http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 31  

PETITIONER: WORKMEN OF MESSRS FIRESTONE TYRE &RUBBER COMPANY OF INDIA (P

       Vs.

RESPONDENT: MANAGEMENT & OTHERS (With connected appeals)

DATE OF JUDGMENT06/03/1973

BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. DUA, I.D.

CITATION:  1973 AIR 1227            1973 SCR  (3) 587  1973 SCC  (1) 813  CITATOR INFO :  R          1974 SC 136  (18)  R          1974 SC 696  (5)  R          1975 SC1892  (4)  RF         1975 SC1900  (19)  R          1975 SC2025  (7)  R          1978 SC1004  (12)  R          1978 SC1380  (8)  R          1979 SC1064  (11)  R          1979 SC1652  (25,27,28,35)  F          1984 SC1805  (16)  RF         1986 SC 842  (5,15)

ACT: Industrial  Disputes  Act  1947  as  amended  by  Industrial Disputes  (Amendment) Act 1971-Section  11A,  interpretation of-Power  of  Tribunal  how  far  modified-Section   whether applicable  to  disputes referred before 15-12-71,  when  it came into force.

HEADNOTE: The  Industrial  Disputes (Amendment) Act  1971  inter  alia introduced  s.  11A into the parent Act of  1947.   The  new section  provided that if in the course of the  adjudication of  an  Industrial  dispute relating  to  the  discharge  or dismissal of a workman a Labour Court, Tribunal, or National Tribunal  is  satisfied  that  the  order  of  discharge  or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workmen or reduce punishment etc.  The proviso to the section  laid down that in any proceeding under the  section the  Court  or Tribunal in question shall rely only  on  the materials on record and shall not take any fresh evidence in relation  to the matter.  The section came into  force  with effect  from December 15, 1971.  In the present  appeals  by special leave the two questions that arose for consideration were  :  (i)  whether s. 11 A had made any  changes  in  the existing  legal situation as laid down by this Court and  if so, to what extent-, (ii) whether the section was applicable to  industrial disputes which had been already referred  for adjudication and were pending as on December 15, 1972. HELD  : (i) The statement of objects and reasons  cannot  be taken into account for the purpose of interpreting the plain

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 31  

words of the section.  But it gives an indication as to what the Legislative wanted to achieve. [608 A-B] (ii)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 and  is  more,  beneficial  to  the  employees  has  to   be preferred.   The  interpretation must be liberal  enough  to achieve  the  legislative  purpose.  It  must  still  be  in accordance  with  the  plain words, of the  statute  or  the section and must not do violence to the language used by the legislature. it will further have to be found from the words of the section whether it has altered the entire law as laid down in the existing decisions and, if so, whether there  is a clear expression of that intention in the language of  the section. [608 G-H; 609 A-C] (iii)Both  in respect of cases where a domestic enquiry  has been  held as also in cases when the Tribunal considers  the matter on the evidence adduced before it for the first time, the satisfaction under s. 11A, about the guilt or  otherwise of the workmen concerned is that of the Tribunal.  It has to consider  the evidence and come to a conclusion one  way  or other.   Even in cases where an enquiry has been held by  an employer  and  a  finding  of  misconduct  arrived  at,  the Tribunal  can now differ from that finding in a proper  case and hold that no misconduct is proved.                                     [611 A-C] The contention that the stage for interference under section 11A by the Tribunal is reached only when it has to  consider the punishment after 588 having  accepted  the  finding  of  guilt  recorded  by  the employee, could not be accepted., The Tribunal under s.  11A can consider the question of guilt as well as of punishment. It  can  also alter the punishment imposed by  an  employer. [611  C-H; 612 A-B] It was specifically contended before the Court in Workmen of Motipur  Sugar  Factories (Private) Limited,  that  when  an employer  had  held no enquiry as required by  the  Standing Orders, it was not open to him to adduce evidence before the Tribunal  for  the  first  time and  justify  the  order  of discharge.   This contention was rejected by this Court  and it was held that if the enquiry was defective or no  inquiry had  been  held,  as required by the  Standing  Orders,  the entire  case  would  be open before the  Tribunal  and  the, employer would have to justify, on evidence as well that its order  of  dismissal or discharge was proper.  There  is  no provision  either  in the  Industrial  Employment  (Standing Orders)  Act  1948 or in the Industrial Disputes  Act  which states that an order of dismissal or discharge is illegal if it  is not recorded by a proper and valid domestic  enquiry. Therefore,  the  contention  that  such  ’an  enquiry  being illegal,  the Tribunal has now under s. 11A  no  alternative but to order reinstatement could not be accepted.   Moreover the Industrial Disputes Act cannot be differently applied to employees who are governed by the Stand Orders Act and those who are not governed by it. [612 H; 613 A-G] The  expression  ’materials  on  record’  occurring  in  the proviso  to s. 11A 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 31  

take  in  (1) the evidence taken by the  management  at  the enquiry and the proceedings of the enquiry, or (2) the above evidence and in addition any further evidence led before the Tribunal,  or (3) evidence placed before the Tribunal  for the  first  time  in  support of the  action  taken  by  the employer  as  well as the evidence adduced  by  the  workmen contra.   The expression ’fresh evidence’ has to be read  in the  context in which it appears, namely,  as  distinguished from  the expression ’materials on record’.   The  Tribunal, for the purpose of determining the question of misconduct or punishment  or relief to be granted to workmen, has  to  act only  on the basis of the , materials on record’  before  it and.  cannot  call  for  fresh  evidence as  an  appellate authority can normally do. [613H; 614 A-H; 615A-D] (iv)The  words "in a proceeding under this section" in  the proviso. to s. 11A are very significant.  There cannot be  a "proceeding under this section" before the section has  come into force.  A proceeding under that section can only be  on or  after  15-12-1971.  T at also gives an  indication  that section 11A applies only to disputes which are referred  for adjudication  after the section has come into force.   There are  no  express  words  in  s.  11A  which  would  make  it applicable  even  to disputes referred before it  came  into force  nor could such an inference be gathered by  necessary intendment, The section therefore does not apply to proceed- ings before 15-12-1971. [619 E-G; 622 D-G] The following cases were referred to in the judgment (1)Indian  Iron  & Steel Co. Ltd.. and  Another  v.  Their Workmen  [1958] S.C.R. 667, Buckingham and Carnatic  Company Ltd.  by its Managing Agents Binny & Co., Madras v.  Workmen of  the Company represented by the Madras Labour  Union  and Madras  Textile Workmen’s Union, [1952] Labour Appeal  Cases 490,  Shri  Ram  Swarath Singh  Righa,  Muzafferpur  v.  The Management  of  the Belsund Sugar  Company  Limited,  Righa, Muzafferpur, [1954] Labour Appeal Cases 697; The Punjab Na-                             589 tional  Bank  Ltd.  v. Workmen [1960]  1  S.C.R.  806,  M/s. Bharat Sugar Wills Ltd. v. Shri Jai Singh and Others, [1962] 3  S.C.R.  684, Management of Ritz Theatre (P) Ltd.  v.  Its Workmen,  [1963], 3 S.C.R. 461, Khardah Co.  Ltd.  v.  Their Workmen,  [1966]  3  S.C.R. 506, Workmen  of  Motipur  Sugar Factory (Private) Limited v. Motipur Sugar Factory, [1965] 3 3.C.R. 588, State Bank of India v. R. K. Jain & Ors., [1972] 1 S.C.R. 755, Delhi Cloth and General Mills Co. Ltd. v. Ludh Budh Singh, [1972] 1 L.L.J. 180.  The Management of Panitole Tea  Estate v. The Workmen [1971] 1 S.C.R. 742,  Garikapatti Veeraya   v.  N.  Subbish  Choudhury,  [1957]  S.C.R.   488, Keshavlal  Jethalal  Shah  v. Mohanlal  Bhagwandas  &  Anr., [1968]  3  S.C.R. 623 The State of  Maharashtra  v.,  Vishnu Ramachandra, [1961] 2 S.C.R. 26, Barber v. Pigdon, [1937] 1, All.,  E.R.  115, Birla Brothers Ltd. v. Molak  I.L.R.  1948 (11)  Cal. 209, Jshiruddin v. K. D. Sethi, Factory  Manager, The  Model  Mills , Nagpur Ltd., [1966] 2 S.C.R.  660,  Shah Bhojraj  Kavar  Oil  Mills and  Gining  Factory  v.  Subhash Chandra  Yograj  Singh [1962] 2 S.C.R.  159,  and  Keshavlal Jethalal  Shah  v. Mohanlal Bhagwandas & Anr.  [1898]  2Q.B. 547.,

