TaxTMI 
TaxTMI 
1973 (3) TMI 134
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....tion 11A was incorporated in the Industrial Disputes Act 1947 (hereinafter referred to as the Act) by section 3 of the Industrial Disputes (Amendment) Act 1971 (hereinafter referred to as the Amendment Act). The Amendment Act passed by Parliament, received the assent of the President on December 8, 1971. Sub-section 2 of section 1 provided for its coming into force on, such date as the Central Government by notification in the official gazette, appoints. The Central Government by notification No. F.S.- 11013/1/71-LR.I dated 14-12-1971 appointed the 15th day of December, 1971, as the date on which the said Act would come into force. Accordingly, the Amendment Act came into force with effect from December 15, 1971. The Amendment Act introduced various amendments to the Act. In particular by section 3, it inserted the new section 11A in the Act. The new section 11 A so inserted runs as follows: 3. Powers of Labour Courts, Tribunals and National Tribunals to give appropriate relief in case of discharge or dismissal of workmen 11 A. Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court., Tribunal or National Tribu....
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....some other relief. In accordance with these recommendations, it is considered that the Tribunal's power in an adjudication proceeding relating to discharge or dismissal of a workman should not be limited and that the Tribunal should have the power in cases wherever necessary, to set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit or give such other relief to the workmen including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require. For this purpose, a new section 11A is proposed to be inserted in the Industrial Disputes Act, 1947.... 5. There is no controversy that in all the four appeals,, the reference had been-made long before the date of coming into force,of section 11A and the industrial disputes were pending adjudication at the hands of the concerned authorities on 15-12-1971. In respect of such disputes the concerned labour court or Tribunal had to consider the question whether section 11A applies to those proceedings and also the further question as to the powers to be exercised by them in respect of such disputes....
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....has further held that an employer under those circumstances has no, right to adduce evidence in the adjudication proceedings to justify his action. In civil Appeal No. 1996 of 1972 arising out of Reference (I.D.A.) No. 207 of[1970] and in Civil Appeal No. 2386 of 1972 arising out of Reference (I.D.A.) No' 213 of [1970], the same Labour Court has expressed similar views in its orders dated June 27, 1972. Against all these three orders the company has filed appeals. 8. The management and the workmen concerned in certain other disputes have also intervened in these appeals and they have placed before us copies of the orders passed by other authorities. It will be useful to refer to the views expressed by some of those authorities. In Reference (I.D.A.) No. 79 of 1971, the Second Labour Court in its order dated April 13, 1972 has held as follows : 9. Section 11A gives power to the Labour Court to scrutinise domestic enquiries similar to that of an appellate court. The said section comes into play only after the court has come to a conclusion that the enquiry held by an employer was proper. Both parties have still a right to adduce evidence to prove the legality or otherwise of th....
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....pportunity to adduce evidence before the Tribunal to justify his action. Once the Tribunal accepts that evidence and 'holds that the misconduct is proved, it had no power to interfere with the discretion of the management regarding the quantum of punishment. 13. The above position has been completely changed by section 11A. It is now obligatory on an employer to hold a proper domestic enquiry in which all material evidence will have to be adduced. When a dispute is referred for adjudication and it is found that the domestic enquiry conducted by the management is defective or if it is found that no domestic enquiry at all had been conducted, the order of discharge or termination passed by the employer becomes, without anything more, 'Unjustified and the Labour Tribunals have no option but to direct the reinstatement of the workmen concerned, as his discharge or dismissal is illegal. Even in cases where a domestic enquiry has been held and finding of misconduct recorded, the Labour Tribunals have now full power and jurisdiction to reappraise the evidence and to satisfy themselves whether the evidence, justifies the finding of misconduct. Even if the enquiry proceedings are held to....
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....opardised by a further enquiry being conducted by the employer after filling up the lacunae that are. found in the original enquiry. He pointed out that when the Tribunals have now been clothed with full power to reappraise the evidence adduced in the domestic enquiry, which an employer is under obligation to conduct, and when they have been clothed with powers to hold as unjustified an order of termination because of the enquiry Proceeding being defective or on the ground that no enquiry at all was conducted, the basis for giving an employer an opportunity to add cc evidence before the Tribunal no longer survives. Mr. Deshmukh was prepared to accept that even now, it is open to the parties, to adduce evidence before the Tribunal, strictly limited to the validity or otherwise of a domestic enquiry conducted by an employer. The counsel relied very heavily 'on the proviso to section 11A in support of his contention that it is obligatory now for an employer to conduct a proper and valid enquiry before passing an order of dismissal or discharge. 15. The above contentions of Mr. Deshmukh have been adopted by Miss Indira Jai Singh, Mr. Madan Mohan and Mr. Bhandare, counsel_appearing f....
