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PETITIONER: D. C. ROY

       Vs.

RESPONDENT: THE PRESIDING OFFICER, MADHYA PRADESH INDUSTRIAL COURT,INDOR

DATE OF JUDGMENT23/03/1976

BENCH: CHANDRACHUD, Y.V. BENCH: CHANDRACHUD, Y.V. KRISHNAIYER, V.R.

CITATION:  1976 AIR 1760            1976 SCR  (3) 801  1976 SCC  (3) 693  CITATOR INFO :  RF         1980 SC1896  (151)

ACT:      Labour  Law-Dismissal   of  employee   after   domestic enquiry-Enquiry found  by Labour  Court to  be vitiated  but order of  dismissal  held  justified  on  evidence,  adduced before it-Whether  order of  dismissal relates  back to  the date of the original order of dismissal.      The  Madhya  Pradesh  Industrial  Employment  (Standing Orders) Rules,  1963, Standard  Standing  Order  12(b)-Major misconduct, what is.

HEADNOTE:      When the  fying squad  checked a  bus of the State Road Transport Corporation,  it was found that the appellant, who was a  ticket-examiner of the Corporation and whose duty was to check  whether all  the passengers  had paid the fare and whether the  conductor had issued tickets to the passengers, was on  the bus;  and that, though all the passengers in the bus had  paid their fares the conductor had not issued 9 1/2 tickets. If  the appellant  were so  minded, he could easily have detected  the conductor’s misconduct. The appellant was charged with  the breach  of Standard  Standing Order  12(b) under the  Madhya Pradesh  Industrial  Employment  (Standing Orders) Rules,  1963, which  governed the matter, and he was dismissed after a domestic enquiry. On his application under s. 31,  Madhya Pradesh  Industrial Relations Act, the Labour Court held  that the  enquiry was  defective as it infringed principles of  natural justice,  but came to the conclusion, after considering  the evidence  adduced before  it  by  the parties, that  the dismissal  was justified. The appellant’s revision to  the Industrial  Court and  writ petition in the High Court were dismissed.      In appeal  to this  Court,  it  was  contended  by  the appellant that:  (1) the  charge did  not amount to a ’major misconduct’ under  the Standing  Orders; and  (2) the Labour Court, having  found  that  there  was  no  proper  domestic enquiry, should  have ordered payment of wages till the date of the decision by the Labour Court.      Dismissing the appeal, ^      HELD :  (1) Standard Standing Order 12(b) provides that

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"theft, fraud  or dishonesty in connection with the business or property  of the  undertaking" shall  amount to  a  major misconduct on  the  part  of  the  employee.  The  appellant obviously colluded  with  the  conductor  in  depriving  the Corporation  of  its  legitimate  earnings.  The  appellant, having  thus   acted  dishonsetly  in  connection  with  the business of  the Corporation,  was clearly guilty of a major misconduct. [803G-804C]      (2) In  a case  where the  domestic  enquiry  does  not suffer from any defect, so serious or fundamental as to make it non  est, the  award of  the Labour  Court, based  on the evidence produced  before it  relates back  to the date when the order  of dismissal was passed on the termination of the domestic enquiry;  and so, the appellant was not entitled to any back wages. [807 B-C]      P. H. Kalyani v. M/s. Air France Calcutta [1964] S.C.R. 104, followed.      The observation  in the  Hotel Imperial  case [1960]  1 S.C.R. 476, 487, that in the Phulbari Tea Estate case [1960] 1 S.C.R.  32, it  was held that in a case where the employer makes good  the defects in the domestic enquiry by producing necessary  evidence  before  the  Industrial  Tribunal,  the employer "will  have to  pay the wages up to the date of the award of  the Tribunal"  even if the award went in favour of the employer,  is not  correct. In  the Phulbari  Tea Estate case, the  employers made no attempt to make good the defect in the  domestic enquiry  by  producing  necessary  evidence before the Tribunal with the result 802 that  the   Tribunal,  which  found  that  the  enquiry  was vitiated, had  no evidence before it to examine the legality or propriety  of the  order of  dismissal. It  was  in  that context that  instead of being re-instated, the employee was given the  alternative relief  of compensation by payment of wages. [805F-806C]      M/s. Sasa  Musa Sugar  Works (P)  Ltd. v. Shobrati Khan [1959] 2 SCR 836, explained and distinguished.      An  enquiry   blatantly   and   consciously   violating principles of  natural justice so as to amount to a pretence may, however,  be equated with a total absence of an enquiry so as  to exclude  the application  of the  ’relation  back’ doctrine. [807 C-D]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeal No. 466 of 1970.      Appeal by  Special Leave  from the  Judgment and  Order dated the  6th March,  1968 of the Madhya Pradesh High Court in Misc. Petition No. 75 of 1968.      M. K. Ramamurthi and Vineet Kumar for the Appellant.      Ram Punjwani and Rameshwar Nath for the Respondents.      The Judgment of the Court was delivered by      CHANDRACHUD, J.  The appellant  was working as a Ticket Examiner  in   the  Madhya   Pradesh  State  Road  Transport Corporation at  its Nagpur  Depot. On  March 21,  1964 a bus belonging to the Corporation was checked by the Flying Squad when  nine   and  half  passengers  out  of  26  were  found travelling without  tickets. The appellant was on the bus in the discharge of his duties as a Ticket Examiner. The Flying Squad prepared a Panchnama on the spot obtaining thereon the signatures of  the appellant,  the  driver  and  the  ticked conductor. It was found that the conductor had collected the fare from  all the  26 passengers who were travelling in the