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1461  of 1972. Appeal  by special leave from the judgment and  order  dated

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 31  

April  21, 1972 of the Industrial Tribunal,  Maharashtra  in I.T. No. 307 of 1968. Indira  Jai Singh, A. D. Shastri and Urmila Sirur,  for  the appellant (in C.A. No. 1461). M.C. Setalvad, V. M. Tarkunde and Rameshwar Nath, for the respondent No. 1 (in C.A. No. 1461). F.D. Damania, D. R. Nath, Bhuvanesh Kumari, O. C. Mathur, Ravinder  Narain,  J.  B. Dadachanji,  for  the  Interveners (Mahindra & Mahindra). Madan Mohan, for the intervener (Kulwant Singh). M.   C. Stalvad, F. D. Damania M. A. Gagrat, S. M. Patel and I.   N. Shroff for the appellant. (in C.A. No. 1995). M.A. Gagrat, S. M. Patel and I. N. Shroff, for the appellant (in C.A. No. 1996). 590 S.J. Deshmukh and Indira Jai Singh, for the respondents. (in C.A. Nos. 1995-96 and C.A. No. 2386) and for the Intervener (M.  Vasudeo) (in C.A. No. 1461). The Judgment of the Court was delivered by VAIDIALINGAM, J. In these appeals, by special leave, two common questions arise for consideration :- (1)  proper interpretation of section 11A of the  Industrial Disputes Act; and (2)  whether  the above section applies to  industrial  dis- putes  which have already been referred to for  adjudication and were, pending as on 15-12-1971. Section 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 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  proceedings,  the               Labour  Court, Tribunal or National  Tribunal,               as  the  case may be, is  satisfied  that  the               order  of  discharge  or  dismissal  was   not               justified, it may, by its award, 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;                                    591               Provided  that  in any proceeding  under  this               section the Labour Court, Tribunal or National               Tribunal, as the case may be, shall rely  only

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 31  

             on the materials on record and shall not  take               any fresh evidence in relation to the matter".               Regarding  section  11A, in the  Statement  of               objects and reasons it is stated as follows:-               "In Indian Iron and Steel Company Limited  and               another v. their workmen (AIR 1958 S.C. 130 at               138), the Supreme Court, while considering the               Tribunal’s   power  to  interfere   with   the               management’s decision to dismiss, discharge or               terminate  the  services  of  a  workman,  has               observed that in case of dismissal on  miscon-               duct, the Tribunal does not act as a court  of               appeal  and  substitute its own  judgment  for               that  of the management and that the  Tribunal               will interfere only when there is want of good               faith, victimisation, unfair labour  practice,               etc. on the part of the management.               The International Labour Organisation, in  its               recommendation     (No.    119)     concerning               termination  of. employment at the               initiative  of  the employer adopted  in  June               1963, has recommended that a worker  aggrievad               by the termination of his employment should be               en7 titled, to appeal against the  termination               among  others,  to a neutral body such  as  an               arbitrator, a court, an arbitration  committee               or  a similar body and that the  neutral  body               concerned  should be empowered to examine  the               reasons given in the termination of employment               and  the other circumstances relating  to  the               case,   and  to  render  a  decision  on   the               justification   of   the   termination.    The               International Labour Organisation has  further               recommended  that the neutral body  should  be               empowered (if it finds that the termination of               employment was unjustified) to order that  the               worker   concerned,  unless  reinstated   with               unpaid  wages,  should be paid  adequate  com-               pensation or afforded 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               5 9 2               case  may  require.  For this purpose,  a  new               section 11A is proposed to be inserted in  the               Industrial Disputes Act, 1947............... 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 1 1 A 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 31  

the  companies,  it  appears to have  been  urged  that  the section  does not apply to the disputes which  had  already been  referred to for adjudication and that  the  management had  a right to adduce evidence to justify the action  taken against  the  workmen even though no enquiry had  been  held before  the order of discharge or dismissal had been  passed and  also  in cases where the enquiry held is  found  to  be defective.  This claim was resisted on behalf of ’the labour on  the ground that the section applies to  all  proceedings which    were  pending  as  on  15-12-1971  and   that   the management,  ’if  it  had not held any enquiry.  or  if  the enquiry  conducted by it was found to be defective, has  no right  to adduce, evidence before the authority  to  justify its  action.   Different views have been  expressed  by  the Tribunals  concerned  as will be seen from  what  is  stated below :- In  Civil Appeal No. 1461 of 1972, the Reference (I.T.)  No. 307  of 1968 related to the question of reinstatement  of  a number of workmen, who had been dismissed.  The  Industrial Tribunal,  Maharashtra,  Bombay,  considered  the   question whether section 11A applies to the reference, which had been made as early as 12th August, 1968.  The Industrial Tribunal by  its  order  dated  April 21,  1972  has  held  that  the restrictions imposed upon the, powers of the Labour Court or Tribunal  to interfere with orders of dismissal  passed  by the management, have been removed by section 11A, which  has the effect of affecting the substantive part of the law  of master  and servant and, therefore, the said section has  no retrospective  effect.  The Tribunal has held that the  con- cerned  reference  will  have to be disposed  of  as  though section  11A was not in the statute.  The workmen have  come up in appeal. Civil Appeal No. 1995 of 1972 arises out of the order  dated 28-6-1972.of  the Fifth Labour Court at Bombay in  Reference (I.D.A.)  No. 268 of 1970.  The Labour Court has  held  that section  11A  applies  even  to  all,  proceedings   pending adjudication as on 15-12-1971, as it only deals with matters of procedure.  The said Court has further held that the  new section makes it clear that 593 there  must  be  a  proper enquiry  by  an  employer  before dismissing  or discharging a workman and that if no  enquiry has  been  held  or  if the enquiry  held  is  found  to  be defective, there is no option but to reinstate the employee. In  this  view, the Labour Court 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. 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 : Section  11A gives power to the Labour Court  to  scrutinlse 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 31  

