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Dismissal of Employee without conducting Disciplinary Enquiry Sustainable: Rules the Apex Court

The Apex Court in the case of The State Of Uttarakhand vs Sureshwati in Civil Appeal no. 142 of 2021 decided recently on 20 January has categorically held that the dismissal of an employee without conducting Disciplinary Enquiry is not illegal & unsustainable only on this ground alone.

Thus, the Apex Court has put to rest the controversy as to whether conducting Disciplinary Enquiry is mandatory before dismissal of an employee holding that the employee gets sufficient & reasonable opportunity to put forth his/her case before the Labour Court and the principles of Natural Justice are not violated in such an eventuality. Thus if an employer fails to make an enquiry before dismissal of a workman, it would be open for both the parties to justify their action/defence before the Labour Court by leading evidence/rebuttal before the Labour Court.

The brief facts of the case are that the Respondent was an Assistant Teacher in a private school for 1 year and thereafter worked as a clerk in the same school, which later became an aided school governed by the Uttaranchal School Education Act, 2006. It is alleged that the Respondent abandoned her service as a clerk in the school since July 1997 when she got married and shifted to Dehradun. After a considerable gap of 9 years the Respondent filed a complaint against the school contending that she had worked continuously upto March 2006 and her services were illegally retrenched without granting her any hearing, or payment of retrenchment compensation.

The Basic School Inspector conducted an enquiry in the presence of both parties and reported that the Respondent had tampered and manipulated the date of appointment and that the employment of the Respondent was illegal. As per the enquiry report, the Respondent had not worked in the school from July 1997 onwards nor she had filed any leave application and the Respondent made grievance of her alleged termination after the school became a Government School to take advantage of the changed situation. Thereafter, the Respondent filed a Complaint before the Labour Commissioner consequent to which an ex-parte award was passed by the Labour Court in 2010 in favour of the employee but the matter was remanded back by the High Court in 2015.

The Labour Court in 2016 answered the reference against the Respondent as it found no truth in the averments made by her and also because she had concealed the material facts and had not approached the Court with 'clean hands.' The Respondent filed a Writ Petition in the Uttarakhand High Court which allowed the writ petition and directed reinstatement of the respondent on the sole ground that no disciplinary enquiry was held by the School regarding her alleged abandonment of service. Against the judgement of the High Court, the State had filed the present SLP in the Apex Court which has been allowed after analysis & application of the precedents and declaration of law earlier by the Apex Court.

It is pertinent that the Apex Court has in a catena of decisions held that where an employer fails to make an enquiry before dismissal or discharge of a workman, it is open for the employer to justify it's action before the Labour Court by leading evidence before it. The entire matter would be open before the tribunal, which would have the jurisdiction to satisfy itself on the evidence adduced by the parties as to whether the dismissal or discharge was justified.

It would be trite to refer to the judgement of a four Judge Bench of the Apex Court in Workmen of the Motipur Sugar Factory Private Ltd. v. Motipur Sugar Factory AIR 1965 SC 1803 wherein it was held thus:
11. 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 questions open to a tribunal where domestic enquiry has been property held (see Indian Iron & Steel Co. v. Workmen AIR: 1958 SC 130) but also to satisfy itself on the facts adduced before it by the employer whether the dismissal or discharge was justified.

The Apex Court referred and followed the cases of:
  • M/s Sasa Musa Sugar Works (P) Limited v. Shobrati Khan AIR 1959 SC 923
  • Phulbari Tea Estate v. Workmen AIR 1959 SC 1111
  • Punjab National Bank Limited v. Workmen, Bharat Sugar Mills Limited v. Jai Singh (1962) 3 SCR 684
  • Ram Swarath Sinha v. Belsund Sugar Co. AIR 1960 SC 160.
The Apex Court reiterated that:
the important effect of omission to hold an enquiry was 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 out.

 It is trite to refer to the case of Delhi Cloth and General Mills Co. v. Ludh Budh Singh (1972) 1 SCC 595 wherein the Apex Court held thus:

 If no domestic enquiry had been held by the management, or if the management makes it clear that it does not rely upon any domestic enquiry that may have been held by it, it is entitled to straightway adduce evidence before the Tribunal justifying its action. The Tribunal is bound to consider that evidence so adduced before it, on merits, and give a decision thereon. In such a case, it is not necessary for the Tribunal to consider the validity of the domestic enquiry as the employer himself does not rely on it.

It would be apposite to refer to the judgment of this Court in Workmen of Firestone Tyre & Rubber Co. of India (P) Ltd. v. The Management of Firestone Tyre & Rubber Co. of India (P) Ltd and Others (1973) 1 SCC 813 wherein the broad principles regarding holding of the enquiry against the workmen were clearly & unambiguously spelt out in detailed manner thus:
  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 hand, 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.
  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.
  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. Workmen's (1971) 1 SCC 742 within the judicial decision of a Labour Court or Tribunal.

Thus it is no longer res- integra' that departmental enquiry before dismissal of a workmen is not sine qua non in all cases. As elucidated above, in the absence of a disciplinary enquiry before termination, both the employee & the employer has to adduce evidence before the Labour Court/ Tribunal who will examine the evidence and decide the dispute in accordance with Law. It is once again clarified that merely because no disciplinary enquiry has been conducted would not, on itself alone, render the dismissal invalid & illegal.

Written By: Inder Chand Jain
Ph no: 8279945021, Email: [email protected]

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