2014 (1) TMI 1935 - HC - Indian Laws

High Court quashes Labor & Industrial Court judgments, directs consideration of gratuity payment post-superannuation

The High Court quashed the judgments of the Labour Court and Industrial Court, dismissing the complaint and allowing the revision. The High Court directed ... Mis-conduct - mixing inferior quality cotton into superior quality cotton which were said to have caused a loss to the petitioner Cotton Federation - HELD THAT:- In the instant case, the Labour Court concluded that the findings of the Enquiry Officer are perverse and the entire complaint has been allowed by the same judgment without affording any opportunity to conduct a de-novo enquiry to the petitioners Management. The only distinction is that in the Permanent Magnet's case [2001 (7) TMI 1327 - BOMBAY HIGH COURT] , the final order of the punishment was passed and in the instant case, the punishment was proposed in the 2nd show cause notice. The ratio in cases of Bharat Forge, K.S.R.T.C. and Permanent Magnet's case [2001 (7) TMI 1327 - BOMBAY HIGH COURT] shall equally apply to cases wherein the 2nd show cause notice is challenged on identical footings. Therefore, the right to conduct a de-novo enquiry is equally available to every employer, be it in a case where the order of punishment is issued or in a case where punishment is proposed by a 2nd show cause notice. Unless the enquiry was set aside on any count, there was no scope for conducting a de-novo enquiry which right was reserved by the petitioners herein in its written statement. By-passing this settled procedure, the Labour Court in one stroke has branded the findings of the Enquiry Officer as perverse and by accepting the evidence adduced by the respondent, has delivered its final judgment. The conclusion drawn by the Labour Court of declaring the findings as perverse on the basis of evidence adduced before it and in the backdrop of the respondent employee having neither led evidence through his witnesses nor cross examined the management witnesses, is an unsustainable conclusion. Procedure unknown to Law has been resorted to by the Labour Court. Since the respondent employee sought to brand the findings as perverse, such a challenge needs to be considered only on the basis of the evidence recorded in the enquiry and the findings arrived at by the Enquiry Officer in light thereof. The respondent employee led evidence before the Labour Court attempting to bring on record such material which was never before the Enquiry Officer. Fresh evidence recorded before the Labour Court, can not be the basis for branding the findings of the Enquiry Officer as perverse. Going by the magnitude of the challenges to the disciplinary proceedings and disciplinary action, it is imperative that the delinquent should put forth substantive prayers in his complaint or statement of claim as regards the fairness of an enquiry and the findings of the Enquiry Officer. He should specifically set out his prayers seeking directions from the Labour Court for setting aside the domestic enquiry on account of violation of principles of natural justice or findings being perverse or for any other connected reason. Since this aspect of disciplinary proceedings happens to be of paramount importance, pleadings and prayers need to go hand in hand in order to enable the Labour Court to frame specific issues to that extent and deliver its part-I order/Award based on such prayers. A Court normally would not travel beyond the prayers put forth by a litigant. The impugned judgments of the Labour Court and the Industrial Court are quashed - the complaint stands dismissed and the revision stands allowed. Issues Involved:1. Validity of the domestic enquiry and findings of the Enquiry Officer.2. Alleged unfair labor practices by the petitioners.3. Legality of the second show cause notice dated 23/01/2002.4. Proportionality and appropriateness of the proposed punishment.5. Right of the employer to conduct a de-novo enquiry.Detailed Analysis:1. Validity of the Domestic Enquiry and Findings of the Enquiry Officer:The petitioners issued a charge sheet cum show cause notice to the respondent alleging serious misconduct, including mixing inferior quality cotton with superior quality cotton, causing significant financial loss. The Labour Court concluded that the findings of the Enquiry Officer were perverse and not based on evidence, leading to the setting aside of the second show cause notice. However, the High Court noted that the Labour Court overstepped its jurisdiction by branding the findings as perverse without substantive prayers from the respondent and without allowing the petitioners to conduct a de-novo enquiry. The High Court emphasized that perversity in findings should be based on evidence before the Enquiry Officer, not fresh evidence before the Labour Court.2. Alleged Unfair Labor Practices by the Petitioners:The respondent claimed that the petitioners engaged in unfair labor practices by issuing a false and arbitrary show cause notice. The Labour Court agreed, stating that the management's actions were unjustified. However, the High Court found that the Labour Court's conclusion was unsustainable as it was based on new evidence presented by the respondent, which was not part of the original enquiry.3. Legality of the Second Show Cause Notice Dated 23/01/2002:The Labour Court quashed the second show cause notice, deeming it illegal. The High Court, however, ruled that the Labour Court should have allowed the petitioners to conduct a de-novo enquiry upon finding the enquiry vitiated. The right to conduct a de-novo enquiry is established in case law, and the Labour Court bypassed this procedure.4. Proportionality and Appropriateness of the Proposed Punishment:The respondent argued that the proposed punishment of compulsory retirement was disproportionate. The Labour Court sided with the respondent, but the High Court highlighted that the Labour Court should not have interfered with the disciplinary process at the stage of the second show cause notice. The High Court also noted that the respondent had already superannuated, making the issue of punishment moot.5. Right of the Employer to Conduct a De-Novo Enquiry:The High Court reiterated that the employer has the right to conduct a de-novo enquiry if the original enquiry is found to be vitiated. This right was reserved by the petitioners in their written statement. The Labour Court's final judgment without allowing a de-novo enquiry was a procedural error. The High Court quashed the judgments of the Labour Court and Industrial Court, emphasizing the need to follow established legal procedures.Conclusion:The High Court quashed and set aside the judgments of the Labour Court and Industrial Court, dismissing the complaint and allowing the revision. The High Court directed the petitioners to consider the respondent's case for payment of gratuity, given his superannuation. The petition was allowed with no order as to costs.