate Authority that the respondent was dismissed
from service without following the provisions of Section 41(1) of the Act
and without holding the domestic enquiry.
D
7. Mr. G.B. Pai, learned senior counsel appearing for the appellant
did not seriously dispute the findings on issue No. 1, but he vehemently
argued that the finding recorded by the Appellate Authority on issue No.
2 was wholly erroneous, inasmuch as the order by which the services of the ·
E respondent were brought to an end was not an order of dismissal and,
therefore, there was no requirement to hold a domestic enqui, y. It was
contended that under Section 41(2) an appeal would lie only on the ground
that there was no reasonable cause for dispensing with the services or that
he had not been guilty of misconduct as held by the employer. In a case of
simple termination, an appeal would, therefore, not lie as it would not fall
F within any of the aforesaid grounds.

8. The nature of the order, whether it is innocuous or punitive, is
exhibited by the contents of the order. The order dated 5.7.1994, by which
the respondent was dismissed from service, recites, inter alia, as under :-
G "1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. On a consideration of the contents of the- letters referred to
above as well as the relevant evidence, (viz.) documents referred
to in the Notice dated 18th January 1994, it is clear that you are
H guilty of the misconducts alleged against you and it is found
UNITED PLANTERS ASSN. OF SOUTHERN INDIA'· K.G. SANGAMESWARAN [S. SAGHIR AHMAD, J.]761

accordingly. Considering the gravity of the misconducts committed A
by you, particularly, in the light of the position of trust and
responsibility that you hold as Accountant, it is decided to dismiss
you from service forthwith.

3 ............... .
B
4. It may be noted that this is without prejudice to the right of the
Association to pursue criminal proceedings initiated against you
as well as to recover the amounts lost by the Ass0ciation pursuant
to the misappropriation and other acts committed by you as also
due to your gross and criminal negligence. It may also be noted C
that in view of the nature of the misconducts committed by you
and the loss suffered by the Association, conseqm;at lo the same,
you will not be entitled lo any gratuity from the A;sociation.

This order, ex-facie, is punitive in nature as the respondent has been held
guilty of misconduct, including misappropriation, allegedly committed by D
him. The order is not an innocuous order and cannot be treated as an order
by which services of the respondent were simply terminated. He was, in ·
fact, dismissed from service.

9. It was next contended by the counsel for the appellant that the
Appellate Authority before whom an application to produce the evidence E
was filed should have allowed the appellant to lead the evidence in support
of the charges levelled against the respondent as the Appellate Authority
has jurisdiction and power to record evidence at the appellate stage as
provided by Section 41(2) read with Rule 9(3) of the Tamil Nadu Shops &
Establishments Rules, 1948. Learned counsel for the respondent has, on F
the contrary, contended that if an opportunity of hearing was not given to
the respondent at the initial stage during the domestic enquiry, the defect
cannot be cured by giving him that opportunity at the appellate stage and,
therefore, even if application to lead fresh evidence was not disposed of by
the Appellate Authority, it would not vitiate the order of that authority.
G
10. Before construing the provisions of Section 14 and Rule 9, it may
be stated that it has always been the philosophy of Industrial Jurisprudence
that if the domestic enquiry held by the employer was defective, deficient,
incomplete or not held at all, the Tribunal, instead of remanding the case
to the enquiry officer for holding the ·enquiry de novo, would itself require H
762 SUPREME COURT REPORTS [1997] 2 S.C.R.

A the parties to produce their evidence so as to decide whether the charges,
for which disciplinary action was taken against the employee, were estab-
lished or not. The pending proceedings keep the employer and the
employee in a state of confrontation generating further misgivings and
bitterness. It is, therefore, of paramount importance that such proceedings
B · should come to an end at the earliest so as to maintain industrial peace
and cordial relations between the management and the labour.

