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PETITIONER: THE UNITED PLANTERS ASSOCIATIONOF SOUTHERN INDIA

       Vs.

RESPONDENT: K.G. SANGAMESWARAN & ANR.

DATE OF JUDGMENT:       06/03/1997

BENCH: S.C. AGRAWAL, S. SAGHIR AHMAD

ACT:

HEADNOTE:

JUDGMENT:                        J D G M E N T S. SAGHIR AHMAD, J.      Leave granted.      The respondent,  K.G Sangameswaran,  who  was  employed with the  appellant as  an  Accountant  was  dismissed  from service by  order dated  5.7.1934. This order was passed for serious misconduct   including  misappropriation on the part of and  bu the respondent during the period 1986-87 to 1992- 93, for  which  criminal  proceedings  were  also  initiated against him. 2.   This order  was challenged by the respondent before the Appellate Authority  under section  41(2) of  the Tamil Nadu shops &  Establishments Act,  1947 (for short, the Act). The Appellate Authority by its judgment dated 12.2.1996, allowed the appeal  set aside  the order  of dismissal  and directed reinstatement of  the respondent with full back-wages. It is against this  judgment that  the  present  appeal  has  been filed. 3.   The order of dismissal by the appellant was set aside b the Appellate  Authority (Respondent No. 2) , principally on the ground that the order being an order of dismissal, could not have  been passed under section 41(1) of the Act without first holding  a domestic  enquiry into the allegations made against him. 4.   The appellant  in their  written statement filed before the  Appellate  Authority  pleaded  that  the  Act  was  not applicable to  the respondent  and consequently  the  appeal itself was  not maintainable.  It was also pleaded that when he charge-memo  was issued  to the  respondent. he filed his reply dated  24.1.1994 in  which he  denied the  charges and made request  for perusal  of records  before submitting his further reply.  The appellant  by  their  subsequent  letter dated 17.2.1994  wanted the  details of  the documents which the respondent by his letter dated 20.2.1994 is said to have pleaded not  guilty and  is further said to have stated that no useful  purpose would  be served  bu participating in the enquiry as  the    enquiry  was  bound  to  be  biased.  The appellant consequently  proceeded to  dismiss the respondent form service  after  perusal  of  the  documents  and  other relevant records  indicating misappropriation and misconduct

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by the respondent. 5.   In view  of the controversy raised before the appellate Authority two issues were framed as under :-      1.Whether the respondent/management      and the appellant are covered under      the TNSE Act 1947 ?      2.  Whether the respondent followed      the  provisions  of  section  41(1)      before dismissing the appellant ? 6.   On issue  No.1, the  finding recorded  by the Appellate Authority was  that since the United Planters Association of southern India  which is appellant before us was declared as a commercial establishment by the Tamil Nadu Government vide its Notification in G.O.Ms. No. 6265 dated 20.12.1948 issued under Section  2(3) of  the Act  it would be governed by the Act. it  was further  held that  since  the  respondent  was employed as  an Accountant  in that  establishment he  would fall within  the definition  of ’person employed" as set out in section  2(12) of  the Act. on issue No.2 it was found by the Appellant  Authority that  the respondent  was dismissed from service  without following  the provisions  of  section 41(1) of the act and without holding the domestic enquiry. 7.   Mr. G.B  Pai, learned  senior counsel appearing for the appellant did  not seriously  dispute the  findings on issue No.1 but  he vehemently  argued that the finding recorded by the appellate  Authority on issue No.2 was wholly erroneous. inasmuch  as   the  order  by  which  the  services  of  the respondent were  brought to  an end  was  not  an  order  of dismissal and  therefore there  was no requirement to hold a domestic enquiry.  It was contended that under section 41(2) an appeal  would lie  only on  the ground  that there was no reasonable course for dispensing with the service or that he had not  been guilty  of misconduct as held by the employer. In a  case of  simple termination  an appeal  would not fall within any of the aforesaid grounds. 8.   The nature  of the  order    whether it is innocuous or punitive is  exhibited by  the contents  of the  order.  The order dated  5.7.1994 by  which the respondent was dismissed from service, recites alia, as under:-      "1.................................      2.    on  a  consideration  of  the      contents of the letters referred to      above  as   well  as  the  relevant      evidence (viz.)  documents referred      to in the Notice dated 18th January      1994, it  is  clear  that  you  are      guilty of  the misconducts  alleged      against  you   and  it   is   found      accordingly.    considering     the      gravity    of    the    misconducts      committed by  you, particularly, in      the light  of the position of trust      and responsibility that you hold as      Accountant.  It   is   decided   to      dismiss you form service forthwith.      3..................................      4.   It may  be noted  that this is      without prejudice  to the  right of      the Association  to pursue criminal      proceeding s  initiated against you      as well  as to  recover the amounts      lost by  misappropriation and other      acts committed  by you  as also due      to   your    gross   and   criminal      negligence. It  may also  be  noted

