Full Judgment Text
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PETITIONER:
THE UNITED PLANTERS ASSOCIATIONOF SOUTHERN INDIA
Vs.
RESPONDENT:
K.G. SANGAMESWARAN & ANR.
DATE OF JUDGMENT: 06/03/1997
BENCH:
S.C. AGRAWAL, S. SAGHIR AHMAD
ACT:
HEADNOTE:
JUDGMENT:
J D G M E N T
S. SAGHIR AHMAD, J.
Leave granted.
The respondent, K.G Sangameswaran, who was employed
with the appellant as an Accountant was dismissed from
service by order dated 5.7.1934. This order was passed for
serious misconduct including misappropriation on the part
of and bu the respondent during the period 1986-87 to 1992-
93, for which criminal proceedings were also initiated
against him.
2. This order was challenged by the respondent before the
Appellate Authority under section 41(2) of the Tamil Nadu
shops & Establishments Act, 1947 (for short, the Act). The
Appellate Authority by its judgment dated 12.2.1996, allowed
the appeal set aside the order of dismissal and directed
reinstatement of the respondent with full back-wages. It is
against this judgment that the present appeal has been
filed.
3. The order of dismissal by the appellant was set aside b
the Appellate Authority (Respondent No. 2) , principally on
the ground that the order being an order of dismissal, could
not have been passed under section 41(1) of the Act without
first holding a domestic enquiry into the allegations made
against him.
4. The appellant in their written statement filed before
the Appellate Authority pleaded that the Act was not
applicable to the respondent and consequently the appeal
itself was not maintainable. It was also pleaded that when
he charge-memo was issued to the respondent. he filed his
reply dated 24.1.1994 in which he denied the charges and
made request for perusal of records before submitting his
further reply. The appellant by their subsequent letter
dated 17.2.1994 wanted the details of the documents which
the respondent by his letter dated 20.2.1994 is said to have
pleaded not guilty and is further said to have stated that
no useful purpose would be served bu participating in the
enquiry as the enquiry was bound to be biased. The
appellant consequently proceeded to dismiss the respondent
form service after perusal of the documents and other
relevant records indicating misappropriation and misconduct
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by the respondent.
5. In view of the controversy raised before the appellate
Authority two issues were framed as under :-
1.Whether the respondent/management
and the appellant are covered under
the TNSE Act 1947 ?
2. Whether the respondent followed
the provisions of section 41(1)
before dismissing the appellant ?
6. On issue No.1, the finding recorded by the Appellate
Authority was that since the United Planters Association of
southern India which is appellant before us was declared as
a commercial establishment by the Tamil Nadu Government vide
its Notification in G.O.Ms. No. 6265 dated 20.12.1948 issued
under Section 2(3) of the Act it would be governed by the
Act. it was further held that since the respondent was
employed as an Accountant in that establishment he would
fall within the definition of ’person employed" as set out
in section 2(12) of the Act. on issue No.2 it was found by
the Appellant Authority that the respondent was dismissed
from service without following the provisions of section
41(1) of the act and without holding the domestic enquiry.
7. Mr. G.B Pai, learned senior counsel appearing for the
appellant did not seriously dispute the findings on issue
No.1 but he vehemently argued that the finding recorded by
the appellate Authority on issue No.2 was wholly erroneous.
inasmuch as the order by which the services of the
respondent were brought to an end was not an order of
dismissal and therefore there was no requirement to hold a
domestic enquiry. It was contended that under section 41(2)
an appeal would lie only on the ground that there was no
reasonable course for dispensing with the service or that he
had not been guilty of misconduct as held by the employer.
In a case of simple termination an appeal would not fall
within any of the aforesaid grounds.
8. The nature of the order whether it is innocuous or
punitive is exhibited by the contents of the order. The
order dated 5.7.1994 by which the respondent was dismissed
from service, recites alia, as under:-
"1.................................
2. on a consideration of the
contents of the letters referred to
above as well as the relevant
evidence (viz.) documents referred
to in the Notice dated 18th January
1994, it is clear that you are
guilty of the misconducts alleged
against you and it is found
accordingly. considering the
gravity of the misconducts
committed by you, particularly, in
the light of the position of trust
and responsibility that you hold as
Accountant. It is decided to
dismiss you form service forthwith.
3..................................