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 defective, reinstatement cannot be ordered straightway as urged by the labour. On the  other hand,  an  employer has got a right to  adduce  evidence  to justify the action, taken by him. But section 11A deals only with   procedural  matters  and,  therefore,   it   operates retrospectively. Similarly  in Reference (I.D.A.) No. 41 of 1956,  the  First Labour Court Bombay in its order, dated January 3, 1973, has held that the section is retrospective in its operation  and that  the employer has got a right to lead  evidence  before the Labour Court, if the domestic enquiry has not been  held or is found to be   defective.      From what is stated above, it is clear that there is a very  wide  divergence  of views expressed  by  the  various authorities, both regarding the applicability of the section to  pending proceedings as well as the interpretation to  be placed on the said section. We  will  first take up the question  regarding  the  proper interpretation to be placed on section 11 A. The contentions of  Mr.  Deshmukh, learned counsel, who  advanced  the  main arguments  in  this regard on behalf of the workmen  are  as follows:- 594 Originally limitations had been placed by judicial decisions in respect of the jurisdiction of the Labour Tribunals  When considering  the  action  of an employer in  the  matter  of discharge or dismissal of a workmen.  It a domestic  enquiry had  been  held  by an ,employer on the  basis  of  which  a workman  is dismissed or discharged, the Labour  Courts  can interfere  with the decision of the management only  if  the domestic enquiry is vitiated by the circumstances  mentioned by  this Court in Indian Iron & Steel Co. Ltd. & Another  v. Their  workmen(1).   Once the  Tribunals  hold  that   the domestic  enquiry  has  been  ’conducted  properly  and  the ,action  of  an employer is bona fide and  the,  conclusions arrived at ,therein are plensible, they had no  jurisdiction to  substitute  their own judgment.  In  cases  where  the misconduct  is  found  to be proved by a  valid  and  proper domestic  enquiry,  the Tribunal had no power to  alter  the punishment imposed by an employer.  Even in cases where  the domestic  enquiry  is held to be: defective or  even  if  no domestic  enquiry had been conducted by an  employer  before passing  an order of termination or discharge, the  employer was  given  an  opportunity 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. 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 31  

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 of dismissal  or  discharge  was necessary  for  the,  type  of misconduct  of which the workman is found guilty.   In  such circumstances,  the Tribunal can also give any other  relief to  the  workman,  including  the  imposing  of  a   ’lesser punishment.   In cases where an employer had  not  conducted any enquiry or when the enquiry conducted by him is held  to ’be   defective,  the  employer  will  not  be   given   any opportunity to (1) [1958] S.C.R 67. 595 adduce  evidence before the Labour Tribunal  for  justifying his action.  Various decisions of this court have emphasised that  there is an obligation on the part of an  employer  to hold  a  proper enquiry before dismissing or  discharging  a workman.   And  it  has also been stated  that  the  enquiry should  conform to certain well defined principles and  that it  should  not be an empty formality.  if  the  management, being fully aware of this position in law, does not  conduct an enquiry or conducts a defective enquiry, the order passed by  it  is  illegal and it cannot  take  advantage  of  such illegality  or  wrong  committed by it and  seek  a  further opportunity before the Tribunal of adducing evidence for the first  time.  Generally, the Standing Orders  also  provided for the conduct of an enquiry before imposing a punishment., The Standing Orders have, been held to be statutory terms of conditions  of service.  If an employer does not conform  to the  provisions  of  the  Standing  Orders   he  commits  an illegality  and an order passed, which is illegal, has  only to. be straightway set aside by the Tribunal.  Decisions  of this Court, while recognising that an opportunity has to  be given to an employer to adduce evidence before the  Tribunal for  the  first time, have not given the importance  to  the effect of a breach of a statutory obligation committed by an employer in not conducting a proper and valid enquiry as per the  Standing Orders.  This anomaly has now been removed  by the legislature. The  above is the line of argument adopted by Mr.  Deshmukh. He  referred us to, certain decisions of this Court in  sup- port of his contentions that the opportunity that was so far directed  to be given to an employer to adduce evidence  for the first  time  before the Tribunal was  not  by  way  of recognising  a  right  in an employer  but  really  for  the benefit of the workman, who will otherwise be jeopardised 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. 596

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 31  

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 section 1 1 A. According  to  him only  such  evidence,  which  could  and  should  have  been produced  by  the parties in the domestic  enquiry,  is  not allowed to be adduced before the Tribunal Mr.  Damania,  learned  counsel, who  advanced  the  leading arguments on behalf of the employers broadly contended as follows :- The restrictions imposed upon the jurisdiction exercised  by the  Labour Tribunals in respect of disputes arising out  of orders passed by way of dismissal or discharge, as laid down by  this  Court in a number of decisions over  a  period  of years, have not been altered by the new section.  The  right of  an  employer  to  manage his affairs  in  his  own  way, provided  he does not act arbitrarily is kept  intact.   The common   law   relationship  of  master  and   servant   was recognised, except to the extent that it was modified by the decision  of  this Court in Indian Iron & Steel Co.  Ltd.  & Another  v.  Their workmen(1).  An employer is  expected  to hold  a  domestic enquiry before an order  of  dismissal  or termination is passed.  He is also bound to follow, in  such cases,  the principles of natural justice and the  procedure laid  down  by the relevant Standing Orders.   The  Tribunal will not interfere with the finding recorded by an  employer in a proper enquiry merely on the ground that it would  have come to a different conclusion.  The punishment. to be noted out  was entirely within the powers and jurisdiction  of  an employer  and  it  was  no part of  the  jurisdiction  of  a Tribunal   to,  decide  whether  the  said  punishment   was justified  except in very rare cases where  the  punishment imposed  is  grossly out of proportion, so as  to  suggest victimisation  or  unfair labour practices.   This  was  the position  vis-a-vis  the management as on  15-12-1971.   But under section 11A, after the Tribunal holds that the enquiry has  been  conducted properly by an employer  and  that  the finding about misconduct is correct, it has jurisdiction  to consider  whether the punishment requires modification.   If it  holds  that the punishment has to be  modified,  it  has power to do so and award a lesser punishment.  Section II A’ comes into effect only at the time when the Tribunal  consi- ders  about the punishment to be imposed.  While  previously the Tribunal had no power to interfere with the  punishment, 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 (1)  [1958] S.C.R. 667.                             597 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. 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 31  

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 relied on by an employer as material on record.  It  will lead  to  an  anomaly if it is held that  the  Tribunal  can straightaway order reinstatement merely because no  domestic enquiry has been held or the domestic, enquiry conducted  is defective  for one reason or other.  Therefore,  he  pointed out that the proper way of interpreting section 11A would be to  hold that it comes into play after a Tribunal  has  held the  enquiry proceedings conducted by the management  to  be proper and the finding of guilt justified.  It is then  that the Tribunal can consider whether the punishment imposed  is justified.  if it is of the opinion that the  punishment  is not justified, it can alter the same. We have broadly indicated above the stand taken on behalf of the  workmen and the employers regarding the  interpretation of section 11A. Before  we proceed to consider the contents of the  section, having due regard to the arguments advanced before us, it is necessary  to indicate the legal position as  on  15-12-1971 regarding  the  powers of a Labour Court  or  Tribunal  when deciding a dispute arising out of dismissal or discharge  of a  workman.  There are several decisions of this  Court,  as also  of  the  Labour Appellate  Tribunal  laying  down  the principles  in this regard, but we will refer only to a  few of them. In  its very early decision in Buckingham and Cernatic  Com- pany  Ltd,  by its Managing Agents Binny &  Co.,  Madras  v. Workers  of  the Company represented by  the  Madras  Labour Union  and  Madras,  Textile Workers  Union(1),  the  Labour Appel- (1) [1952] Labour Appeal Cases 490. -L761 Sup CI73 598 late  Tribunal held that the decision of the Management   in relation to charges against the employee will not prevail if (a)  there is want of bona fide, or (b)  it is a case of victimisation or unfair labour practice or violation of the principles of natural justice, or (c)  there is a basic error of facts or, (d)  there has been a perverse finding on the materials. It was further laid down, that an employer ought to have the right  to  decide  what the  appropriate  punishment  for  a misconduct  should be and its exercise of the discretion  in this  regard  should not be interfered with  by  a  Tribunal unless the punishment is unjust.  In Shri Ram Swarath Sinha, Righa,  Muzafferpur v. The Management of the  Belsund  Sugar Company Limited, Righa Muzaffarpur(1), 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. In discussing the nature of the jurisdiction exercised by an Industrial Tribunal when adjudicating a dispute relating  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 31  

