Full Judgment Text
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PETITIONER:
WORKMEN OF HINDUSTAN STEEL LTD AND ANR
Vs.
RESPONDENT:
HINDUSTAN STEEL LTD. AND ORS.
DATE OF JUDGMENT12/12/1984
BENCH:
DESAI, D.A.
BENCH:
DESAI, D.A.
KHALID, V. (J)
CITATION:
1985 AIR 251 1985 SCR (2) 428
1984 SCC Supl. 554 1984 SCALE (2)927
CITATOR INFO :
RF 1985 SC 722 (4)
R 1986 SC1571 (58,67)
E&F 1991 SC 101 (5,20,88,174,195,223,239,263,2
ACT:
Industrial Disputes Act 1947 Schedule 2 Item No. 3
and Schedule 2 Item 6.
Public Scctor Undertaking-Standing Order No. 32-
General Manager empowered to dismiss workman without holding
an enquiry if ’inexpedient or against the interests of
security to continue to employ the workman-Such Standing
Order whether violative of the principles of natural
justice-Dismissal of employee without holding domestic
enquiry under the Standing Order Whether valid, legal and
permissible.
Constitution of India 1950 Article 311(Z) provisos (b)
and (c).
Power of dismiss civil servant without holding
inquiry-When arises- Introduction of safeguard-That
authority must specify reasons why not reasonable
practicable to holding inquiry.
Practice and Procedure-Labour disputes-Adjudication
of-Dismissal of employee-Decision of employer to dispense
with domestic enquiry questioned- Deputy of employer to
satisfy the court that holding of enquiry would be counter
productive or cause irreparable and irreversible damage.
HEADNOTE:
Standing Order 31 of the 1st Respondent/Public Sector
Undertaking prescribed a detailed procedure for dealing with
cases of misconduct; and for imposing major penalty, the
employer had to draw up a chargesheet and give an
opportunity to the delinquent workman to make his
representation within 7 days. If the allegations were
controverted, an enquiry had to be held by an officer to be
nominated by the management and in such an enquiry
reasonable opportunity of explaining and defending the
alleged misconduct had to be given to the workman.
Suspension of the delinquent workman pending enquiry was
also permitted. At the end of the enquiry, if the charges
were held proved, and it was provisionally decided to impose
a major penalty, tho delinquent workman bad to be afforded a
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further reasonable opportunity to represent why the penalty
should not be imposed on him.
Standing Order 32 provided for a special procedure in
case of a workman was convicted for a criminal offence in a
court of law or where the General Manager was satisfied for
reasons to be recorded in writing that it was inexpedient or
against the interests of security to continue to employ the
workmen’, viz., the workman could be removed or dismissed
from service without following the procedure laid down in
Standing Order No. 31.
429
The appellant an Assistant in the 1st Respondent-
undertaking was A removed from service on the ground that it
was no longer expedient to employ him. The management
dispensed with the departmental enquiry, after looking into
the secret report of one of their officers that the
appellant had misbehaved with the wife of an employee and
that a complaint in respect thereof had been lodged with the
police.
In the reference to the Industrial Tribunal, the
Tribunal held that as the employer dispensed with the
disciplinary enquiry in exercise of the power conferred by
Standing Order 32, it could not be said that the dismissal
from service was not justified, and that if there were
allegations of misconduct, the employer was quite competent
to pass an order of removal from service without holding any
enquiry any in view of the provisions contained in Standing
Order 32, and rejected the reference.
Allowing the appeal, by the employee to this Court,
^
HELD: 1. The reasons for dispensing with the enquiry
do not spell out what was the nature of the misconduct
alleged to have been committed by the appellant and what
prompted the General Manager to dispense with the enquiry.