11. This Court in Mis Indian Iron & Steel Co. Ltd. v. Their Workmen,
AIR (1958) SC 130, had laid down that in case of dismissal for misconduct,
the tribunal does not act as a court of appeal and it is not within its
C jurisdiction to substitute its own judgment for that of the management and
that it would interfere only when there was want of good faith, victimisation
or unfair labour practice etc. on the part of the management. This decision
was followed in Punjab National Bank Ltd. v. Its Workmen, (1960] 1 SCR
806.

D
12. In Mis Bharat Sugar Mills Ltd. v. Jai Singh, (1962] 3 SCR 684, the
question of allowing an employer to adduce evidence before the Tribunal
justifying its action (after the domestic enquiry was found to be defective)
was considered and it was held that in such a situation it would be
appropriate to allow the parties to lead evidence so that the Tribunal itself
E may be satisfied about the misconduct imputed to the employee. The
decision of the Labour Appellate Tribunal in Buckingham and Carnatic Co.
Ltd. v. Workers of the Company, (1952) Lab IC 490, in which it was laid
down that evidence can be adduced even for the first time at that stage
was approved. This question was again considered in Management of Ritz
F Theatre (P) Ltd. v. Its Workmen, [1963] 3 SCR 461, and the law laid down
earlier was reiterated. To the same effect is the decision of this Court in
Khardah Co. Ltd. v. Their Workmen, (1964] 3 SCR 506 and Workmen of '
Motipur Sugar Factory (P) Ltd. v. Motipur Sugar Factory, (1965] 3 SCR 588.
In State Bank of India v. R.K Jain & Ors., [1972] 1 SCR 755 and in Delhi
Cloth & General Mills Company Ltd. v. Ludh Budh Singh, (1972) 1 Labour
G Law Journal 180 SC, it was again laid down that where an employer failed
to make an enquiry before dismissing a workmen, it would be open to him
to produce all relevant evidence before the Tribunal to show that the action
was justified.

H 13. Provisions of the Industrial Disputes Act were, in the meantime,
UNITED PLANTERS ASSN. OF SOUTHERN INDIA,. K.G. SANGAMESWARAN [S. SAGH!RAHMAD, J.]763

amended and on the recommendation of the International Labour Or- A
ganization, Section llA was introduced in the Act by the parliament,
wherein it was provided that the Tribunal had not only the power to set
aside the order of dismissal and direct reinstatement of the workmen, it
had also the power to award lesser punishment. The proviso to Section
llA, however, provided that the Tribunal would rely only on the material B
already on record and shall not take any fresh evidence.

14. In view of the provisions contained in Section 11A, a question
arose in The Workmen of Mis Firestone Tyre & Rubber Co. of India Pvt. Ltd.
v. The Management & Ors., AIR (1973) SC 1227, as to the jurisdiction of
the Tribunal to take evidence to decide the merit of the charges and it was C
laid down that in spite of the prohibition contained in the Proviso to
Section llA the Tribunal, in order to satisfy itself as to the guilt of the
person charged, had the jurisdiction to take the evidence and that th; law
in that regard had not undergone any change. It was pointed out that if the
domestic enquiry had been held by the employer, the Tribunal will examine
the merits of that enquiry and would confine itself to the evidence already D
on record. But where the enquiry was defective, the Tribunal could still
take fresh evidence to decide the merits of the charges.

15. This decision has since been followed by this Court in a number
of cases, including The East India Hotels v. Their Workmen & Ors., AIR E
(1974) SC 696; The Cooper Engineering Ltd. v. P.P. Mundhe, AIR (1975)
SC 1900; Ruston & Hornsby Ltd. v. T.B. Kadam, AIR 1975 SC 2025, and

- in a recent decision in Bharat Forge Co. Ltd. v. A.B. Zodge & Anr., [1996]
4 sec 374, in which it was again reiterated that the parties have the right
to adduce evidence before the Tribunal and the Tribunal can, on the basis
of such evidence, come to its own conclusion as to the guilt of the F
employee.