dismissal or discharge, it has been emphasised by this Court in Indian Iron & Steel Co. Ltd.(2) 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               relief.  In cases of dismissal on  misconduct,               the Tribunal does not, however, act as a Court               of appeal and substitute its own judgment  for               that of the management.  It will interfere (i)               when  there is want of good faith;  (ii)  when               there   is  victimisation  or  unfair   Labour               practice,  (iii) when the management has  been               guilty  of  a basic error or  violation  of  a               principle of natural Justice. and (iv) when on               the   materials  the  finding  is   completely               baseless or perverse". (1)  It [1954] Labour Appeal Cases 697. (2) 1958 S.C.R. 667. 599 This  is  the  decision which has been referred  to  in  the Statement  of objects and reasons already adverted  to.   It may be noted that the four circumstances pointed out by this Court  justifying interference at the hands of the  Tribunal are,  substantially  the  same as laid down  by  the  Labour Appellate Tribunal in Buckingham and Carnatic Company (1). Following  the  decision  in Indian Iron &  Steel  Co.  Ltd. (2)thisCourt  in  The Punjab National Bank  Ltd.  v.  Its Workmen(3) held :               "In  cases  where an  industrial  dispute,  is               raised  on the ground of dismissal and  it  is               referred  to the, tribunal  for  adjudication,               the  Tribunal naturally wants to know  whether               the impugned dismissal was preceded by a  pro-               per  enquiry  or  not.  Where  such  a  proper               enquiry  has been held in accordance with  the               provisions of the relevant standing orders and               it  does  not  appear that  the  employer  was               guilty  of victimisation or any unfair  labour               practice, that tribunal is generally reluctant               to interfere with the impugned orders".               It was further emphasised that :               There  is  another principle which has  to  be               borne in mind when the tribunal deals with  an               industrial dispute arising from the  dismissal               of  an employee.  We have already pointed  out               that  before  an  employer  can  dismiss   his               employee be, has to hold a proper enquiry into               the  alleged  misconduct of the  employee  and               that  such an enquiry must always  begin  with               the  supply of a specific charge-sheet to  the               employee".               The  effect  of  an employer  not  holding  an               enquiry has been stated as follows               "  But  it follows that if no enquiry  has  in               fact  been  held by the  employer,  the  issue               about  the  merits of the  impugned  order  of               dismissal is at large before the tribunal and,               on the evidence adduced before it, the  tribu-               nal  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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 31  

             the  point  about the exercise  of  managerial               functions does not arise at all". In  M/s.   Bharat  Sugar Mills Ltd. v. shri  Jai  Singh  and others(4),  the  question arose regarding the powers  of  an Industrial Tribunal to permit an employer to adduce evidence before it (1)  [1952] Labour Appeal Cases 490, (3)  [1960] (1) S.C.R. 806. (2)[1958] S.C.R. 667. (4)[1962] (3) S.C.R. 684. 600 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  perverse  and should give  the  permission               asked for unless it has reason to believe that               the  management is guilty of victimisation  or               has  been guilty of unfair labour practice  or               is  acting mala fide.  But the mere fact  that               no  enquiry has been held or that the  enquiry               has not been properly conducted cannot absolve               the Tribunal of its duty to decide whether the               case that the work-man has been guilty of  the               alleged  misconduct has been made,  out.   The               proper way of performing this duty where there               has   not  been  a  proper  enquiry   by   the               management   is  for  the  Tribunal  to   take               evidence  of  both  sides in  respect  of  the               alleged  misconduct.   When such  evidence  is               adduced before the Tribunal the management  is               deprived of the benefit of having the findings               of  the  domestic tribunal being  accepted  as               prima  facie proof of the  alleged  misconduct               unless the finding is perverse and to prove to               the  satisfaction of the Tribunal itself  that               the   workman  was  guilty  of   the   alleged               misconduct.  We do not think it either just to               the  management  or indeed even  fair  to  the               workman  himself  that  in  such  a  case  the               Industrial  Tribunal  should  refuse  to  take               evidence  and thereby drive the management  to               make  a  further  application  for  Permission               after holding a proper enquiry and dePrive the               workman of the benefit of the Tribunal  itself               being satisfied on evidence adduced before  it               that he was guiltY of the alleged misconduct". In  the above decision, this Court quoted with approval  the decision of the Labour Appellate Tribunal in Buckingham and 601

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 31  

Carnatic Company Ltd. (supra) holding that the materials  on which a Tribunal acts may consist of :-               "(1)  entirely  the,  evidence  taken  by  the               management at the enquiry and the  proceedings               of the enquiry, or               (2)  that  evidence and  in  addition  thereto               further evidence led before the Tribunal, or               (3)  evidence placed before the  Tribunal  for               the first time in support of the charges". It was further emphasised--that               "for a long time now, it has been settled  law               that  in  the  case of in  adjudication  of  a               dispute  arising  out  of  a  dismissal  of  a               workman by the management (as distinct from an               application for permission 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". 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. 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(1). Regarding  the  powers of a Tribunal when there has  been  a proper and fair enquiry, it was held :               "It is well-settled that if in employer  serve               the relevant charge or charges on his employee               and holds a proper and fair enquiry, it  would               be open to him to act (1) [1963] (3) S.C.R. 461. 602               upon  the  report  submitted  to  him  by  the               Enquiry  Officer and to dismiss  the  employee               concerned.   If the enquiry has been  properly               held,  the order of dismissal  passed  against               the  employee as a result of such  an  enquiry               can  be,  challenged if it is shown  that  the               conclusions   reached  at  the,   departmental               enquiry   were   perverse  or   the   impugned               dismissal  is  vindictive or  mala  fide,  and               amounts to an unfair labour practice.  In such               an  enquiry  before the Tribunal, it  is.  not               open to the Tribunal to sit in appeal over the               findings  recorded  at the  domestic  enquiry.               This  Court  has  held  that  when  an  proper               enquiry has been held, it would be open to the               Enquiry Officer holding the, domestic  enquiry               to  deal  with the matter on the  merits  bona

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 31  

             fide and come to his own conclusion". Again  regarding the procedure to be adopted when there  has been no enquiry or when there has been a defective  enquiry, it was stated :               "It has also been held that if it appears that               the departmental enquiry held by the  employer               is not fair in the, sense that proper  charge,               had not been served on the employee or  proper               or full opportunity had not been given to  the               employee  to meet the charge, or  the  enquiry               has    been    affected   by    other    grave               irregularities vitiating it, then the position               would  be that the Tribunal would be  entitled               to deal with the merits of the dispute as  to,               the dismissal of the employee for itself.  The               same  result  follows if no enquiry  has  been               held  at  all.   In  other  words,  where  the               Tribunal is dealing with a dispute relating to               the dismissal of an industrial employee, if it               is satisfied that no enquiry has been held  or               the enquiry which has been held is not  proper               or  fair or that the findings recorded by  the               Enquiry Officer are perverse, the whole issue;               is  at  large  before  the,  Tribunal.    This               position also is well-settled". It  was  further held that it is only where  a  tribunal  is satisfied  that a proper enquiry has, 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. 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(1) as follows (1) [1964] (3) S.C.R. 506. 603               "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". In  Workmen  of Motipur Sugar Factory (Private)  Limited  v. Motipur  Sugar Factory(1), 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  orders  of discharge  passed  by  the employer  were  fully  justified. Before this Court it was contended on behalf of the  workmen that  when  no enquiry whatever had been  conducted  by  the employer, as required by the Standing Orders, before passing an  Order  of dismissal or discharge, the  Tribunal  had  no jurisdiction  to  hold an enquiry itself by  permitting  the employer  to adduce evidence be fore it for the, first  time in rejecting this contention, it was held

