Domestic enquiry perversity must be tested on the enquiry record, and a reserved right to de-novo evidence must be honoured.

Where an employer reserves in its written statement the right to adduce evidence afresh if the domestic enquiry is found defective, the Labour Court must permit a de-novo enquiry and cannot finally dispose of the complaint at that stage. Perversity of the Enquiry Officer's findings must be assessed only on the evidence and reasons contained in the enquiry record; fresh material led before the Labour Court cannot be used to re-try the charges. The court also reiterated that domestic enquiries are judged on preponderance of probabilities, not a stricter standard.

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Issues: (i) Whether, after holding that the domestic enquiry was vitiated and the findings of the Enquiry Officer were perverse, the Labour Court could finally allow the complaint without first permitting the employer to conduct a de-novo enquiry when such a right had been reserved in the written statement; (ii) Whether the Labour Court could brand the findings as perverse on the basis of fresh material led before it, instead of examining only the evidence that was before the Enquiry Officer.

Issue (i): Whether, after holding that the domestic enquiry was vitiated and the findings of the Enquiry Officer were perverse, the Labour Court could finally allow the complaint without first permitting the employer to conduct a de-novo enquiry when such a right had been reserved in the written statement.

Analysis: The settled law is that when an employer reserves in the written statement the right to lead evidence afresh if the enquiry is found defective, the Labour Court cannot straightaway deliver a final decision on the complaint once it concludes that the enquiry is vitiated. The proper course is to allow the employer an opportunity to conduct a de-novo enquiry. That procedural safeguard applies equally where the challenge is at the stage of a second show cause notice, and not only where a punishment order has already been passed.

Conclusion: The Labour Court acted illegally in finally disposing of the complaint without allowing a de-novo enquiry opportunity to the employer; this issue is answered in favour of the petitioner.

Issue (ii): Whether the Labour Court could brand the findings as perverse on the basis of fresh material led before it, instead of examining only the evidence that was before the Enquiry Officer.

Analysis: A finding of perversity must be tested only on the evidence that was before the Enquiry Officer and the reasons recorded in the enquiry report. Material not before the Enquiry Officer cannot be used before the Labour Court to convert the proceeding into a fresh trial of the charges. In domestic enquiries, proof is by preponderance of probabilities, and the Labour Court erred in proceeding on a stricter standard and in relying on fresh evidence to hold the findings perverse.

Conclusion: The Labour Court could not rely on new material to hold the findings perverse; this issue is answered in favour of the petitioner.

Final Conclusion: The impugned orders were set aside and the complaint was dismissed, with a limited direction to consider gratuity in accordance with law in view of superannuation.

Ratio Decidendi: Where the employer has reserved the right to lead evidence afresh, a Labour Court that finds the domestic enquiry vitiated must permit a de-novo enquiry, and perversity of enquiry findings must be judged only on the evidence that was before the Enquiry Officer.

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