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    that in  view of  the nature of the      misconducts committed  bu  you  and      the   loss    suffered    by    the      Association. consequent to the same      you will  not be  entitled  to  any      gratuity from the Association."      This order  ex-facie  is  punitive  in  nature  as  the respondent has  been held  guilty  of  misconduct  including misappropriation allegedly  committed but  him. The order is not an  innocuous order and cannot be treated as an order by which services  of the respondent were simply terminated. He was in fact dismissed from service. 9.   It was  next contended by the counsel for the appellant that the  appellate Authority  before whom an application to produce the  evidence was  filed  should  have  allowed  the charges levelled  against the  respondent as  the  Appellate Authority has  jurisdiction and  power to record evidence at the appellate  stage as  provided by section 41(2) read with Rule 9(3)  or this  Tamil Nadu  shops a Establishments Rules 1943 learned  counsel for the respondent has on the contrary contended that if an opportunity of hearing was not given to the respondent  at the  initial stage  during  the  domestic enquiry the  defect cannot  be  cured  by  giving  him  that opportunity at  the appellate  stage and  therefore even  if application to  lead fresh  evidence was  not disposed of by the Appellate  Authority it  would not  vitiate the order of that authority. 10.  Before construing the provisions of section 14 and Rule 9 it may be stated that it has always been the philosophy of industrial jurisprudence  that if  the domestic enquiry held bu the  employer was  defective, deficient incomplete or not held at  all the  Tribunal, instead of remanding the case to the enquiry  officer for  holding the  inquiry de novo would itself require  the parties  to produce their evidence do as to decide  whether the  charge for which    action was taken against the  employee were  established or  not. The pending proceedings keeps  the employer  and  further  of  paramount importance that  such proceedings  should come  to an end at the earliest  so to  maintain industrial  peace and  cordial relations between the management and the labour. 11.  This court  in M/s  Indian Iron  & steel  co. Ltd.  vs. their Workmen. AIR 1958 SC 130 had laid down that in case of dismissal for  misconduct the  Tribunal does  not act  as  a court of  appeal and  it is  not within  its jurisdiction to substitute its  own judgment  for that of the management and that it  would interfere  only when  there was  want of good faith victimisation  or unfair  labour practice  etc. on the part of the management. This decision was followed in Punjab National bank Ltd. vs. Its workmen,(1960) 1 SCR 806. 12.  In M/s  Bharat Sugar mills Ltd. vs. Jai Singh, (1962) 3 SCR 684  the question  of allowing  an  employer  to  adduce evidence before  the Tribunal  justifying its  action (after the  domestic   enquiry  was  found  to  be  defective)  was considered and it was hold that in such a situation it would be appropriate to allow the partied to lead evidence so that the Tribunal  itself may  be satisfied  about the misconduct imputes  to   the  employee.  The  decision  of  the  Labour Appellate  Tribunal   itself  may  be  satisfied  about  the misconduct imputed  to the  employee. the  decision  of  the Labour Appellate Tribunal in Buckingham and Carnatic co Ltd. vs. Workers of the company, 1952 Lab AC 490, in which it was laid down  that evidence  can be  adduced even for the first time at  that stage  was approved.  This question  was again considered in  management of  Ritz vs.  Its Workman (1963) 3 SCR 461 and the law laid down earlier was reiterated. To the

