TaxTMI 
TaxTMI 
TaxTMI 
1973 (3) TMI 134
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....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 Tribunal for adjudication and; in the course of the adjudication procee....
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....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. On behalf of the companies, it appears to have been urged that the section does not apply to the....
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....judication 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 the domestic enquiry. Even if no enquiry has been held by an employer or if the enquiry is held to be defect....
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....olds 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 be proper and the finding of misconduct is also accepted, the Tribunal has now power to consider whether the punishment ....
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.... 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 for certain other workmen. Mr. Bhandare, however, was prepared to take a slightly different stand regarding the proviso to sec....
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....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 dispute. When such dispute is being adjudicated by the Tribunal, the records pertaining to the proceedings under section 33 will be re....
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....he 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 unlimited and when a dispute arises, Industrial Tribunals have been given the power to see whether the termination, of service of a workman is justified to give appropriate relie....
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....n 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 such dismissal. Where there has been a proper enquiry by the management itself the Tribunal, it has been settled by a number of decisions of this Court has to accept the finding arrived at in that enquiry unless it is....
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....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 when no enquiry at all has been held or an enquiry held was found to be defective, again came up for consideration in Management of Ritz Theatre (P.) Ltd. v. Its Workmen([1963] (3) S.C.R. 461). Regarding the powers of a Tribunal when there has been a pr....
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....ght 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 adduced evidence justifying the action taken against the workmen. The workmen were also given an opportunity to adduce evidence in rebuttal. After a consideration of such evidence, the Tribunal held that the workmen were guilty of misconduct alleged against them and that the or....
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..... 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". 37. The rights of an employer to avail itself of an opportunity to satisfy the Tribunal by adducing evidence, when an enquiry held by it was found to be defective or when no enquiry at all has been held, have been stated in State Bank of India v. R. K. fain & Ors.( [1972] (1) S.C.R. 755), as fol....
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....d 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 dismissal or discharge. 40. From those decisions, the following principles broadly emerge (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 ....
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.... 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 Estate v. The Workmen ([1971] (1) S.C.R. 742), within' the judicial decision of a Labour Court or Tribunal. 41. The above was the law as laid down by this Court as on 15-12-1971 applicable to all industrial adjudication arising out of orders of dismissal or discharge. 42. The question is whether section 11A has made any changes in the legal position mentioned above and if so,....
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....loyees. 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 violence to the language used by the legislature. Another aspect to be borne in mind will be that there has been a long chain of decisions of this Court, referred to exhaustively earlier, laying down various principles in relation to adjudication of disputes by industrial courts arising out of orders of discharge or dismissal. Therefore it will have to be found from the words of the sect....
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....bunal 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 to the workman to lead evidence contra. The stage at which the employer has to ask for such an opportunity, has been pointed out by this Court in Delhi and General Mills Co. Ltd ([1972] I.L.L.J. 180) No doubt, this procedure may be time consuming, elaborate and cumbersome. As pointed out by this Court in the decision just referred to above, it is open to the Tribunal to deal with the vali....
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....mployer. 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 reappraise the evidence and come to its conclusion enures to it when it has to adjudicate upon the dispute referred to it in which an employer relies on the findings recorded by him in a domestic enquiry. Such a power to appreciate the evidence and come to its own conclusion about the guilt or otherwise was always recognised in a Tribunal when it was deciding a dispute on the basis of evidence adduced ....
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....osing 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 Orders) Act 1946, become part of the statutory terms and conditions of service between the employer and his employee and that they govern the relationship between the- parties. But there is no provision either in this statute or in the Act which states that an order of dismissal or discharge is illegal if it is not preceded by a proper and valid domestic enquiry. No- doubt it has been emphasised in the vario....
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....hibits 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. The expression 'materials on record, occurring in the Proviso, in our opinion, cannot be confined only to the materials which were available at the domestic enquiry. On the other hand, the 'materials on record' in the Proviso must be held to refer to materials on record before the Tribunal. They take in- (1) the evidence taken by the management at the enquiry and the proceedings of the enquiry, or (2) the abo....
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....rding 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 Court in its various decisions. No change has been effected in that section by the Amendment Act. It has been held by this Court that even in cases where no enquiry has been held by an employer before passing an order of dismissal or discharge, it is open to him to adduce evidence for the first time before the Tribunal. Though the Tribunal is exercising only a very limited jurisdiction under this section, nevertheless, it would have applied ....
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....e 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 formality. If a proper enquiry is conducted by an employer and a correct finding arrived at regarding the misconduct, the Tribunal, even though it has now power to differ from the conclusions arrived at by the management, will have to give very cogent reasons for not accepting the view of the employer. Further by holding a proper enquiry, the employer will also escape the charge of having acted arbitrarily or mala fide. It cannot be over emph....
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....stic 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 be, done so only by a clear expression to that effect; or such intention to take away or interfere with those rights must appear by necessary intendment. The words of the section clearly show that it applies only to disputes in respect of which a reference is made after the section has come into force i.e. 15-12-1971. The expressions 'has been referred' in the section only signify that on the happening of a particular event, namely, a reference m....
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....ng 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 7A regarding the qualifications to be possessed by a person for appointment as presiding officer of a Tribunal. The words 'has been' occurring in these sub-sections, immediately after the word 'is' or even separately clearly shows that they refer to a past event. 69. The words 'has been referred' in section 11A are no doubt capable of being interpreted as making the section applicable to references made even prior to 15-12-1971. But is the section so expressed as to plainly make i....
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.... 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 which they appear as well as the scheme of the particular legislation. 72. The decision of the Court of Appeal in Barber v. Pigden([1973] I All E.R. 115) is also not of any material,' assistance to the workmen. Having due regard to the scheme of the "Law Reform (Married Women and Tortfeasors) Act, 1935", it was held therein that the said statute did away with a host of legal fictions, which in origin were inextricably mixed up with the old procedural law. It was further held that the canon ag....
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....ved' 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 Tribunal finds such misconduct proved on the basis of evidence adduced before it These limitations on the powers of the Tribunals were recognised by this Court mainly on the basis that the power to take disciplinary action and impose punishment was part of the managerial functions. That means that the law, as laid down by this Court over a period of years,' had recognised certain managerial rights in an employer. We have pointed out that this position has now been changed by section 11 A. The section has the effect of....