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bus but had not issued tickets to 9 1/2 passengers. Since it was the  duty of the appellant as a Ticket Examiner to check whether the  conductor  had  collected  fare  from  all  the passengers and  in token thereof had issued tickets to them, a chargesheet  was served  on the  appellant for  breach  of clauses  12(b)  and  (d)  of  the  Madhya  Pradesh  Standard Standing Orders  which govern the matter by reason of Rule 7 of  the   Madhya  Pradesh  Industrial  Employment  (Standing Orders) Rules,  1963. A Domestic inquiry was thereafter held into the  charges and the appellant having been found guilty the Corporation, through its Depot Manager, dismissed him by an order dated August 14, 1964.      On December  9, 1964 the appellant filed an application in the  Labour Court,  Jabalpur, under  section  31  of  the Madhya Pradesh  Industrial  Relations  Act  challenging  the validity of  the inquiry on various grounds and praying that the order  of dismissal  be set  aside and  that an order of reinstatement be  passed with  back wages.  By a preliminary order dated  December 7, 1966 the Labour Court held that the Domestic tribunal  did not  hold a  proper inquiry  into the charges levelled  against the appellant but that it was open to the  parties to  lead evidence before it on the merits of the case  and to satisfy it whether the appellant was guilty of the  charges and  further  whether  the  conduct  of  the appellant was  such as  to call  for an  order of dismissal. Parties thereafter  led evidence before the Labour Court, on a 803 consideration of  which it held by an order dated August 18, 1967 that  the appellant  was guilty of the charges levelled against him  and that  in the  circumstances of the case the punishment of dismissal was neither harsh nor unjust.      Feeling aggrieved  by the aforesaid order of the Labour Court the  appellant preferred a revision application to the Industrial Court,  Indore, under  section 66  of the  Madhya Pradesh  Industrial  Relations  Act.  The  Industrial  Court confirmed the  findings of fact recorded by the Labour Court and upheld  the order  of dismissal.  As regards back wages, the Industrial Court held that the order of the Labour Court dated August 18, 1967 would relate back to the date when the appellant was dismissed by the Corporation and therefore the appellant was  not entitled to back wages till the date when the Labour Court passed its final order.      The appellant  thereafter filed  a petition in the High Court of  Madhya Pradesh  under articles  226 and 227 of the Constitution challenging  the order of the Industrial Court. The High  Court by  its order  dated March 6, 1968 dismissed the petition  in limine,  though with  a speaking  order. It held that  the omission of the appellant to check ticketless travellers in  the bus  which he  had boarded  as  a  Ticket Examiner amounted  to major  misconduct under Standing Order 12(b). The  High Court further held that no interference was called for  on the  question whether  the order of dismissal was justified  and since  the  order  of  the  Labour  Court related back  to the  date when  the order  of dismissal was passed by the Corporation, the appellant was not entitled to wages until  the date  on which  the Labour Court passed the judgment. The  appellant has  filed  this  appeal  in  forma pauperis by special leave of this Court.      Mr. M.  K. Ramamurthi who appeared as an amicus for the appellant raised  two points  for our  consideration in this appeal. He contended in the first place that the charge made against  the   appellant  does   not  amount   to  a  "major misconduct" under  the Madhya  Pradesh Industrial Employment (Standing Orders)  Rules, 1963  and  secondly  that  in  any