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 31  

             "It  is  now  well-settled  by  a  number   of               decisions of this Court that where an employer               has   failed   to  make  an   enquiry   before               dismissing or discharging a workman it is open               to  him  to  justify  the  action  before  the               tribunal  by  leading  all  relevant  evidence               before it.  In such a’ case the employer would               not  have  the benefit which he has  in  cases               where domestic inquiries have been held.   The               entire  matter  would  be,  open  before   the               tribunal which will have jurisdiction not only               to  go into the limited questions open to  a               tribunal  where  domestic  inquiry  has   been               property held   but also to satisfy itself  on               the,  facts adduced before it by the  employer               whether   the  dismissal  or   discharge   was               justified  ...... If the enquiry is  defective               or if no enquiry has been held as required  by               Standing Orders, the entire case would be open               before  the  tribunal and the  employer  would               have  to  justify on facts as  well  that  its               order of dismissal’ or discharge was proper  A               defective enquiry to our opinion stands on the               same (1) [1965] (3) S.C.R. 588. 604               footing  as no enquiry and in either case  the               tribunal  would have jurisdiction to  go  into               the  facts  and  the employer  would  have  to               satisfy  the tribunal that on facts the  order               of dismissal or discharge was proper" The reasons for allowing an employer to lead evidence before the Tribunal justifying his action have been stated thus :               "If  it  is  held  that  in  cases  where  the               employer   dismisses  his   employee   without               holding an enquiry, the dismissal must be  set               aside by the industrial tribunal only on  that               ground,  it  would inevitably  mean  that  the               employer will immediately proceed to hold  the               enquiry  and  pass  an  order  dismissing  the               employee  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  consis-               tently  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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 31  

             between  cases where the domestic  enquiry  is               invalid and those where no enquiry has in fact               been held". 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.(1), as follows :-               "It should be remembered that when an order of               punishment by way of dismissal or  termination               of service is effected by the management,  the               issue   that  is  referred  is   whether   the               management was justified in dis- (1) [1972] (1) S.C.R. 755. 605               charging  and terminating the service  of  the               workman  concerned and whether the workman  is               entitled to any relief.  In the present  case,               the   actual  issue  that  was  referred   for               adjudication  to the Industrial  Tribunal  has               already been quoted in the earlier part of the               judgment. There may be cases where an  inquiry               has   been   held  preceding  the   order   of               termination or there may have been no  inquiry               at all.  But the dispute that will be referred               is  not whether the domestic inquiry has  been               conducted  properly or not by the  management,               but  the larger question whether the order  of               termination,  dismissal or the order  imposing               punishment   on  the  workmen   concerned   is               justified.   Tinder those circumstances it  is               the   right  of  the  workman  to  plead   all               infirmities  in the domestic inquiry,  if  one               has been held and also to attack the order  on               all  grounds  available to him in law  and  on               facts.   Similarly the management has  also  a               right to defend the action taken by it on  the               (,round  that  a proper domestic  inquiry  has               been  held  by it-on the basis  of  which  the               order  impugned has been passed.  It  is  also               open  to  the management to justify  on  facts               that  the order passed by it was proper.   But               the point to be noted is that the inquiry that               is  conducted by the Tribunal is  a  composite               inquiry  regarding  the order which  is  under               challenge.   If  the  management  defends  its               action  solely on the basis that the  domestic               inquiry held by it is proper and valid and  if               the  Tribunal holds against the management  on               that point, the management will fail.  On  the               other hand, if the management relies not  only               on  the validity of the domestic inquiry,  but               also  adduce  evidence  before  the   Tribunal               justifying  its  action,  it is  open  to  the               Tribunal to accent the evidence adduced by the               management and hold in its favour even if  its               finding  is against the  management  regarding               the  validity of the domestic inquiry.  It  is               essentially  a  matter for the  management  to               decide  about  the stand that it  proposes  to               take  before  the  Tribunal.  It  may  be  em-               phasised,   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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 31  

             is  for the management to avail itself of  the               said opportunity". This Court in its recent decision in Delhi Cloth and General Mills Co. Ltd. v. Ludh Budh Singh(1). after a review of  all the earlier cases, has summarised the principles flowing out of those (1) [1972] (1) LLJ 180. 606 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. 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. 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  is               justified.               (2)   Before  imposing  the   punishment,   an               employer  is  expected  to  conduct  a  proper               enquiry  in accordance with the provisions  of               the   Standing  Orders,  if  applicable,   and               principles  of natural justice.   The  enquiry               should not be an empty formality.               (3) When a proper enquiry has been held by  an               employer,  and  the finding of  misconduct  is               plausible   conclusion   flowing   from    the               evidence,  adduced  at the said  enquiry,  the               Tribunal   has  no  jurisdiction  to  sit   in               judgment over the decision of the employer  as               an appellate body.  The interference with  the               decision  of  the employer will  be  justified               only  when  the, findings arrived  at  in  the               enquiry  are  perverse or  the  management  is               guilty   of   victimisation,   unfair   labour               practice or mala fide.               (4)  Even  if no enquiry has been held  by  an               employer  or  if the enquiry held  by  him  is               found  to be defective, the Tribunal in  order               to  satisfy  itself  about  the  legality  and               validity  of the order, has to give an  oppor-               tunity to the employer and employee to, adduce               evidence  before  it.   It  is  open  to   the               employer to adduce evidence for the first time               justifying  his action; and it is open to  the               employee to adduce evidence contra.               (5)  The effect of an employer not holding  an               enquiry is that the Tribunal would not have to               consider only whether there was a prima  facie               case.  On the other 607               hand,  the  issue  about the,  merits  of  the               impugned order of dismissal or discharge is at               large  before the Tribunal and the latter,  on               the evidence adduced before it, has to  decide               for  itself whether the misconduct alleged  is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 31  

             proved.   In such cases, the point  about  the               exercise  of  managerial  functions  does  not               arise  at  all.  A case of  defective  enquiry               stands on  the same footing as no enquiry.               (6)   The  Tribunal  gets   jurisdiction.   to               consider the evidence placed before-it for the               first  time  in justifications of  the  action               taken  only, if no enquiry has been  held  or               after the enquiry conducted by an employer  is               found to be defective.               (7)  It  has never been  recognised  that  the               Tribunal should straightaway, 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 Estate v. The Workmen(1), within’               the  judicial  decision of a Labour  Court  or               Tribunal. 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. (1) [1971] (1) S.C.R. 742. 608 The question is whether section 11A has made any changes  in the legal position mentioned above and if so, to what extent ?  The Statement of objects and reasons cannot be taken into account  for the purpose of interpreting the plain words  of the  section.   But it gives an indication as  to  what  the Legislature  wanted to achieve.  At the time of  introducing section 11A in the Act, the legislature must have been aware of the several principles laid down in the various decisions of this Court referred to above.  The object is stated to be that  the,  Tribunal  should  have  power  in  cases,  where necessary, to set aside the order of discharge or  dismissal and  direct  reinstatement or award any  lesser  punishment. The  Statement  of  objects  and  reasons  has  specifically referred  to the limitation on the powers of  an  Industrial Tribunal, as laid ,down by this Court in Indian Iron & Steel Co. Ltd.(1). This will be a convenient stage to consider the contents  of section 11A.  To invoke section 11A, it is necessary that an