[437D]
2. As there was no justification for dispensing with
the enquiry, imposition of penaly of dismissal without the
disciplinary enquiry as contemplated by Standing Order 31 is
illegal and invalid. [437F]
3 The respondent shall recall and cancel the order
dated August 24, 1970 removing the appellant from service
and reinstate him and on the same day the appellant shall
tender resignation of his post which shall be accepted by
the respondent. The respondent shall pay as and by way of
back wages and future wages, a sum of Rs. l.5 lakhs to the
appellant within 2 months which shall be spread over from
year to year commencing from the date of removal from
service. The appellant shall be entitled to relief under
Section 89 of the Income-tax Act, 1961 for which he shall
make the necessary application to the appropriate authority.
who would consider granting of relief. [438C-D;F] F
4. Where an order casts a stigma or affects
livelihood, before making the order, principles of natural
justice in a reasonable opportunity to present one s case
and controvert the adverse evidence must have full play.
Even he Constitution which permits dispensing with the
inquiry under Article 311 (2) a safeguard is introduced that
the concerned authority must specify reasons for its
decision why it was not reasonably practicable to hold the
inquiry. [435 A-B]
5. (i) Standing Order 32, nowhere obligates the
General Manager to record reasons for dispensing with the
inquiry as prescribed by Standing Order 31. On the contrary,
the language of Standing Order 32 enjoins a duty upon the
General Manager to record reasons for his satisfaction why
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it was inexpedient ar against the interest of the security
of the State to continue to employ the workman. Ressons for
dispensing with the enquiry an reasons for not continuing to
employ the workman stand, wholly apart from each other.
[435C-D]
430
(ii) A Standing Order which confers such arbitrary.
uncanalised and drastic power to dismiss an employee by
merely stating that it is inexpedient or against the
interest of security to continue to employ the workman is
violative of the basis c requirement of natural justice, as
tho General Manger can impose penalty of such a drastic
nature as to affect the livelihood and put a stigma on the
character of the workman without recording reasons why
disciplinary enquiry is dispensed with and, what was the
misconduct 13 alleged against the employee. [435D-E]
6 When the decision of the employer to dispense with
the enquiry is questioned, the employer must be in a
position to satisfy the Court that holding of the enquiry
will be either counter-productive or may cause such
irreparable and irreversible damage which in the facts and
circumstances of the case need not be suffered- This minimum
requirement cannot and should not be dispensed with. [436B-
C]
L. Michael and Anr. v. M/s. Johnston Pumps India Ltd
[1975] 3 SCR 489, referred to.
7. It is time for the 1st respondent-public sector
undertaking to recast Standing Order 32, and to bring it in
tune with the philosophy of the Constitution failing which
the vires of the said standing Order would have to be
examined in an appropriate proceeding. [438D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1 1 37
of 1981 .
From the Award dated 22nd December, 1978 of the 9th
Industrial Tribunal, West Bengal in Industrial Case No. X-
7/74 (G.O. No. 8231-IR-IR-IOL-3 (K)/73.
R.K. Garg, P.K. Chakravarti and A K. Ganguli for
the Appellants.
G.B. Pai, S. Chatterjee, Altaf Ahmed and A K Panda for
the Respondents.
The Judgment of the Court was delivered by
DESAI, J. In exercise of the power conferred by Sec.
10 of the Industrial Disputes Act, 1947, the Government of
the State of West Bengal as an appropriate Government
referred the following dispute to the Ninth Industrial
Tribunal, West Bengal for adjudication. The reference reads
as under:
"Whether the termination of services of Shri Manas
Kumar Mukherjee is justified ? To what relief, if any is he
entitled ?"
Hindustan Steel Ltd. (’Employer’ for short)
dismissed Manas Kumar Mukherjee(’Workman’ for short)
without holding any inquiry
431
and without giving any opportunity to the workman to
question or A correct the allegation of misconduct levelled
against him and in violation of principles of natural
justice. The employer tried to sustain its action by
invoking its powers under Standing Order 32 of the certified
Standing Orders of the Hindustan Steel Ltd. S.O. 32 reads as
under: B
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"32. Special Procedure in certain cases.