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....nishment, it is now clothe with such a power. This is the only modification regarding the powers of the management that has been introduced by section 11 A. Neither the fact that no enquiry at all has been held by an employer nor the circumstance that the enquiry, if any held, is found to be detective, stands in the way of an employer adducing evidence before the Tribunal for the first time to justify his action taken against a workman. 18. Mr. Setalvad, learned counsel, appearing for Larsen & Toubro Ltd. adopted these contentions of Mr. Damania. He, however, referred us to the provisions of section 33 of the Act. According to him when the previous permission or an approval for dismissing discharging a workman has been obtained under section 33, the Tribunal concerned would have applied its mind and satisfied itself at least prima facie that the proposed action of the employer was justified. Such satisfaction may be arrived at on perusal of the records of domestic enquiry, if one had been conducted or on the basis of evidence Placed before the Tribunal by an employer for the first time. The said order of dismissal or discharge can nevertheless be the subject of an industrial dis....
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.... Muzafferpur v. The Management of the Belsund Sugar Company Limited, Righa Muzaffarpur ([1954] Labour Appeal Cases 697), the Labour Appellate Tribunal has recognised the right of a management to ask for permission to adduce evidence for the first time before the Tribunal to justify its action though no domestic enquiry had been held by it. It has been emphasised that the permission asked for cannot be thrown out in limine on the ground that the management had not made any previous enquiry into the charge. We may say that this decision was in respect of a proceeding under section 33 of the Act, but, as held by this Court, there is no difference in such matters whether the Tribunal was deciding a dispute referred to it under section 10 or an application filed before it under section 33 of the Act. 23. In discussing the nature of the jurisdiction exercised by an Industrial Tribunal when adjudicating a dispute relating to dismissal or discharge, it has been emphasised by this Court in Indian Iron & Steel Co. Ltd.(1958 S.C.R. 667) as follows : "Undoubtedly, the management of a concern has power to direct its own internal administration and discipline; but the power is not un....
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....sal is at large before the tribunal and, on the evidence adduced before it, the tribunal has to decide for itself whether the misconduct alleged is proved, and if yes, what would be proper order to make. In such a case the point about the exercise of managerial functions does not arise at all". 27. In M/s. Bharat Sugar Mills Ltd. v. shri Jai Singh and Others ([1962] (3) S.C.R. 684), the question arose regarding the powers of an Industrial Tribunal to permit an employer to adduce evidence before it justifying its action after the domestic enquiry was held to be defective. It was contended on behalf of the workmen that when once the domestic enquiry was found to be defective, the tribunal had no option but to dismiss the application filed by an employer for approval and that it cannot allow an employer to adduce evidence before it justifying its action. This Court rejected this contention as follows : "When an application for permission for dismissal is made on the allegation that the workman has been guilty of some misconduct for which the management considers dismissal the appropriate punishment the Tribunal has to satisfy itself that there is a prima facie case for suc....
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....sion to dismiss under s. 33), evidence can be adduced for the first time before the Industrial Tribunal. The important effect of the omission to hold an enquiry is 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". 30. The observations made by this Court in The Punjab National Bank Ltd. (supra) were quoted with approval. It was further held that the reasons for which it is proper for a Tribunal to take evidence itself as regards the alleged misconduct when adjudicating upon a dispute arising out of an order of dismissal are equally present in a case where the management makes an application for permission to dismiss an employee without holding a proper enquiry. Ultimately, this Court upheld the order of the Tribunal allowing the employer to adduce evidence before it in support of its application for permission to dismiss an employee even though the domestic enquiry held by it was held to be highly defective. 31. The powers of a Tribunal when a proper enquiry has been held by an employer as well as the procedure to be adopted whe....