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 31  

industrial dispute of the type mentioned therein should have been  referred to an Industrial Tribunal  for  adjudication. In  the course of such adjudication, the Tribunal has to  be satisfied that the ,order of discharge or dismissal was  not justified.  If it comes to such a conclusion, tile  Tribunal has  to set aside the order and direct reinstatement of  the workman  on such terms as it thinks fit.  The  Tribunal  has also  power  to  give  any  other  relief  to  the  work-man including the imposing of a lesser punishment having due re- gard to the circumstances.  The; proviso casts a duty on the Tribunal  to  rely  only on the  materials-  on  record  and prohibits  it from taking any fresh evidence.  Even  a  mere reading of the section. in our opinion, does indicate that A change  in the law, ,is laid ,down by this Court, has  been effected.  According to the workmen the entire law has  been completely  altered; whereas according to the  employers,  a very  minor  change has been effected giving  power  to  the Tribunal,  only to alter the punishment, after  having  hold that  the misconduct is proved.  That is, according  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. 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 (1) [1958] S.C.R, 667. 609 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  ind  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  section whether  it has altered the entire law, as laid down by  the decisions,  and, if so, whether there is a clear  expression of that intention in the language of the section. We  will first consider cases where an employer has  held  a proper  and valid domestic enquiry before passing the  order of  punishment.   Previously the Tribunal had  no  power  to interfere  with  its finding of misconduct recorded  in  the domestic enquiry unless one or other infirmities pointed out by  this Court in Indian  Iron & Steel Co. Ltd.(1)  existed. The conduct of disciplinary proceeding and the punishment to be  imposed were all considered to be a managerial  function with which the Tribunal had no power to  interfere  unless the  finding was perverse or the punishment was so harsh  as to  lead to an inference of victimisation or  unfair  labour practice.  This position, in our view, has now been  changed by  section  11A.   The words "in the course  of  the  adju-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 31  

dication  proceeding,  the Tribunal is  satisfied  that  the order  of discharge or dismissal was not justified"  clearly indicates that the Tribunal is now clothed with the power to reappraise the evidence in the domestic enquiry and  satisfy itself  whether the said evidence relied on by an  employer, establishes the misconduct alleged against a workman.   What was originally a plausible conclusion that could be drawn by an  employer  from the evidence, has now given  place  to  a satisfaction  being  arrived at by ,lie  Tribunal  that  the finding  of misconduct is correct.  The limitations  imposed on the powers of the Tribunal by the decision in Indian Iron &  Steel Co.  Ltd. (1). case can no longer be invoked by  an employer.   The Tribunal is now at liberty to  consider  not only  whether  the  finding of  misconduct  recorded  by  an employer  is  ’correct;  but also to differ  from  the  said finding if a proper case is made out.  What was once largely in the realm of the satisfaction of the employer, has ceased to  be  so: and now it is the satisfaction of  the  Tribunal that finally decides the matter. 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 (1) [1958] S.C.R.667 610 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 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(1) 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  validity  of  the domestic  enquiry,  if one has been held  as  a  preliminary ’issue.   If its finding on the subject is in favour of  the management,  then there will be no occasion  for  additional evidence being cited by the management.  But if the  finding on  this issue is against the management, the Tribunal  will have to give the employer an opportunity to cite  additional evidence   justifying  his  action.   This  right  in   the, management  to  sustain its order  by  adducing  independent evidence,  before the Tribunal, if no enquiry has been  held or  if the enquiry is held to be defective, has  bean  given judicial recognition over a long period of years. All parties are agreed that even after section 11A, the  em- ployer  and  employee  can  adduce  evidence  regarding  the legality  or  validity of the domestic enquiry, if  one  had been held by an employer. Having  held  that  the  right of  the  employer  to  adduce

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 31  

evidence  continues  even  under  the  new  section,  it  is needless  to state that, when such evidence is  adduced  for the first time, it is the Tribunal which has to be satisfied on such evidence about the guilt or otherwise of the workman concerned.  The law, as laid ’down by this Court that  under such  circumstances  the  issue  about  the  merits  of  the impugned order of dismissal or discharge is at large  before the  Tribunal and that it has to decide for  itself  whether the  misconduct  alleged is proved, continues to  have  full effect.  In (1) [1972] I.L.L.J. 180, 611 such  a  case, as laid down by this Court, the  exercise  of managerial functions does not arise at all. Therefore,  it  will-be seen that both in respect  of  cases where  a  domestic enquiry has been held as  also  in  cases where  the  Tribunal considers the matter  on  the  evidence adduced before it for the first time, the satisfaction under section  11 A, about the guilt or otherwise of  the  workman concerned, is that of the Tribunal.  It has to consider  the evidence and come to a conclusion one way or other.  Even in cases  where an enquiry has been held by an employer  and  a finding  of  misconduct  arrived at, the  Tribunal  can  now differ  from that finding in a proper case and hold that  no misconduct is proved. 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 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 before it for  the first time.  Both categories are now put on a par by section 11 A, Another change, that has been effected by section 11A is the power  conferred  on  a Tribunal to,  alter  the  punishment imposed  by  an  employer.  If the  Tribunal  comes  to  the conclusion that the misconduct is established, either by the domestic  enquiry accented by it or by the evidence  adduced before  it for the. first time, the Tribunal originally  had no  power  to interfere with the punishment imposed  by  the management.   Once the, misconduct is proved,  the  Tribunal had to sustain the order of punishment unless it was 612 harsh  indicating victimisation.  Under section 11A,  though the  .Tribunal  may  hold that  the  misconduct  is  proved,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 31  

nevertheless  it  may be of the opinion that  the  order  of discharge  or  dismissal  for the  said  misconduct  is  not justified.   In other words, the Tribunal may hold that  the proved  misconduct  does  not merit  punishment  by  way  of discharge  or dismissal.  It can, under such  circumstances, award  to  the workman any lesser punishment  instead.   The power  to interfere with the punishment and alter  the  same has been now conferred on the Tribunal by section 1 1 A. Mr.  Deshmukh rather strenuously urged that in all its  pre- vious  decisions, this Court had not considered a  breach-or an  illegality, as he calls it-committed by an  employer  in not  holding a domestic enquiry.  The learned counsel  urged that  this Court has consistently held in several  decisions that  there is an obligation on the part of an  employer  to conduct  a  proper domestic enquiry in accordance  with  the Standing  Orders  before passing an order  of  discharge  or dismissal.   Hence an order passed without such  an  enquiry is,  on  the  face of it, illegal.  The effect  of  such  an illegal order deprives the employer of an opportunity  being given  to him to adduce evidence for the first  time  before the  Tribunal  to  justify  his  action.   These.   aspects, according  to the learned counsel, have not been  considered by this Court when it recognised an opportunity to be  given to an employer to adduce evidence before the Tribunal. 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. 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. 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 613 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  various decisions of this Court that an employer is expected to hold a proper enquiry before dismissing or discharging a workman. If  that requirement is satisfied, an employer will  by  and large  escape  the attack that he has acted  arbitrarily  or mala  fide  or by way of victimisation.  If he  has  held  a proper enquiry, normally his bona fides will be established. But  it is not correct to say that this Court, when it  laid down that an employer has a right to adduce evidence for the first  time before the Tribunal, was not aware of  a  breach committed  by an employer of the provisions of the  Standing Orders.   A similar contention, though in a different  form, advanced on behalf of the workmen was rejected by this Court in  Workmen of Motipur Sugar Factory  (Private)  Limited(1).