Where a workman has been convicted for a criminal
offence in a Court of Law or where to General Manager
is satisfied, for reasons to be recorded in writing,
that it is inexpedient or against the interests of
security to continue to employ the workman, the workman
may be removed or dismissed from service without
following the procedure laid down in Standing Order
31."
S.O. 31 prescribed detailed procedure for dealing with
cases of misconduct. Briefly stated, the procedure
prescribed in S.O. 31 for imposing major penalty is that the
employer has to draw up a charge-sheet and give an
opportunity to the delinquent workman to make his
representation within seven days. If the allegations are
controverted, an enquiry has to be held by an officer to be
nominated by the management and in such an enquiry
reasonable opportunity of explaining and defending the
alleged misconduct must be given to the workman. The
delinquent workman may also be given the assistance of a
fellow employee. The procedure also permits suspension of
the delinquent workman pending enquiry. At the end of the
enquiry. if the charges are held proved, and it is
provisionally decided to impose major penalty, the
delinquent workman has to be afforded a further resalable
opportunity to represent why the penalty should not be
imposed on him. According to the employer it can dispense
with such an enquiry in exercise of the power conferred by
S.O. 32. The scope and ambit of S.O. 32, will be presently
examined.
The Tribunal held that as the employer dispensed with
the disciplinary enquiry in exercise of the power conferred
by S.O. 32, it cannot be said that dismissal from service
was not justified. The Tribunal observed that even if there
were allegations of misconduct, the employer was quite
competent to pass an order of removal from service without
holding any enquiry in view of the provision con-
432
tained in S.O. 32- The Tribunal concluded that the employer
accused the workman of committing misconduct and proceeded
to pass the order of removal from service without holding
any enquiry into the allegations of misconduct, it cannot be
said to be a colorable exercise of power and the workman
would not be entitled to any relief. The Tribunal
accordingly rejected the reference. Hence this appeal by
special leave.
The only question that must engage our attention is
what is the scope and ambit of S.O 32. It has already been
extracted. Upon its true construction the standing Order
does not provide that for reasons to be recorded in writing,
an enquiry into misconduct can be dispensed with. S.O. 32
clearly confers power upon the General Manager that on his
being satisfied that it is inexpedient or against the
interest of security to continue to employ the workman, then
for reasons to be recorded in writing the workman may be
removed or dismissed from service without following the
procedure laid down in Standing Order 31. This archaic
standing order reminiscent of the days of hire and fire is
relied upon by a public sector undertaking to sustain an
utterly unsustainable order and to justify an action taken
in violation of the principles of natural justice, an action
which has the- effect of denying livelihood and casting a
stigma. One can appreciate-that in a given situation, and
enquiry into misconduct may be counter-productive.
Constitution itself contemplates such a situation when it
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enumerates siltations in which a punishment of dismissal,
removal or reduction in rank can be imposed without holding
a disciplinary enquiry. Let it be extracted:
"311. Dismissal, removal or reduction in rank of
persons employed in civil capacities under the Union or a
State-
( 1) ... ... ... ... ... ... ... ... ... ... ...
(2) No such person as aforesaid/shall be
dismissed or removed or reduced in rank except after an
inquiry in which he has been informed of the charges
against him and given a reasonable opportunity of being
heard in respect of those charges:
... ... ... ... ... ... ... ... ...
... ... ... ... ... ... ... ... ...
433
Provided further that this clause shall not
apply- A
(a) where a person is dismissed or removed or reduced
in rank on the ground ’ of conduct which has led to his
conviction on a criminal charge: or
(b) where the authority empowered to dismiss or
remove a person or to reduce him in rank is satisfied
that for some reason, to be recorded by that authority
in writing, it is not reasonably practicable to hold
such inquiry; or
(c) where the President or the Governor as the case
may be, is satisfied that in the interest of the
security of the State it is not expedient to hold such
inquiry."