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same effect  is the  decision of  this court  in Khardah co. Ltd. vs.  Their workmen,  (1964) 3  SCR 506  and workmen  of Motipur sugar  Factory (p)  Ltd. vs.  Motipur sugar Factory, (1965) 3  SCR 588.  In state  Bank of  India vs. R.K. Jain & ors. (1972)  1 SCR  755 and  in Delhi  cloth & General mills company Ltd.  vs. Ludh  Budh  Singh  ,(1972)  1  Labour  Law journal 180  SC  it  was  again  laid  down  that  where  an employer failed  to make  an  enquiry  before  dismissing  a workman it  would be  open to  him to  produce all  relevant evidence before  the Tribunal  to show  that the  action was justified. 13.  Provisions of  the Industrial Disputes Act were. In the meantime,  amended   and  on   the  recommendation   of  the International Labour Organisation section 11A was introduced in the  Act by  the parliament  wherein it was provided that the Tribunal  had not  only the power to set aside the order of dismissal  and direct reinstatement of the workmen it had also the  power to  award lesser  punishment. The proviso to section 11A,  However, provided that the Tribunal would rely only on  the material  already on  record and shall not take fresh evidence. 14.  In view  of the  provisions contained in section 11A, a question arose  in The  workman of  M/s.  Firestone  Tyre  & Rubber co.  of India pvt. Ltd. vs. The management & ors. AIR 1973 SC  1227 as to the jurisdiction of the Tribunal to take evidence to  decide the merit of the charges and it was laid down that  in spite  of the  prohibition  contained  in  the proviso to  section 11A  the Tribunal  in order  to  satisfy itself as  to the  guilt of  the  persons  charged  had  the jurisdiction to  take the  evidence and that the law in that regard had not undergone any change. It was pointed out that if the  domestic enquiry  had been  held by the employer the Tribunal will  examine the  merits of that enquiry and would confine itself  to the evidence already on record. But where the enquiry  was defective  the Tribunal  could  still  take fresh evidence to decide the merits of the charges. 15.  This decision  has since been followed by this court in a number  of cases including The East India Hotels vs. Their Workman &  ors. AIR 1974 SC 696; The cooper Engineering Ltd. vs. P.P.  Mundhe AIR 1975 SC 1900; Ruston & Hornsby Ltd. vs. T.B. Kadam.  AIR 1975  SC 2025,  and in a recent decision in Bharat Forge  co. Ltd.  vs. A.B.  Zodge &  Anr.,(1996) 4 SCC 374, in  which it was again reiterated that the parties have the right  to adduce  evidence before  the Tribunal  and the Tribunal can, on the basis of such evidence, come to its own conclusion as to the guilt of the employee. 16.  we may  now  proceed  to  consider  the  provisions  of section 41 and Rule 9 which are quoted below :-      "Section 41.  Notice of  dismissal-      (1) No employer shall dispense with      the services of a not less than six      months except for a person at least      one month’s  except for  reasonable      cause and  without giving such lieu      of  such  notice  provided  however      that  such   notice  shall  not  be      necessary  where  the  services  of      such persons  are dispensed with on      satisfactory evidence  recorded  at      an enquiry held for purpose.      (2) The  person employes shall have      a right to appeal to such authority      and  within   such  time   as   may      prescribed  either  on  the  ground      that there  was no reasonable cause

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    for dispensing with his services or      on the  ground that he had not been      guilty of misconduct as held by the      employer.      (3) The  decision of  the appellate      authority  shall   be   final   and      binding on  both the  employer  and      the person employed."      Rule 9. Appeals under section 41(1)      -  The   deputy  commissioners   of      Labour in  their  respective  areas      assigned    to    them    by    the      commissioner of Labour shall be the      authorities  for  the  purposes  of      hearing appeals  under  sub-section      (2) of section 41 of the said Act.      Provided that  the commissioner  of      Labour may,  by order in writing on      the on  the representation  made by      either  of  the  parties  any  case      under this  Act. pending  before an      authority   fr    disposal.    Such      authority to  whom the  case is  so      transferred  may,  subject  to  the      special direction  in the  order of      transfer proceed  either de-novo or      from the  stage at  which it was so      transferred.      (2) Any  appeal  under  sub-section      (2)  of   section   41   shall   be      preferred by  the  person  employed      within thirty days from the date of      service of  the  order  terminating      the  service with the employer such      service to  be deemed  effective if      carried out either personally or if      that br not practicable. by prepaid      registered post  to the  last known      address   whin  the  date  of  such      service shall  be deemed  to be the      date when  the letter  would arrive      in ordinary course of post.       [provided that  an appeal  may  be      admitted after  the said  period of      thirty  days   if   the   appellant      satisfies the  appellate  authority      that he  had sufficient  cause  for      not preferring  the  appeal  within      that period.]      (3) The procedure to be followed by      the  appellate   authority  (Deputy      commissioner   of   Labour),   when      hearing appeals  preferred  to  him      under sub-section (2) of section 41      shall be  summary. He  shall record      briefly the evidence adduced before      him and then pass orders giving his      reasons therefor. The result of the      appeal shall  be communicated to he      parties as soon as possible. Copies      of  the   orders  shall   also   be      furnished  to   the   parties.   if      required by them." 17.  From a  perusal of the provisions quoted above. it will be seen  that the jurisdiction of the Appellate Authority to