16. We may now proceed to consider the provisions of Section 41
and Rule 9 which are quoted below :-

"Section 41. Notice of dismissal- (1) No employer shall dispense G
with the services of a person employed continuously for a period
of not less than six months, except for a reasonable cause and
without giving such person at least one month's notice or wages in
lieu of such notice, provided however, that such notice shall not
be necessary where the services of such person are dispensed with H
764 SUPREME COURT REPORTS [1997] 2 S.C.R.

A on a charge of misconduct supported by satisfactory evidence
recorded at an enquiry held for the purpose.

(2) The person employed shall have a right to appeal to such
authority and within such time as may prescribed either on the
ground that there was no reasonable cause for dispensing with his
B services or on the ground that he had not been guilty of misconduct
as held by the employer.

(3) The decision of the appellate authority shall be final and
binding on both the employer and the person employed."

c Rule 9. Appeals under section 41(1).- The Deputy Commissioners
of Labour in their respective areas assigned to them by the Com-
missioner of Labour shall be the authoriries for the purposes of
hearing appeals under sub-section (2) of section 41 of the said Act:

Provided that the Commissioner of Labour may, by order in
D writing, on the representation made by either of the parties in this
behalf or on his own record, withdraw any case under this Act,
pending before an authority and transfer the same to another
authority for disposal. Such authority to whom the case is so
transferred may, subject to the special direction in the order of
E transfer proceed either de-novo or from the stage at which it was
so transferred.

(2) Any appeal under sub-section (2) of section 41 shall be
preferred by the person employed within thirty days from the date
of service of the order terminating the service with the employer,
-
F such service to be deemed effective if carried out either personally
or if that be not practicable, by prepaid registered post to the last
known address when the date of such service shall be deemed to
be the date when the letter would arrive in ordinary course of post.

[Provided that an appeal may be admitted after the said period
G
of thirty days if the appellant satisfied the appellate authority that
he had sufficient cause for not preferring the appeal within that
period.]

(3) The procedure to be followed by the appellate authority
H (Deputy Commissioner of Labour), when hearing appeals
UNITED PLANTERS ASSN. OF SOUTHERN INDIA'· K.G. SANGAMESWARAN [S. SAGHIRAHMAD, J.]765

preferred to him under sub-section (2) of section 41 shall be A
summary. He shall recorc\ briefly the evidence adduced before him
and then pass orders giving his reasons therefor. The result of the
appeal shall be communicated to the parties as soon as possible.
Copies of the orders shall also be furnished to the parties, if
required by them."
B
17. From a perusal of the provisions quoted above, it will be seen
that the jurisdietion of the Appellate Authority to record evidence and to
come to its own conclusion on the question involved in the appeal is very
wide. Even if the evidence is recorded in the domestic enquiry and the
order of dismissal is passed thereafter, it will still be open to the Appellate C
Authority to record, if need be, such evidence as may be produced by the
-- parties. Conversely, also if the domestic enquiry is ex parte or no evidence
was recorded during those proceedings, the Appellate Authority would still
be justified in taking additional evidence to enable it to come to itr own
conclusions on the articles of charges framed against the delinquent officer. D

18. This Court in Remington Rand of India Ltd. v. Thim R. Jambulin-
gam, [1975] 2 SCR 17, has already considered the scope of the provisions
of Section 41 of the Act and held that the jurisdiction of the Commissioner
(Deputy Labour Commissioner) who is the Appellate Authority under the
Act is of wider scope unlike that of the tribunal in an applicaton under E
Section 33 of the Industrial Disputes Act. It was further held that the
Commissioner was competent to rehear the matter completely and come
to its own conclusion after re-appreciation of the evidence or entertaining
additional evidence, if necessary, in the interest of justice.