A bare perusal of the situations and contingencies in
which a disciplinary enquiry affording a reasonable
opportunity of being heard before imposing the enumerated
penalty can be dispensed with will clearly show that the
power is not given to dismiss remove or reduce in rank the
delinquent worker but the power conferred by the afore-
mentioned provision is to dispense with an enquiry before
imposing major penalty. Sub-art- (3) of Art- 311 provides
that ’if, in respect of any such person as aforesaid, a
question arises whether- it is reasonably practicable to
hold such inquiry as is referred to in clause (2). the
decision thereon of the authority empowered to dismiss or
remove such person or to reduce him in rank shall be final.’
Now the three situations contemplated by the provision arc
such that holding of an enquiry would be counter-productive.
Where the penalty of dismissal, removal or reduction in rank
is to be imposed on the ground of a conduct which has led
to his conviction on a criminal charge, obviously, the
enquiry will be superfluous or a repeat performance because
a judicial tribunal has held the charges proved. But where
the authority empowered to impose the penalty is satisfied
for reasons to be recorded by it in writing to dispense with
an enquiry, the reasons so recorded must ex-facie show that
it was not reasonably practicable to hold a disciplinary
enquiry. Similarly, where in the interest of the security of
the State, the President or the Governor, as the case may
be, is satisfied that it is not expedient to hold such
enquiry, the same can be dispensed with. In the last
mentioned situation, the highest executive of the country,
the President and the highest executive of State the
Governor alone is entitled to dispense with the inquiry, if
it is satisfied that in the interest of the security of the
State, it is not
434
expedient to hold such enquiry Dispensing with the enquiry
in the first and third situation does not present a
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difficulty because in the first situation there is a
conviction by a criminal court and in the third situation,
the highest executive in the Centre and the State is
empowered to dispense with the enquiry. It is in the second
fact situation that one must evaluate the width of
discretionary power to dispense with enquiry. The appointing
authority is invested with power to dispense with enquiry.
And in case of persons belonging to Class IV services, the
appointing authority may be some-one in the lower
administrative hierarchy and such an officer is invested
with such draconian powers. Where such a power is conferred,
on an authority entitled to impose penalty of dismissal or
removal or reduction in rank, before it can dispense with
the inquiry, it must be satisfied for reasons to be recorded
in writing that it is not reasonably practicable to hold
such an enquiry. Power to dispense with enquiry is conferred
for a purpose and to effectuate the purpose power can be
exercised. But power is hedged in with a condition of
setting down reasons in writing why power is exercised.
Obviously therefore the reasons which would permit exercise
of power must be such as would clearly spell out that the
inquiry if held would be counter-productive. The duty to
specify by reasons the satisfaction for holding that the
inquiry was not reasonably practicable cannot be dispensed
with. The reasons must be germane to the issue and would be
subject to a limited-judicial review. Undoubtedly Sub-art.
(3) of Art. 311 provides that the decision of the authority
in this behalf is final. This only mean that the Court
cannot inquire into adequacy or sufficiency of reasons. But
if the reasons ex-facie are not germane to the issue namely
of dispensing with enquiry the Court in a petition for a
writ of certiorari can always examine reasons ex-facie and
if they are not germane to the issue record a finding that
the pre-requisite for exercise of power having not been
satisfied, the exercise of power was bad or Without
jurisdiction. If the court is satisfied that the reasons
which prompted the concerned authority to record a finding
that it was not reasonably practicable to hold the enquiry,
obviously the satisfaction would be a veneer to dispense
with the inquiry and the court may reject the same. What is
obligatory is to specify the reasons for the satisfaction of
the authority that it was not reasonably practicable to hold
such an inquiry. Once the reasons are specified and are
certainly subject to limited judicial review as in a writ
for certiorari, the court would examine whether the reasons
were germane to the issue or was merely a cloak, device or a
pretence to dispense with the inquiry
435
and to impose the penalty. Let it not be forgotten what is
laid down A by a catena of decisions that where an order
casts a stigma or affects livelihood before making the
order, principles of natural justice namely a reasonable
opportunity to present one’s case and controvert the adverse
evidence must have full play Thus even where the
Constitution permits dispensing with the inquiry, a
safeguard is introduced that the concerned authority must
specify reasons for its decision why it was not reasonably
practicable to hold the inquiry.