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record evidence  and to  come to  its own  conclusion on the questions involved  in the  appeal is very wide. Even if the evidence is  recorded in  the domestic enquiry and the order of dismissal  is passed thereafter, it will still be open to the  appellate  Authority  to  records.  if  need  be,  such evidence as may be produced by the parties. Conversely, also if the  domestic enquiry  is ex  parte of  no  evidence  was recorded during  those proceedings,  the Appellate Authority would still  be justified  in taking additional evidenced to enable it  to come to its own conclusions on the articles of charges framed against the delinquent officer. 18.  This court in Remington Rand of India Ltd. vs. Thiru R. Jambulingam, (1975)  2 SCR  17, has  already considered  the scope of  the provisions  of section  41 of the Act and held that the  jurisdiction of  the commissioner  (Deputy  Labour commissioner) who  is the  Appellate Authority under the Act is of  wider   scope unlike  that  of  the  tribunal  in  an application under section 33 of the Industrial Disputes Act. It was  further held  that the commissioner was competent to re-hear the matter completely and come to its own conclusion after  re-appreciation   of  the  evidence  or  entertaining additional  evidence,  if  necessary,  in  the  interest  of justice. 19.  A similar  provision was  considered  by  There  Judges Bench of  this court  in chairman M/s Brooke Bond India Pvt. Ltd. vs.  Chandra Nath  Choudhary, (1969) 1 SCR 919. In that case, the court considered the provisions of the Bihar shops and  commercial  Establishment  Act  and  the  Rules  framed thereunder. Sub-section  (1) of  section 26 of the Bihar Act provided that  no employer  shall dismiss  or  discharge  an employee except  on a  reasonable cause  and without  giving such employee  at least one  month’s notice or month’s wages in lieu  thereof. the  proviso to  sub-section (1) laid down that the   notice shall not be necessary where  the services are dispensed  with  on  a  charge  of  misconduct.  It  was provided by  sub-section (2)  that every employee, dismissed or discharged.  May  file  a  compliant  to  the  prescribed authority (Labour Court ) on three grounds, namely -      (1)   that there  was no reasonable      cause  for   dispensing  with   his      services, or      (2) that  no notice  was served  on      him as  required by  sub-section 1,      or      (3) that  he  was  not  guilty  any      misconduct as held by the employer. 20.  Sub-section (5)  of section  26 enabled  the  competent authority to record evidence and come to its own findings on such evidence.  It was  held that the authority was required to come  to its  own independent  findings on  the  evidence adduced by  the parties and recorded by  it independently of the findings  given in the domestic enquiry. It was no doubt laid down  that the proceedings under section 26 were not by way of  appeal against  the order  passed as a result of the domestic enquiry and that they were independent and original proceedings but the jurisdiction to record evidence so as to enable  the   prescribed  authority   to  come  to  its  own conclusion  irrespective   of  the   findings  and  evidence recorded  in  the  domestic  enquiry,  was  similar  to  the jurisdiction of the appellate Authority under the Tamil Nadu Act. Here  also the  Authority (Deputy  Labour Commissioner) has also  been given  the power  and  jurisdiction  to  take additional evidence  and to  come to  its own  conclusion in respect of  the charges  framed against an employee. In view of the  wide jurisdiction  of the  Appellate  Authority,  it