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....as, not been held or that the, enquiry having been held properly the finding recorded is perverse, that the Tribunal derives jurisdiction to 'deal with the merits of the dispute, when permission has to be given to an employer to adduce additional evidence. 34. The right of an employer to lead evidence before the Tribunal to justify his action was again reiterated in Khardah Co. Ltd. v. Their Workmen([1964] (3) S.C.R. 506) as follows "It is well settled that if the enquiry is held to be unfair the employer can lead evidence before the Tribunal and justify his action, but in such a case, the question as to whether the dismissal of the employee is justified or not, would be open before the Tribunal and the Tribunal will consider the merits of the dispute and come to its own conclusion without having any regard for the view taken by the management in dismissing the employee". 35. In Workmen of Motipur Sugar Factory (Private) Limited v. Motipur Sugar Factory ([1965] (3) S.C.R. 588), the employer had charge-sheeted certain workmen and without conducting any enquiry, as required by the Standing Orders, passed orders discharging the workmen. Before the Tribunal, the employer....
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....loyee once again. In that case, another industrial dispute would arise and the employer would be entitled to rely upon the enquiry which he had held in the meantime. This course would mean delay and on the second occasion it will entitle the employer to claim the benefit of the domestic enquiry. On the other hand, if in such cases the employer is given an opportunity to justify the impugned dismissal on the merits of his case being considered by the tribunal for itself and that clearly would be to the benefit of the employee. That is why this Court has consistently held that if the domestic enquiry is irregular, invalid or improper, the tribunal may give an opportunity to the employer to prove his case and in dealing, so the tribunal tries the merits itself. This view is consistent with the approach which industrial adjudication generally adopts with a view to do justice between the parties without relying too much on technical considerations and with the object of avoiding delay in the disposal of industrial disputes. Therefore, we are satisfied that no distinction can be made between cases where the domestic enquiry is invalid and those where no enquiry has in fact been held". ....
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....iry. It is essentially a matter for the management to decide about the stand that it proposes to take before the Tribunal. It may be emphasised, that it is the right of the management to sustain its order by adducing also independent evidence before the Tribunal. It is a right given to the management and it is for the management to avail itself of the said opportunity". 38. This Court in its recent decision in Delhi Cloth and General Mills Co. Ltd. v. Ludh Budh Singh([1972] (1) LLJ 180) after a review of all the earlier cases, has summarised the principles flowing out of those decisions. It has, been emphasised that when no enquiry has been held by an employer or when the, enquiry held has been found to be defective, the employer has got a right to adduce evidence before the Tribunal justifying its action. The stage at which the employer should invoke the jurisdiction of the Tribunal to allow him to adduce evidence before it, has also been discussed in the said decision. 39. We have exhaustively referred to the various decisions of this Court, as they give, a clear picture of the principles governing the jurisdiction of the Tribunal when adjudicating disputes relating to dism....
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....way, 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 The Management of Panitole Tea ....
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....ding to the employers, the Tribunal has a mere power to alter the punishment after it holds that the misconduct is proved. The workmen, on the other hand, claim that the law has been rewritten. 44. We cannot accept the extreme contentions advanced on behalf of the workmen and the employers. We are aware that the Act is a beneficial piece of legislation enacted in the interest of employees. It is well settled that in construing the provisions of a welfare legislation, courts should adopt, what is described as a beneficent rule of construction. If two constructions are reasonably possible to be, placed on the section, it follows that the construction which furthers the policy and object of the Act Ind is more beneficial to the employees, has to be preferred. Another principle to be borne in mind is that the Act in question which intends to improve and safeguard the service conditions of an employee, demands an interpretation liberal enough to achieve the. legislative purpose. But we should not also lose sight of another canon of interpretation that a statute or for the matter of that even a particular section, has to be interpreted according to its plain words and without doing vi....
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....des the matter. 46. If there has been no enquiry held by the employer or if the enquiry is held to be defective, it is open to the employer even now to adduce evidence for the first time before the Tribunal justifying the order of discharge or dismissal. We are not inclined to accept the contention on behalf of the workmen that the right of the employer to adduce evidence before the Tribunal for the first time recognised by this Court in its various decisions, has been taken away. There is no indication in the section that the said right has been abrogated. If the intention of the legislature was to do away with such a right, which has been recognised over a long period of years, as will be noticed by the decisions referred to earlier, the section would have been differently worded. Admittedly there are no express words to that effect; and there is no indication that the section has impliedly changed the law in that respect. Therefore, the position is that even now the. employer is entitled to adduce evidence for the first three before the Tribunal even if he had held no, enquiry or the enquiry held by him is found to be defective. Of course, an opportunity will have to be given....