Turning to S.O 32, it nowhere obligates the General
Manager to record reasons for dispensing with the inquiry as
prescribed by S.O. 31. On the contrary, the language of S O.
32 enjoins a duty upon the General Manager to record reasons
for his satisfaction why it was inexpedient or against the
interest of the security of the State to continue to employ
the workman. Reasons for dispensing with the inquiry and
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reasons for not continuing to employ the workman stand
wholly apart from each other. A Standing Order which confers
such arbitrary, uncanalised and drastic power to dismiss an
employee by merely stating that it is inexpedient or against
the interest of the security to continue to employ the
workman are violative of the basic requirement of natural
justice inasmuch as that the General Manager can impose
penalty of such a drastic nature as to affect the livelihood
and put a stigma on the character of the workman without
recording reasons why disciplinary inquiry is dispensed with
and what was the misconduct alleged against the employee. It
is time for such a public sector undertaking as Hindustan
Steel Ltd to recast S.O. 32 and to bring it in tune with the
philosophy of the Constitution failing which it being other
authority and therefore a State under Art. 12 in an
appropriate proceeding, the vires of S O. 32 will have to be
examined. It is not necessary to do so in the present case
because even on the terms of S.O. 32, the order made by the
General Manager is unsustainable.
The view we are taking gets some support from a
decision of this Court. In a slightly different situation,
this Court in L. Michael & Anr. v. M/s Johnston Pumps India
Ltd ll) observed that discharge simplicitor on the ground of
loss of confidence when questioned before a court of law on
the ground that it was a colorable exercise of power or it
is a mala fide action, the employer must disclose that he
has acted in good faith and for good and objective reasons.
Mere ipse dixit of the employer in such a situation is of no
significance. Where a disciplinary enquiry is dispensed with
on the specious plea that it was not reasonable practicable
to hold one and a penalty
(1) [1975] 3 S.C.R.489.
436
of dismissal or removal from service is imposed, if the same
is challenged on the ground that it was a colorable exercise
of power or mala fide action, the same situation would
emerge and the employer must satisfy the Court the good and
objective reasons showing both proof of misconduct and valid
and objective reasons for dispensing with the enquiry. In
our opinion, when the decision of the employer to dispense
with enquiry is questioned, the employer must be in a
position to satisfy the Court that holding, of the enquiry
will be either counter-productive or may cause such
ireparable and irreversible damage which in the facts and
circumstances of the case need not be suffered. This minimum
requirement cannot and should not be dispensed with to
control wide discretionary power and to guard against the
drastic power to inflict such a heavy punishment as denial
of livelihood and casting a stigma without giving the
slightest opportunity to the employee to controvert the
allegation and even without letting him know what is his
misconduct.
Turning to the facts of the case, a bare perusal of
the impugned order is both instructive and provides ample
material for pointing out how the drastic power can be
arbitrarily exercised without keeping in view the
prerequisite to be satisfied for exercise of the power. The
order reads as under:
" HINDUSTAN STEEL LIMITED
DURGAPUR STEEL PLANT
Ref. No. Order/PF/MN 1215
24th August, 1970
O R D E R
Having considered the matter fully, I am
satisfied that it is no longer expedient to employ Shri
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Manas Mukharjee, Assistant, Order Department, Durgapur
Steel Plant any further.
It is therefore ordered that Shri Manas Mukherjee
be removed from the service of the Company with effect
from 24. 8. 1970.
He is allowed/three months’ salary which he may
collect from the cash section of the Finance Department
by 26.8.1970.
Sd/
Maj. ,Gon.
Director Ineharge.