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cannot be  legally to  record evidence would be limited only to those  cases  where  no  evidence  was  recorded  at  the domestic enquiry and the principles of natural justice where violated. In  addition to such cases. namely, cases in which an opportunity  of hearing  was not given to the employee or the  principles   of  natural  justice  were,  in  any  way, violated,  the   Appellate   Authority   shall   also   have jurisdiction to  record evidence,  if necessary, in question whether the employee was guilty or not of the charges framed against him. 21.  The  Madras   High  Court   in  Salem-   shevapet   Sri Venkateswara Bank,  Ltd. vs.  Krishnan (K.K.)  and  another. (1959) 2  Ltd. 797,  held that the Appellate Authority under section 41(2)  had the  jurisdiction to  enquire whether the statutory conditions  subject to which alone a servant could be dismissed,  have been  complied with. It would imply that the Appellate  Authority can  also record evidence specially when it  has also to record the findings whether the charges were established or not. 22.  The Madras  High court  again in  Srirangam  Janopakara Bank, Ltd.  vs. Rangarajan  (S.) and  another, (1964)  1 LLJ 221, considered  the ambit and scope of section 41 read with Rule 9 and laid down that :-      " It  appears to  us that this rule      is not  intended to  confer, on the      appellate  authority,  a  power  to      take evidence  de   hors procedure,      that the  hearing of  appeals shall      be summary,  that when  orders  are      passed. reasons  should  be  given.      There is dissociated from s. 41(2),      and to  decide that  rule 9(2) went      far beyond  the rule  makings power      under S.49,  on the  ground that it      confers power  to  take  additional      evidence    on     the    appellate      authority.      It would  also appear  necessary in      the interests of the proper working      of an  enactment  like  the  Madras      shops and  Establishments  Act.  to      confer on  the appellate  authority      the power  to take evidence itself,      if  the  circumstances  of  a  case      justify it." 23.  In view  of the above decisions, there remains no doubt that  the  Appellate  Authority  has  jurisdiction  to  take evidence at  the appellate  stage and  to come  to  its  own conclusion about the guilt of the delinquent employee. 24.  If the  instant case  is analysed  in the  light of the principles laid  down above,  it will  be noticed  that  the Appellate  Authority   has  interfered  with  the  order  of discharge/dismissal of  the respondent  on the  ground  only that a   domestic  enquiry was not held into the imputations made  against   the  respondent.   It  did  not  decide  the application of  the appellant  for recording  evidence.  The Appellate Authority, therefore. committed grave error in the exercise of  its jurisdiction  by not disposing evidence and proceeding to  dispose of  the appeal on the ground that the order of  dismissal having  been passed  without  holding  a domestic enquiry was bad in law. 25.  We may  now consider  the  contention  of  the  learned counsel for  the respondent  relating to  the principles  of nature justice which were not observed at the initial stage, namely, at  the time  of the  domestic enquiry.  Whether the

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defect is  curable at  the appellate  stage or  not  is  the question. 26.  Learned counsel,  in support  of his arguments that the defect is not curable has placed reliance on the decision of this court  in Institute  of chartered  Accountants of India vs. L.K Ratna & ors.,(1935) 4 SCC 537. It was no doubt. laid down in  this case  that a post-decisional hearing cannot be an effective  substitute of  pre-decisional hearing and that if an  opportunity of hearing is not given before a decision is taken  at the  initial stage.  it would result in serious prejudice, inasmuch as if such an opportunity is provided at the appellate  stage, the person is deprived of his right of appeal to another body. There may be cases where opportunity of hearing  is excluded by a particular service or statutory rule. In  union of India & Anr. vs. Tulsiram Patel, (1985) 3 SCC 398, pre-decisional hearing stood excluded by the second proviso  to   Article  311(2)   of  the   constitution  and, therefore, the  court took the view that though there was no prior opportunity  to plead  in an  appeal filed by him that the charges  for which  he was removed from service were not true. Principles  of nature justice in such a case will have to be  held to have been sufficiently complied with. In Mrs. Menka Gandhi  vs. Union  of India & Anr. (1978)1 SCC 248 and in Liberty oil mills & ors. vs. Union of India & ors. (1934) 3 SCC  465 an  opportunity of  making a representation after the  decision   was  taken,   was  held   to  be  sufficient compliance. All depends on acts of each case. 27.  In the  instant case  the appellant  has contended that the respondent  did not  participate in the domestic enquiry in spite  of an  opportunity of hearing having been provided to him.  He was  also offered the inspection of the document but he did not avail of that opportunity. He himself invoked the jurisdiction of the Appellate Authority and the order of dismissal passed  against him  was set  aside on  the ground that the appellant did not hold any domestic enquiry. it has already been  seen above that the Appellate Authority has to come to  its own  conclusion on  the guilt  of the  employee concerned. since  the Appellate Authority has to come to its own conclusion  on the basis of he evidence recorded bu it , irrespective  of  the  findings  recorded  in  the  domestic enquiry the  rule laid down in Ratna’s case (supra) will not strictly apply and the opportunity of hearing which is being provided to  the respondent  at  the  appellate  stage  will sufficiently meet his demands for a just and proper enquiry. 28.  In view  of the  above,  the  appeal  is  allowed.  The Judgment and  order dated  12.2.1996 passed by the Appellate Authority is  set aside and the case is remanded back to the Appellate Authority  to dispose  of the  appeal filed by the respondent under  section 41 of the Act afresh in accordance with law  in the  light of  the observations made above. No. costs.