- 19. A similar provision was considered by Three Judges Bench of this
Court in Chainnan, Mis Brooke Bond India Pvt. Ltd. v. .Chandra Nath
F

Choudhary, [1969] 1 SCR 919. In that case, the Court considered the
provisions of the Bihar Shops and Commercial Establishments Act and the
Rules framed thereunder. Subcsection (1) of Section 26 of the Bihar Act
provided that no employer shall dismiss or discharge an employee except G
on a reasonable cause and without giving such employee at least one month's
notice or one month's wages in lieu thereof. The Proviso to Sub-section (1)
laid down that the notice shall not be necessary where the services are
dispensed with on a charge of misconduct. It was provided by Sub-section
(2) that every employee, dismissed or discharged, may file a complaint to H
766 SUPREME COURT REPORTS (1997] 2 S.C.R.

A the prescribed authority (Labour Court) on three grounds, namely -
· (1) that there was no reasonable. cause for dispensing with his ser-
vices, or

(2) that no notice was served on him as required by sub-section 1,or
B
(3) that he was not guilty of any misconduct as held by the employer.

20. Sub-section (5) of Section 26 enabled the competent authority
to record evidence and come to its own findings on such evidence. It was
held that the authority was required to come to its own independent
c findings on the evidence adduced by the parties and recorded by it inde-
pendently of the findings given in the domestic enquiry. It was no doubt
laid down that the proceedings under Section 26 were not by way of appeal
against the order passed as a result of the domestic enquiry and that they
were independent and original proceedings but the jurisdiction to record
D evidence so as to enable the prescribed authority to come to its own
conclusion irrespective of the findings and evidence recorded in the domes-
tic enquiry, was similar to the jurisdiction of the Appellate Authority under
the Tamil Nadu Act. Here also the Authority (Deputy Labour Commis-
sioner) has also been given the power and jurisdiction to take additional
E evidence and to come to its own conclusion in respect of the charges
framed against an employee. In view of the wide jurisdiction of the Appel-
late Authority, it cannot be legally argued that the jurisdiction of the
Appellate Authority to record evidence would be limited only to those
cases where no evidence was recorded at the domestic enquiry and the
F principles of natural justice were violated. In addition to such cases,

--
namely, cases in which an opportunity of hearing was not given to the
employee or the principles of natural justice were, in any way, violated, the
Appellate Authority shall also have jurisdiction to record evidence, if
necessary, in order to come to its own conclusion on the vital question
whether the employee was guilty or not of the charges framed against him.
G
21. The Madras High Court in Salem Sheyapet Sri Venkateswara
Bank, Ltd. v. Krishnan (K.K.) and another, (1959) 2 LLJ 797, held that the
. Appellate Authority under Section 41(2) had the jurisdiction to enquire
whether the statutory conditions subject to which alone a servant could be
H dismissed, have been compiled with. It would imply that the Appellate
UNITED PLANTERS ASSN. OF SOUIBERN INDIA v. K.G. SANGAMESWARAN [S. SAGHIR AHMAD, J.]767
',•\·

Authority can also record evidence specially when it has also to record the A
findings whether the charges were established or not.

22. The Madras High Court again in Srirangam Janopakara Bank,
Ltd. v. Rangarajan (S.) and another, (1964) 1 LU 221, considered the ambit
and scope of Section 41 read with Rule 9 and laid down that :-
B
"It appears to us that this rule is not intended to confer, on the
appellate authority, a power to take evidence de hors S.41(2); the
rule really lays down. a rule of procedure, that the hearing of
appeals shall be summary, that the evidence (if) recorded shall be
brief, and that when orders are passed, reasons should be given. C
There is therefore no room for examining rule 9(2) dissociated
from S.41(2), and to decide that rule 9(2) went far beyond the
rule-making power under S.49, on the ground that it confers power
to take additional evidence on the appellate authority.

It would
'
also appear necessary. in the interests of the proper D
working of an e~actment like the Madras Shops and Estab-
lishments Act, to confer on the appellate authority _the power to
take evidence itself, if the circumstances of a case justify it."