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....g of misconduct arrived at, the Tribunal can now differ from that finding in a proper case and hold that no misconduct is proved. 50. We are not inclined to accept the contentions advanced on behalf of the employers that the stage for interference under section 11 A by the Tribunal is reached only when it has to consider the punishment after having accepted the finding of guilt recorded by an employer. It has to be remembered that a Tribunal may 'hold that the punishment is not justified because the misconduct alleged and found proved is such that it does not warrant dismissal or discharge. The Tribunal may also hold that the order of discharge or dismissal is not justified because the alleged misconduct itself is not established by the evidence. To come to a conclusion either way, the Tribunal will have to reappraise the evidence for itself. Ultimately it may hold that the misconduct itself is not proved or that the misconduct proved does not warrant the punishment of dismissal or discharge. That is why, according to us, section 11A now gives full power to the Tribunal to go into the evidence and satisfy-itself on both these points. Now the,jurisdiction of the Tribunal to reapp....
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....cognised an opportunity to be given to an employer to adduce evidence before the Tribunal. 53. The above aspect was stressed before us by Mr. Deshmukh in support of the contention that section 11A has taken not of such an illegality committed by employers and has now made it obligatory to conduct a domestic enquiry. According to him, if no such proper and valid domestic enquiry precedes the order imposing punishment, the Tribunal now has no alternative but to order reinstatement on that ground alone. We have already indicated our views regarding the scope of section 11A and held that the right of an employer to adduce such evidence before the Tribunal has not been taken away. 54. Mr. Deshmukh referred us to section 23 of the Act prohibiting a workman from going on strike in the circumstances mentioned therein and further pointed out that if a strike is illegal, it cannot be lawful'. Similarly, an illegal act of an employer in not holding a domestic enquiry cannot be made legal. 55. In our opinion, the analogy placed before us by the counsel cannot stand scrutiny. It is no doubt true that Standing Orders, which have been certified under the Industrial Employment (Standing O....
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.... will now pass on to consider the proviso to Section II A. Mr. Deshmukh relied on the terms of the proviso in support of his contention that it is now obligatory to hold a proper domestic enquiry and the Tribunal can only take into account the materials placed at that enquiry. The counsel emphasised that the proviso places an obligation on the Tribunal 'to rely only on the materials on record' and it also prohibits the Tribunal from taking 'any fresh evidence in relation to the matter'. According to him, the expression materials on record' refers to the materials available before the management at the domestic enquiry and the expression 'fresh evidence' refers to the evidence that was being adduced by an employer for the first time before the Tribunal. From the wording of the Proviso, he wants us to infer that the right of an employer to adduce evidence for the first time has been taken away, as the Tribunal is obliged to confine its scrutiny only to the materials available at the domestic enquiry. 57. We are not inclined to accept the above contention of Mr. Deshmukh. The Proviso specifies matters which the Tribunal shall take into account as also matters which it shall not. Th....
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....he Tribunal has also been given power, also for the first time, to interfere with the punishment imposed by an employer. When such wide powers have been now conferred on Tribunals, the legislature obviously felt that some restrictions have to be imposed regarding what matters could be taken into account. Such restrictions are found in the Proviso. The Proviso only emphasises that the Tribunal has to satisfy itself one way or other regarding misconduct, the punishment and the relief to be granted to workmen only on the basis of the 'materials on record' before it. What those materials comprise of have been mentioned earlier. The Tribunal, for the purposes referred to above. cannot call for further or fresh evidence, as an appellate authority may normally do under a particular statute, when considering the correctness or otherwise of an order passed by a subordinate body. The 'matter' in the Proviso refers to the order of discharge or dismissal that is being considered by the Tribunal. 60. It is to be noted that an application made,, by an employer under section 33(1) for permission or 33(2) for approval has still to be dealt with according to the principles laid down by this Cour....