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event, the  Labour Court  having  found  that  the  Domestic tribunal had  failed to hold a proper inquiry, the appellant was entitled  to back  wages until the final decision of the Labour Court.      The  Madhya  Pradesh  Industrial  Employment  (Standing Orders) Rules,  1963  provide  by  Rule  7,  to  the  extent material,  that   the  Standard   Standing  Orders  for  all undertakings  to   which  the   Madhya  Pradesh   Industrial Employment (Standing  Orders) Act, 26 of 1961, applies shall be those  set out  in the  Annexures to  the Rules.  We  are concerned in  this case  with Standard  Standing Order 12(b) which  provides   that  "theft,   fraud,  or  dishonesty  in connection  with   the   business   or   property   of   the undertakings" shall amount to a major misconduct on the part of an  employee. The  appellant had  evidently  entered  the particular bus  in order  to check  it in  his capacity as a Ticket Examiner and it is undisputed that it was his duty to check whether  the passengers travelling in the bus had paid the fare  and whether  tickets were  issued to  them by  the conductor on collecting the fare from them. The bus 804 was carrying a complement of 26 passengers out of whom 9 1/2 passengers did  not hold  tickets. The  Panchnama which  was drawn on the spot shows that the conductor had collected the fare from  the passengers  but had not issued any tickets to them. There  cannot be the least doubt that if the appellant were so minded, he could have easily detected the misconduct of the conductor. Obviously, the appellant had colluded with the conductor in depriving the Corporation of its legitimate earnings. The  only explanation offered by the appellant was that he  was not  travelling in the bus at the relevant time and that explanation has been found to be false consistently by all the courts. The appellant having acted dishonestly in connection with  the business  of the  Corporation,  he  was clearly guilty of a major misconduct.      On the  second question  as to whether the appellant is entitled to  back wages from the date of dismissal until the date on  which the  Labour  Court  delivered  its  judgment, learned counsel  for the  appellant relies  strongly on  the observations made  by this  Court in The Management of Hotel Imperial, New  Delhi &  Ors. v.  Hotel Workers’ Union(1), to the following effect:           "In Phulbari  Tea Estate  v. Its  Workmen(2),  the      rider laid  down in  the case  Messrs. Sasa  Musa Sugar      Works (P)  Ltd.(3) was further extended to a case of an      adjudication under  s. 15 of the Act and it was pointed      out that  if there was any defect in the enquiry by the      employer he  could make  good that  defect by producing      necessary evidence  before the  tribunal; but  in  that      case he  will have  to pay  the wages up to the date of      the award  of the  tribunal, even  if the award went in      his favour". (p. 487)      We will  consider the  impact and  implication  of  the concluding portion  of this  passage but before we do so, we must draw  attention to  a 5-Judge  Bench decision  of  this Court in P. H. Kalyani v. M/s. Air France Calcutta(4), which is directly  in  point  and  concludes  the  question  under consideration. In  that case  an inquiry was held against an employee of M/s. Air France by the Station Manager, on whose findings  the   employee  was   dismissed  by  the  Regional Representative of  the Company  on payment  of  one  month’s wages. The  employee challenged  the order  of dismissal  by filing an  application under  section 33A  of the Industrial Disputes Act,  1947 on  the ground  that the Station Manager was  biased  against  him  and  therefore  the  inquiry  was