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 31  

It  was  specifically  contended before this  Court  by  the workmen therein that when, an employer had _held no enquiry, as  required by the Standing Orders, it was not open to  him to  adduce evidence before the Tribunal for the  first  time and  justify  the order of discharge.  This  contention  was rejected  by this Court and it was held that if the  enquiry was  defective or no enquiry had been held, as required  by the  Standing Orders, the entire case would be  open  before the  Tribunal  and the employer would have  to  justify,  on evidence  as well that its order of dismissal  or  discharge was proper.  Therefore, this contention cannot be  accepted. We  may also state that the industrial Employment  (Standing Orders)   Act   1946  applies  only  to   those   industrial establishments  which are covered by section 1(3).  But  the field  of operation of the Act is much wider and it  applies to  employers, who may have no standing orders at  all.   If the contention of Mr. Deshmukh regarding Standing Orders  is accepted,  then  the  Act  will have  to  be  applied  in  a different manner to employers, who have no Standing  Orders, and  employers,  who are obliged to  have  Standing  Orders. That is- certainly not the scheme of the Act. We 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 (1) [1965] 3 S.C.R. 588. 7--L761Sup.C.I./73 614 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. 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 above evidence and in  addition,  any               further evidence led before the Tribunal, or               (3)  evidence placed before the  Tribunal  for               the first time in support of the action  taken               by an employer as well as the evidence adduced               by the workman contra. The above items by and large should be considered to be  the ’materials  on record’ as specified in the Proviso.  We  are not  inclined to limit that expression as meaning only  that material  that has been placed in a domestic  enquiry.   The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 31  

Proviso  only  confines  the Tribunal to  the  materials  on record  before it as specified above, when  considering  the justification  or  otherwise of the order  of  discharge  or dismissal.  It is only on the basis of those materials  that the  Tribunal is obliged to consider whether the  misconduct is  proved and the further question whether the proved  mis- conduct justifies the punishment of dismissal or  discharge. It  also  prohibits  the  Tribunal  from  taking  any  fresh evidence   either  for  satisfying  itself   regarding   the misconduct  or for altering the punishment from the  Proviso it is not certainly possible to come to the conclusion  that when once it is held that an enquiry has not been held or is found to be defective, an order reinstating the workman will have  to be made by the Tribunal.  Nor does it  follow  that the  Proviso  deprives an employer of his  right  to  adduce evidence  for  the  first time  before  the  Tribunal.   The expression ’fresh evidence’ has to be read in the context in which   it  appears,  namely.  as  distinguished  from   the expression  materials  on record.  If so read,  the  Proviso does not prevent any difficulty at all. 615 The  legislature  in section 11A has made,  a  departure  in certain respects in the law as laid down by this Court.  For the,  first  time,  power has been given to  a  Tribunal  to satisfy  itself  whether  misconduct  is  proved.   This  is particularly  so,  as already pointed out by  us,  regarding even  findings  arrived  at by an employer,  in  an  enquiry properly held.  The 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. 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 its mind before giving permission or approval.  Section 33 only imposes  a ban.   An order of dismissal or discharge passed  even  with the  permission  or approval of the Tribunal  can  form  the subject of a dispute and as such referred for  adjudication. Quite naturally, when the dispute is being adjudicated,  the employer  will rely upon the proceedings that  were  already held  before  a Tribunal under section 33.  They  will  form part  of the materials on record before the  Tribunal.   The contention  of Mr. Deshmukh that if no enquiry is held.  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 31  

order  of dismissal will have to be set aside, if  accepted, will  lead to very incongruous results.  The Tribunal  would have  allowed an employer to adduce, evidence before  it  in proceedings under section 33 for the first time. even though no  domestic  enquiry had been ’held.  If it  is  held  that another  Tribunal. which adjudicates the main dispute,  has to   ignore   those  proceedings  and   straightaway   order reinstatement on the ground 616 that  no domestic enquiry had been held by an  employer,  it will lead to very startling results.  Therefore, an  attempt must be made to construe section 11A in a reasonable manner. This is another reason for holding that the right to  adduce evidence  for the first time recognised in an employer,  has not been disturbed by section 11A. There may be other instances where an employer with  limited number  of workman may himself be a witness to a  misconduct committed by a workman.  He will be disabled from conducting an enquiry against the workman because he cannot both be  an enquiry officer and also a witness in the proceedings.   Any enquiry  held  by  him  will not  be  in  keeping  with  the principles  of  natural justice.  But he will  certainly  be entitled  to take disciplinary action for which  purpose  he can serve a charge-sheet and, after calling for explanation, impose the necessary punishment without holding any enquiry. This  will be a case, where no enquiry at all has been  held by  an  employer.   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. 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 emphasised that conducting of a proper and valid enquiry by an employer will conduce  to harmonious and healthy relationship between  him and the workman and 617 it  will  serve the cause of industrial peace.   Further  it will  also enable, an employer to persuade the Tribunal  to accept  the  enquiry  as  proper and  the  finding  also  as correct. Having dealt with the proper interpretation to be placed  on section  11A,  we will now proceed to  consider  the  second

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 26 of 31  

point   regarding  the  applicability  of  the  section   to industrial  disputes  which had already  been  referred  for adjudication  and were pending with the Tribunals on  15-12- 1971 We have earlier referred to the fact that the Amendment Act  received the assent of the President on  8th  December, 1971.   But  the  Amendment  Act did  not  come  into  force immediately.   It  came  into force only  with  effect  from December  15,  1971, as per the Notification issued  by  the Central Government on 14-12-1971 under section 1. subjection 2. Miss  Indira  Jai Singh, learned counsel for  the  appellant workmen, in Civil Appeal No. 1461 of 1972, advanced the main arguments  in this regard.  Mr. Deshmukh appearing  for  the workman  in  the  other  Appeals,  adopted  her   arguments. According  to the learned counsel, section 11A  applies  not only  to references, which are made on or after  15-12-1971, but  also  to  all references already made  and  which  were pending  adjudication on that date.  It is pointed out  that section  11A has been incorporated in Chapter IV of the  Act dealing with procedure, powering and duties of  authorities. According  to  them,  section  11A  deals  with  matters  of procedure.  Applying the well known canon of interpretation, procedural  laws  apply  to pending  proceedings  also.   No right, much less any vested right, of the employers has been taken away or affected by section 11A.  Considerable  stress has  been  laid  on the use of  the  expressions  ’has  been referred   occurring   in  section  11A,   as   conclusively indicating the 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 enures  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. 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 618 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 made in  future, the powers ,given to the Tribunal, whatever they may be, can be  exercised.  Mr. M. C. Setalvad and Mr.Tarkunde,  learned counsel,  appearing  for  other  employers  ,  adopted   the contentions  of  Mr.  Damania.  A faint  argument  was  also advanced  that for section 11-A to apply, even the order  of discharge or dismissal should be one passed on or after  15- 12-1971.   But  this was not pursued, quite rightly  in  our