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....yer. But the employer will have sufficient material available with him which could be produced before any Tribunal to satisfy it about the justification for the action taken. Quite naturally, the employer will place before the Tribunal, for the, first time, in the adjudication proceedings material to support his action. That material will have to be considered by the Tribunal. But if the contention of Mr. Deshmukh is accepted, then the mere fact that no enquiry has been held, will be sufficient to order reinstatement. Such reinstatement, under the circumstances mentioned above, will, not be doing justice either to the employer or to the workman and will not be conducive to preserving industrial peace. 62. We have indicated the changes effected in the law by section 11 A. We should not be understood as laying down that there is no obligation whatsoever on the part of an employer to hold an enquiry before passing an order of discharge or dismissal. This Court has consistently been holding that an employer is expected to hold a proper enquiry according to the Standing Orders and principles of natural justice. It has also been emphasised that such an enquiry should not be an empty f....
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.... applicability of the section even to disputes already referred. It was stressed that even assuming that an employer has a right to adduce evidence for the first time before the Tribunal, that right ensures to him only after the Tribunal had adjudicated upon the validity of the domestic enquiry. It cannot be characterised even as a right, much less a vested right, because it is contingent or dependent upon the Tribunal's adjudication on the domestic enquiry. The Tribunal, when it adjudicates, a dispute on or after 15-12-1971, has to exercise the powers conferred on it by section 11A, even though the dispute may have been referred prior to that date. Hence it is clear that the section applies even to all proceedings pending adjudication on 15-12-1971. 65. Mr. Damania, learned counsel for the employers, contended that retrospective operation should not be given unless it appears very clearly by the terms of the section or arise by necessary and distinct interpretation. The counsel pointed out that the employers would have moulded their behaviour according to the principles laid down by a series of decisions and if the rights recognised in an employer are to be taken away, that can....
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....our opinion, those words cannot be isolated from the context. The said expressions may have different connotations when they are used in different context. A reference may be made to section 7(3) and section 7A(3) of the Act, laying down qualifications for being appointed as a presiding officer of a Labour Court or a Tribunal respectively. Sub Section 3 of section 7 enumerates the qualifications which a person should possess for appointment as Presiding Officer of a Labour Court. Section 7(3)(a) & (e) is as follows :- "A person shall not be qualified for appointment as the presiding officer of a Labour Court, unless- (a) he is, or has been, a Judge of a High Court; or x x x x (e) he has been the presiding officer of a Labour Court constituted under any Provincial Act or State Act for not less than five years. 68. The words 'has been a judge of a High Court' denote a past event, on the date of his appointment, he must have been a judge of a High Court. Same is the position under clause (e) regarding the office mentioned therein. A similar interpretation will have to be placed on the expressions 'has been' occurring in sub-section 3 of section 7....
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.... of the Act. This Court differed from the interpretation placed by the High Court on section 57 of the Bombay Police Act and held that the section enabled the authorities to take note of the convictions of the accused prior to the Act. It was observed "An offender who has been punished may be restrained in his acts and conduct by some legislation, which takes note of his antecedents; but so long as the action taken against him is after the Act comes into force, the statute cannot be said to be applied retrospectively. The Act in question was thus not applied retrospectively but prospectively The verb 'has been' is in the present perfect tense, and may mean either 'shall have been' or 'shalt be'. Looking, however, to the scheme of the enactment as a whole and particularly the other portions of it, it is manifest that the former meaning is intended .... 71. It is clear from the above observations that the, expression 'has been' was interpreted having regard to the schemes of the enactment and it was not construed in isolation. That decision makes it clear that. the question whether those expressions relate to past or future events, have to be gathered from the context in ....
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.... "Then is the section so expressed as to be plainly retrospective ? No doubt the words 'where a debt has been proved under the principal Act' are capable, of such a meaning. But this form of words is often used to refer, not to a past time which preceded the enactment, but to a time which is made past by anticipation a time which will have become a past time only when the event occurs on which the statute is to operate. In former times draftsmen would have used the words ' where a debt shall have been proved' but in modern Acts the past tense is frequently used where no retrospective operation can be intended". 75. We have already expressed our view regarding the interpretation of -section 11A. We have held that the previous law, according to the decisions of this Court, in cases where a proper domestic enquiry had been held, was that the Tribunal, had no jurisdiction to interfere with the finding of misconduct except under certain circumstances. The position further was that the Tribunal had no jurisdiction to interfere with the punishment imposed by an employer both in cases where the misconduct is established in a proper domestic enquiry as also in cases where the Tri....