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vitiated as  being contrary  to the  principles  of  natural justice. The  Labour Court took the view that the employee’s contention that  the Station  Manager was biased against him could not  be brushed  aside lightly  but it went on to hold that even  if there  was some  violation the  principles  of natural justice  on account  of  the  bias  of  the  Inquiry Officer, the  Company was entitled to adduce, as it did, all the  evidence  before  it  in  support  of  its  action  and therefore it  was open to the Labour Court to decide on that evidence whether  the action  was justified  and whether the approval to  the order  of dismissal  should be  granted. On going into that evidence, the Labour Court held that the 805 breaches committed  by the employee were of a serious nature and the  order of  dismissal  passed  by  the  employer  was therefore justified.  In an  appeal by special leave against the decision  of the  Labour Court, it was contended in this Court on  behalf of  the employee  that since  the  Domestic inquiry was  found defective,  the Labour  Court, even if it was of  the opinion that the dismissal was justified, should have ordered  the dismissal  from the  date of its award and not from  the date  when the  Regional Representative passed the order  of dismissal.  Rejecting  this  contention,  this Court held:           "The present is a case where the employer has held      an inquiry  though it  was defective  and has passed an      order of dismissal and seeks approval of that order. If      the inquiry is not defective, the Labour Court has only      to see  whether  there  was  a  prima  facie  case  for      dismissal and whether the employer had come to the bona      fide  conclusion   that  the  employee  was  guilty  of      misconduct. Thereafter on coming to the conclusion that      the employer  had bona fide come to the conclusion that      the employee was guilty i.e. there was no unfair labour      practice and  no victimisation,  the Labour Court would      grant the  approval which would relate back to the date      from which  the employer  had ordered the dismissal. If      the inquiry  is defective  for any  reason, the  Labour      Court would  also have  to consider  for itself  on the      evidence adduced  before it  whether the  dismissal was      justified. However,  on coming to the conclusion on its      own appraisal  of evidence  adduced before  it that the      dismissal was  justified its  approval of  the order of      dismissal made  by the  employer in a defective inquiry      would still  relate back to the date when the order was      made." These observations directly cover the case before us because though the Labour Court, in the instant case, found that the inquiry was  defective as  it infringed  the  principles  of natural justice, it came to the conclusion after considering the evidence  adduced before  it,  that  the  dismissal  was justified. The  award of  the Labour  Court  must  therefore relate back  to the  date when  the order  of dismissal  was passed on the termination of the Domestic inquiry.      The observations extracted earlier from the judgment of a 3-Judge  Bench in  Hotel Imperial’s  case (p.  487 of  the Report), on  which the appellant relied strongly prima facie support the  appellant’s contention  that if  an inquiry  is found to be defective, the employer can make good the defect by producing  the necessary evidence before the Labour Court but that in such a case he will have to pay wages up to date of the  decision of  the Labour  Court even if that decision went in  his favour.  The particular observations purport to summarize what  was decided  by the  same Bench  a fortnight earlier in  Phubari Tea  Estate v.  Its Workmen(1).  Learned