437
The expression ’no longer expedient’ as used in the
order A clearly spells out the fact that some enquiry was
started. What prompted the General Manager to close the
enquiry, one cannot gather from the order- But our attention
was invited to Ann. R-2 which according to the respondents
specifies the reasons recorded in writing for dispensing
with the enquiry. Briefly, in Ann. R-2, it is stated that
the authority concerned has looked into the secret . report
sent to him by Shri P S- Rao Naidu, Planning & Progress
Officer, Order Deptt. and the comments of DGM thereon. He
has also stated that he has looked into- the report received
from Sr. AO (E) and the copy of the complaint lodged by Smt.
Gita Majumdar, wife of an employee in the plant with the
police. These recitals have been considered sufficient to
dispense with tho enquiry. If Smt. Gita Majurndat did file
a report with the police making accusation against the
appellant, she would have to be examined in the criminal
case. She could have been more conveniently called before
the enquiry officer, and the secret reports remain secret.
The reason for dispensing with the enquiry do not spell out
what was the nature of the misconduct alleged to have been
committed by the appellant and what prompted the General
Manager to dispense with tho enquiry. It is difficult to
hold that the recitals of the order spell out some objective
reasons and the reasons were germane to the question of
dispensing with the enquiry - Frankly speaking, we are not
satisfied in this case that for valid, objective and
relevant reasons, the enquiry was dispensed with.
An attempt was made to urge that some annexures to the
counter-affidavit would show certain complaints received
against; the appellant. We decline to look into them as they
were not given to the appellant in the course of enquiry to
meet or explain the same. We consider them irrelevant at
this stage,
Once we hold that there was DO justification for
dispensing with the enquiry, imposition of penalty of
dismissal without disciplinary enquiry as contemplated by S-
O 31 would be illegal and invalid.
Two options are thereupon open to us. One would be to
permit the General Manager, if he is so minded to hold the
disciplinary enquiry and come to his own decision and the
second would be to remit the matter to the Labour Court to
permit the respondent-employer if it is entitled in law to
substantiate the charges of misconduct before the Tribunal.
The order removing the appellant from service was
passed way back on August 24, 1970. More than 14 years have
rolled by. H
438
In such a situation, to start the whole thing de nevo would
neither be of any help to the appellant nor would be
conducive to the maintenance of discipline in the plant.
Undoubtedly, once a workman is removed from service a stigma
attaches to him, and if the order is held to be not in
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consonance with the provisions of the relevant standing
orders at any rate, the stigma has to be removed
Having given the matter our anxious consideration, we
dispose of the appeal as under
The respondent shall recall and cancel the order
dated August 24, 1970 removing the appellant from service
and reinstate him and on the same day the appellant shall
tender resignation of his post which shall be accepted by
the respondent. The respondent shall pay as and by way of
back wages and future wages, a sum of Rs. 1,50,000 to the
appellant within 2 months from today to be spread over from
year to year commencing from the date of removal from
service. We give one more opportunity to the respondent to
recast its Standing Order 32 within a period of two weeks to
be brought at best in conformity with the second proviso to
sub-art. (2) of Art. 311 failing which its validity will be
re-examined by this Court.
The amount of Rs. 1, 50,000 directed to be paid to the
appellant by the respondent comprises backwages, and all
other allowances admissible to him from year to year from
1970 upto the end of 1984. The amount shall be spread over
from year to year. If because of the lump sum payment as
directed herein the respondent is required to deduct Income-
tax as enjoined by Sec. 192 of the y Income-tax Act, 1961,
the appellant shall be entitled to relief under Sec. 89 of
the Income Tax Act, 1961. For this purpose, the appellant
shall make an application as required by Sec. 89 read with
Rule 21A to the appropriate authority, who would consider
granting of relief to the appellant under Sec. 89 of the
Income-tax Act. The proceeding in this behalf shall be
disposed of within a period of six months. The appeal is
disposed of in these terms with no order as to cost.
N.V.K. Appeal allowed.
439