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 27 of 31  

opinion,  in  view of the wording of the section.   But  the main  contention  on the side of the employers is  that  the section  applies  only to disputes which  are  referred  for adjudication on or after 15-12-1971. The  learned  counsel  on both sides  have  referred  us  to several decisions where a statute or a section thereof,  has been held to be either retrospective or not.  They have also referred   us   to  certain  passages  in  text   books   on interpretation  thereof.   It is needless to  state  that  a decision  has to be given one way or other having regard  to the  scheme  of the statute and the language  used  therein. Hence we do not propose to refer to those decisions, nor  to the  passages  in the text books, as the principle  is  well established  that  a retrospective operation is  not  to  be given to a statute so as to impair an existing right.   This is  the general rule.  But the legislature is  competent  to pass a statute so as to have retrospective operation, either by  clearly  expressing such intention or by  necessary  and distinct   intendment.    The   principles   regarding   the retrospectively or otherwise of a section or a statute  have been  laid down by this Court in Garikapatti Verraya  v.  N. Subbiah   Choudhury(1)  and  Kesshavlal  Jethalal  Shah   v. Mohanlal Bhagwandas & Anr. (2). Miss Indira Jai Singh, learned counsel, placed  considerable reliance  on the use of the expressions ’has been  referred’ in section 11A as indicating that the section _Applies  even to  all references made before 15-12-1971.  In 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 (1) [1957] S.C.R.488. (2) [1968] (3) S.C.R. 623. 619 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-ection  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               Sourt; 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. 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. 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 it applicable to  such  references  ? In our opinion,  there  is  no  such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 28 of 31  

indication  in the section. In the first place, as  we  have already  pointed  out, the section itself has  been  brought into  effect only some time after the Act had  been  passed. The  Proviso  to section 11A which is as much  part  of  the section,  refers to "in any proceeding under this  section". Those  words  are  very  significant.  There  cannot   be  a "proceeding  under this section", before the section  itself has  come  into force. A proceeding under  that,section  can only  be  on  or  after  15-12-1971.  That  also  gives   an indication  that section 11A applies only to disputes  which are  referred  for adjudication after the section  has  come into force. Reliance  has  been placed by the learned  counsel  for  the workmen  on  the  decision of this Court  in  The  State  of Maharashtra  v.Vishnu  Ramachandra(1).  Section  57  of  the Bombay  Police  Act  dealt  with  the  removal  of   persons convicted of certain offences. (1) [1961] (2) S.C.R. 26. 620 The opening words of the section were "if a person has  been convicted  ; then followed the various types of offences  of which that person may have been convicted.  The Deputy  Com- missioner  of  Police, Bombay, acting  under  section  57(1) passed an order externing the respondent from the limits  of Greater  Bombay.   It was contended before the  Bombay  High Court that section 57 was prospective and could not be  made applicable  unless  the conviction on which  the  action  of externment was based, took place after the coming into force of  that  Act.  The High Court upheld  this  contention  and acquitted the accused.  The High Court had held that as  the legislature had used the present participle ’has been’.  and not the past participle in the opening part of the  section, it should be understood that the section was intended to  be used  only where a person was convicted of the offences  re- ferred to in section 57, subsequent to the coming into force 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 res-               trained  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 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. The  decision of the Court of Appeal in Barber v.  Pigden(1) 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 29 of 31  

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  against retrospective interpretation does not (1) [1973] I All E.R. 115. 621 apply  to  a  statute dealing with the  adjective  law  i.e. procedure.   Similarly  the decision of  the  Calcutta  High Court  in  Birla Brothers, Ltd. v. Modak(1) which  has  been approved in Jahiruddin v. K. D. Rathi, Factory Manager.  The Model Mills Nagpur Ltd.(2) and the decision of this Court in Shah  Bhojraj  Kuverji  Oil Mills  And  Ginning  Factory  v. Subbash  Chandra Yograj Sinha(3) do not advance the case  of the  workmen.   The decision in Keshavlal Jethalal  Shah  v. Mohanlal  Bhagwandas  &  Anr.  (supra)  relied  on  by   the employers deals with a different problem. It  must  be stated at this stage that  procedural  law  has always  been  held to operate even  retrospectively,  as  no party has a vested right in procedure.  In our opinion,  the principles  stated in In re Atlumhney v. Ex-parte  Wilson(4) are more apposite to the case on hand.  The  question  arose regarding the construction to be placed upon  section 23  of the Bankruptcy Act 1890.  The said section   was as follows:               "Where a debt has been proved upon a  debtor’s               estate under the principal Act, and such  debt               includes    interest,   or    any    pecuniary               consideration   in  lieu  of  interest,   such               interest or consideration shall, for the  pur-               poses of dividend, be calculated at a rate not               exceeding five per centum  per annum,  without               prejudice  to  the  right  of  a  creditor  to               receive  out of the estate any higher rate  of               interest to which he may be entitled after all               the debts proved in the estate have been  paid               in full". The point that arose for consideration was whether the above section  operates  so  as  to  govern  the  distribution  of dividend  under  a contract made under a  scheme  which  had taken  effect  before  the  Act  was  passed  or  came  into operation.    In   holding   that  the   section   was   not retrospective, it was observed :               "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  enact-               ment,  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". (1) I.L.R. 1948 (II) Cal. 209.   (2) [1966] (2) S.C.R. 660. (3) [1962] (2) S.C.R. 159.       (4) [1898] 2 Q.B. 547. 622 We have already expressed our view regarding the interpreta- tion 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 30 of 31  

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 altering the law by abridging the rights of the employer inasmuch as it gives power to the Tribunal for the first time to differ both on a finding of misconduct arrived at by’ an employer as well  as the  punishment imposed by him.  Hence in order to make  the section applicable even to disputes, which had been referred prior to the coming into force of the section, there  should be  such  a clear, express and manifest  indication  in  the section.  There is no such express indication.  An inference that  the section applies to proceedings, which are  already pending, can also be gathered by necessary, intendment.   In the  case  on hand, no such inference can be  drawn  as  the indications  are to the contrary.  We have already  referred to  the,  proviso  to  section  11A  which  states  ’in  any proceeding  under  this section’.  A  proceeding  under  the section  can only be after the section has come into  force. Further the section itself was brought into force some  time after the Amendment Act was passed.  These circumstances  as well  as  the  scheme of the section  and  particularly  the wording  of the Proviso indicate that section 11A  does  not apply  to disputes which had been referred prior  to  15-12- 1971.   The  section  applies only  to  disputes  which  are referred  for  adjudication  on  or  after  15-121971.    To conclude, in our opinion, section 11A has-no application  to disputes  referred prior to 15-12-1971.  Such disputes  have to  be dealt with according to the decisions of  this  Court already referred to. In  Civil Appeal No. 1461 of 1972, the  Industrial  Tribunal had   considered   only   the   question   regarding-    the applicability  of  the section to disputes  which  had  been referred  before the section came into force.  The  Tribunal has held that the section does not 623 apply to such disputes.  This view is in accordance with our decision  and  as  such is correct.  This  appeal  is  hence dismissed. In  the  three  other  orders,  which  are  the  subject  of consideration  in Civil Appeals Nos. 1995 of 1972,  1996  of 1972  and  2386 of 1972, the Labour Court, Bombay  has  held that  section 11A   applies even to disputes which had  been referred  prior  to 15-121971 This view,  according  to  our judgment, is erroneous.  The Labour Court has also-expressed some views on the construction to be placed on section 11 A. Part of the views expressed therein is correct; but the rest are  wrong.  To the extent that the decision of  the  Labour Court  in the three orders are contrary to our  decision  on both the points, they are set aside add the appeals  allowed to  that  extent.   The  Tribunal  and  the  Labour   Courts concerned  in  all  these appeals,  will  proceed  with  the adjudication  of the disputes in accordance with  the  views expressed  in this judgment.  There will be no order  as  to costs in these appeals. G. C.                               C.A. No. 1461/72 dismissed.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 31 of 31  

                         C.As. Nos. 1995-96 & 2386/72                                     allowed in part. 624