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counsel for  the respondent  took  us  closely  through  the judgment in  Phulbari Tea  Estate but  we are unable to find anything in  that judgment  showing that whenever there is a defect in a Domestic inquiry, the employer would have to pay wages up to the date of the award of the Labour Court or the Industrial 806 Tribunal even  if the  order passed  in the Domestic inquiry was ultimately  upheld by  the Labour Court or the Tribunal. In Phulbari  Tea Estate (supra), the domestic inquiry was in gross violation  of the  fundamental principles  of  natural justice and  was therefore  vitiated. The  employers did not lead proper  evidence before  the Tribunal  to  justify  the order of dismissal and were content merely to produce before the Tribunal  the statements  which were recorded during the inquiry. The employee therefore had no opportunity to cross- examine the witnesses before the Tribunal. Since the inquiry was bad  and the  Tribunal had  no  evidence  before  it  to sustain the  order of  dismissal it set aside that order but held that  in the  peculiar circumstances  of the  case, the employee  may   be  granted   the  alternative   relief   of compensation instead  of  an  order  of  reinstatement.  The Tribunal  accordingly   granted  to  the  employee  pay  and allowance from  the date of his suspension till payment. The award of the Tribunal was upheld is appeal by this Court.      It shall  have been  seen that  in the case of Phulbari Tea Estate  (supra) the  employers made  no attempt  to make good the  defect  in  the  inquiry  by  producing  necessary evidence before the Tribunal and by affording an opportunity to the employee to cross-examine their witnesses. "This left the matters  where they were", as observed by Wanchoo J. who spoke on  behalf of  the Court,  with the  result  that  the Tribunal which  found that  the inquiry  was vitiated had no evidence before  it to examine the legality and propriety of the order  of dismissal.  In the  instant case, the Domestic inquiry was  held to  be in  violation of  the principles of natural justice  but the  employer led  evidence before  the Labour Court  in support  of the order of dismissal and on a fresh appraisal  of that  evidence, the  Labour Court  found that the  order of  dismissal was justified. The ratio of P. H. Kalyani’s  case would  therefore govern  the case and the judgment of the Labour Court must relate back to the date on which the order of dismissal was passed.      With great respect, the ratio of Phulbari Tea Estate is not stated  correctly in  the particular passage at page 487 of the Report in the case of Hotel Imperial. That passage is partly a  reproduction in  substance  of  what  is  said  in Phulbari Tea  Estate at  page 38  of the Report but the last clause  of  the  passage  following  the  semi-colon  is  an addition not  borne out  by the  judgment  in  Phulbari  Tea Estate.      Counsel for  the appellant  also relied on the decision of this  Court in  M/s. Sasa  Musa Sugar  Works (P)  Ltd. v. Shobrati  Khan   &  Ors.(1)   but  that   case  is   clearly distinguishable. As  pointed out  by this  Court  in  P.  H. Kalyani’s case,  Sasa Musa  was a  case where an application had been made under section 33(1) of the Industrial Disputes Act  for  permission  to  dismiss  the  employees  and  such permission was  asked for,  though no inquiry whatsoever was held by  the employer  and no  decision was  taken that  the employees be  dismissed.  The  case  for  dismissal  of  the employees was made out for the first time in the proceedings under section  33(1) and  it was for that reason that it was held that  the employees  were entitled  to back wages until the decision  of the  application filed  under  section  33.

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Commenting on the decision in Sasa Musa, this Court observed in P. H. Kalyani’s case that the 807 matter would have been different if in Sasa Musa, an inquiry had been  held, the employer had come to the conclusion that the dismissal was the proper punishment and had then applied under section 33(1) for permission to dismiss the employees. "In those  circumstances the  permission would  have related back to  the date  when the  employer came to the conclusion after an  inquiry that  dismissal was  the proper punishment and had  applied for  removal of  the ban  by an application under section 33(1)." (page 113).      The second  contention must  also  therefore  fail.  We would, however,  like to  add that  the decision  in  P.  H. Kalyani’s case  is not  to be  construed as  a  charter  for employers to  dismiss employees  after the  pretence  of  an inquiry. The  inquiry in  the instant  case does  not suffer from defects  so serious  or fundamental  as to make it non- est. On  on appropriate occasion, it may become necessary to carve an  exception to  the ratio of Kalyani’s case so as to exclude from  its operation  at least that class of cases in which under  the facade  of a domestic inquiry, the employer passes  an  order  gravely  detrimental  to  the  employee’s interest like  an order  of dismissal.  An inquiry blatantly and consciously  violating principles of natural justice may well be  equated with  the total absence of an inquiry so as to exclude  the application of the ’relation-back’ doctrine. But we  will not  pursue the  point beyond this as the facts before us do not warrant a closer consideration thereof.      In the  result, the  appeal is dismissed but there will be no order as to costs. V.P.S.                                     Appeal dismissed. 808