Hon'ble Supreme Court in State of Uttarakhand v. Sureshwati, (2021 SCC Online SC 34) reiterated important principles governing realm of enquiry into employee's misconduct and ensuing employer's disciplinary action.
Long story short:
Sureshwati ("Respondent") was employed as an assistant teacher in an unaided school ("School") at Haridwar during July 1993 to May 1994. From July 1994 onwards, she worked as a clerk.
It is Respondent's case that she had been in the employment of the School from July 1994 till March 2006, when she was illegally terminated from employment of School without holding any enquiry or granting her personal hearing. She contended that since the work was of permanent nature, she was entitled to re-instatement with continuity of service.
Additional District Education Officer (Basic), Haridwar conducted an inquiry on Respondent's complaint. Inspection of records revealed that the Respondent neither worked in the School from July 1997 onwards nor submitted any leave application. On account of her continuous absence, the School engaged another clerk in July 2002. The Respondent never made any grievance about her alleged termination till 2006, which was made only after the School started receiving grants-in-aid from the State and came to be governed by the Uttaranchal School Education Act, 2006.
On August 22, 2016, Labour Court answered the reference against the Respondent because:
i. her continuous absence in the School, since July 1997, was proved;
ii. she failed to discharge the onus of her employment till March 2006 or produce any evidence to prove that she had been terminated in March 2006;
iii. her contention of illegal termination of service was unreliable, devoid of any truth; and
iv. she concealed material facts and did not approach the Court with clean hands.
Respondent challenged the award by filing a writ petition before Hon'ble Uttarakhand High Court. The petition was allowed on the ground that the employer failed to make an enquiry or initiate any disciplinary proceedings for abandonment of service. The State of Uttarakhand preferred a special leave petition against this judgment before Hon'ble Supreme Court.
Hon'ble Apex Court allowed the appeal and set aside judgment of High Court amongst others on following grounds:
i. Respondent failed to produce any evidence by calling for School's attendance register, accounts and salary slips whatsoever to substantiate her continuous employment till March 2006;
ii. School established that Respondent had abandoned her service in 1997 and never reported back for work; and
iii. Respondent failed to prove that she worked for 240 days during the year preceding alleged termination of her services; and
iv. The High Court disposed of the writ petition without adverting to the evidence and on sole ground that School failed to conduct a disciplinary enquiry before discharging the Respondent.
To support its decision, Hon'ble Supreme Court reiterated the broad principles governing realm of conducting an enquiry set out in Workmen of Firestone Tyre & Rubber Co. of India (P) Ltd. v. The Management of Firestone Tyre & Rubber Co. of India (P) Ltd and Others ((1973) 1 SCC 813) and reproduced below:
"(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 a 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.1 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, had to give an opportunity 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 case2. On the other 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 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.3
(6) The Tribunal gets jurisdiction to consider the evidence placed before it for the first time in justification 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 Management of Panitole Tea Estate v. Workmen4 within the judicial decision of a Labour Court or Tribunal." (emphasis supplied)
To sum it up:
Employer conducts enquiry and concludes existence of misconduct: In such case, the tribunal is empowered to re-apprise the evidence and arrive at its own conclusion one way or the other. In doing so, the tribunal can (i) hold that the domestic enquiry was proper or defective; and/or (ii) agree or disagree with the employer's finding of a misconduct and in a proper case hold that no misconduct is proved; and/or (iii) where misconduct is proved, the disciplinary action is proportionate or disproportionate to the misconduct committed.
Disciplinary action carried out without enquiry or defective inquiry: In such case, the tribunal should not straightaway direct the reinstatement of a discharged or dismissed employee but rather satisfy itself about the validity of the disciplinary action. The tribunal must allow both, the employer to justify his action and the employee to negate employer's justification. Thereafter, the tribunal should consider the evidence adduced for the first time by the parties so as to (i) agree or disagree with the employer's finding of a misconduct and in a proper case hold that no misconduct is proved; and/or (ii) where misconduct is proved, the disciplinary action is disproportionate or commensurate to the misconduct committed.
1. The principle emanates from judgment of Delhi Cloth and General Mills Co. v. Ludh Budh Singh ((1972) 1 SCC 595):
"61.... (1) If no domestic enquiry had been held by the management, or if the management makes it clear that it does not rely upon any domestic enquiry that may have been held by it, it is entitled to straightway adduce evidence before the Tribunal justifying its action. The Tribunal is bound to consider that evidence so adduced before it, on merits, and give a decision thereon. In such a case, it is not necessary for the Tribunal to consider the validity of the domestic enquiry as the employer himself does not rely on it.
(3) When the management relies on the enquiry conducted by it, and also simultaneously adduces evidence before the Tribunal, without prejudice to its plea that the enquiry proceedings are proper, it is the duty of the Tribunal, in the first instance, to consider whether the enquiry proceedings conducted by the management, are valid and proper. If the Tribunal is satisfied that the enquiry proceedings have been held properly and are valid, the question of considering the evidence adduced before it on merits, no longer survives. It is only when the Tribunal holds that the enquiry proceedings have not been properly held, that it derives jurisdiction to deal with the merits of the dispute and in such a case it has to consider the evidence adduced before it by the management and decide the matter on the basis of such evidence...."
3. The principle emanates from judgment of Workmen of the Motipur Sugar Factory Private Ltd. v. Motipur Sugar Factory (AIR 1965 SC 1803):
"11....In either case 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 in our opinion stands on the same 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."
4. (1971) 1 SCC 742.
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