23. In view of the above decisions, there remains no doubt that the E
Appellate Authority has jurisdiction to take evidence at the appellate stage
and to come to its own conclusion about the guilt of the delinquent
employee.

24. If the instant case is analysed in the light of the principles laid F
down above, it will be noticed that the Appellate Authority has interferred
with the order of discharge/dismissal of the respondent on the ground only
that a domestic enquiry was not held into the imputations made against the
respondent. If did not decide the application of the appellant for recording
evidence. The Appellate Authority, therefore, committed grave error in the
·exercise of its jurisdiction by not disposing .of the application of the G
appellant for additional evidence and proceeding to dispose of the appeiil
on the ground that the order of dismissal having been passed without
holding a domestic enquiry, was bad in law.

25. We may now consider the contention of the learned counsel for H
I

'').-
768 SUPREME COURT REPORTS [1997) 2 S.C.R.

A the respondent relating to the principles of natural justice which were not
observed at the initial stage, namely, at the time of the domestic enquiry.
Whether the defect is curable at the appellate stage or not is the question. .
•
26. Learned counsel in support of his arguments that the defect is
B not curable has placed reliance on the decision of this Court in Institute of
Chartered Accountants of India v. L.K. Ratna & Ors., [1986) 4 SCC 537. It
was, no doubt, laid down in this case that a post-decisional hearing cannot
be an effective substitute of pre-decisional hearing and that if an oppor-
tunity of hearing is not given before a decision is taken at the initial stage,
it would result in serious prejudice, inasmuch as if such an opportunity is
C provided at the appellate stage, the person is deprived of his right of appeal
to another body. There may be cases where opportunity of hearing is
excluded by a particular service or statutory rule. In Union of India & Anr.
v. Tutsi Ram Patel, [1985] 3 SCC 398, pre-decisional hearing stood excluded
by the second Proviso to Article 311(2) of the Constitution, and therefore,
· D the Court took the view that though there was no prior opportunity to a
Government servant to defend himself against the charges made against
him, he got an opportunity to plead in an appeal filed by him that the
charges to which he was removed from service were not true. Principles of
natural justice in such a case will have to be held to have been sufficiently
E compiled with. In Mrs. Menka Gandhi v. Union of India & Anr., [1978] 1
SCC 248 and in Liberty Oil Mills & Ors. v. Union of India & Ors., [1984] 3
.sec 465, an opportunity of making a representation after the decision was
taken, was held to be sufficient compliance. All depends on facts of each
case.

F
27. In the instant case, the appellant has contended that the respon-
dent did not participate in the domestic enquiry in spite of an opportun_ity
of hearing having been provided to him. He was also offered the inspection
of the documents, but he- did not avail of that opportunity. He himself
invoked the jurisdiction of the Appellate Authority and the order of
G dismissal passed against him was set aside on the ground that the appellant
did not hold any domestic enquiry. It has already been seen above that the
Appellate Authority has full jurisdiction to record evidence to enable it to
come to its own conclusion on the guilt of the employee concerned. Since
the Appellate Authority has to come to its own conclusion on the basis of
H the evidence recorded by it, irrespective of the findings recorded in the
',.
--{
UNITED PLANTERS ASSN. OF SOUTHERN INDIA" K.G. SANGAMESWARAN [S. SAGHIR AHMAD, J.J769

domestic enquiry, the rule laid down in Ratna's case (supra) will not strictly A
apply and the opportunity of hearing which is being provided to the
respondent at the appellate stage will sufficiently meet his demands for a
just and proper enquiry.

28. In view of the above, the appeal is allowed. The judgment and
order dated 12.2.1996 passed by the Appellate Authority is set aside and B
the case is remanded back to the Appellate Authority to dispose of the
appeal filed by the respondent under Section 41 of the Act afresh in
accordance with law in the light of the observations made above. No costs.

S.V.K.I. Appeal allowed.