4. It may be noted that this is
without prejudice to the right of
the Association to pursue criminal
proceeding s initiated against you
as well as to recover the amounts
lost by misappropriation and other
acts committed by you as also due
to your gross and criminal
negligence. It may also be noted
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that in view of the nature of the
misconducts committed bu you and
the loss suffered by the
Association. consequent to the same
you will not be entitled to any
gratuity from the Association."
This order ex-facie is punitive in nature as the
respondent has been held guilty of misconduct including
misappropriation allegedly committed but him. The order is
not an innocuous order and cannot be treated as an order by
which services of the respondent were simply terminated. He
was in fact dismissed from service.
9. It was next contended by the counsel for the appellant
that the appellate Authority before whom an application to
produce the evidence was filed should have allowed the
charges levelled against the respondent as the Appellate
Authority has jurisdiction and power to record evidence at
the appellate stage as provided by section 41(2) read with
Rule 9(3) or this Tamil Nadu shops a Establishments Rules
1943 learned counsel for the respondent has on the contrary
contended that if an opportunity of hearing was not given to
the respondent at the initial stage during the domestic
enquiry the defect cannot be cured by giving him that
opportunity at the appellate stage and therefore even if
application to lead fresh evidence was not disposed of by
the Appellate Authority it would not vitiate the order of
that authority.
10. Before construing the provisions of section 14 and Rule
9 it may be stated that it has always been the philosophy of
industrial jurisprudence that if the domestic enquiry held
bu the employer was defective, deficient incomplete or not
held at all the Tribunal, instead of remanding the case to
the enquiry officer for holding the inquiry de novo would
itself require the parties to produce their evidence do as
to decide whether the charge for which action was taken
against the employee were established or not. The pending
proceedings keeps the employer and further of paramount
importance that such proceedings should come to an end at
the earliest so to maintain industrial peace and cordial
relations between the management and the labour.
11. This court in M/s Indian Iron & steel co. Ltd. vs.
their Workmen. AIR 1958 SC 130 had laid down that in case of
dismissal for misconduct the Tribunal does not act as a
court of appeal and it is not within its jurisdiction to
substitute its own judgment for that of the management and
that it would interfere only when there was want of good
faith victimisation or unfair labour practice etc. on the
part of the management. This decision was followed in Punjab
National bank Ltd. vs. Its workmen,(1960) 1 SCR 806.
12. In M/s Bharat Sugar mills Ltd. vs. Jai Singh, (1962) 3
SCR 684 the question of allowing an employer to adduce
evidence before the Tribunal justifying its action (after
the domestic enquiry was found to be defective) was
considered and it was hold that in such a situation it would
be appropriate to allow the partied to lead evidence so that
the Tribunal itself may be satisfied about the misconduct
imputes to the employee. The decision of the Labour
Appellate Tribunal itself may be satisfied about the
misconduct imputed to the employee. the decision of the
Labour Appellate Tribunal in Buckingham and Carnatic co Ltd.
vs. Workers of the company, 1952 Lab AC 490, in which it was
laid down that evidence can be adduced even for the first
time at that stage was approved. This question was again
considered in management of Ritz vs. Its Workman (1963) 3
SCR 461 and the law laid down earlier was reiterated. To the
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same effect is the decision of this court in Khardah co.
Ltd. vs. Their workmen, (1964) 3 SCR 506 and workmen of
Motipur sugar Factory (p) Ltd. vs. Motipur sugar Factory,
(1965) 3 SCR 588. In state Bank of India vs. R.K. Jain &
ors. (1972) 1 SCR 755 and in Delhi cloth & General mills
company Ltd. vs. Ludh Budh Singh ,(1972) 1 Labour Law
journal 180 SC it was again laid down that where an
employer failed to make an enquiry before dismissing a
workman it would be open to him to produce all relevant
evidence before the Tribunal to show that the action was
justified.
13. Provisions of the Industrial Disputes Act were. In the
meantime, amended and on the recommendation of the
International Labour Organisation section 11A was introduced
in the Act by the parliament wherein it was provided that
the Tribunal had not only the power to set aside the order
of dismissal and direct reinstatement of the workmen it had
also the power to award lesser punishment. The proviso to
section 11A, However, provided that the Tribunal would rely
only on the material already on record and shall not take
fresh evidence.
14. In view of the provisions contained in section 11A, a
question arose in The workman of M/s. Firestone Tyre &
Rubber co. of India pvt. Ltd. vs. The management & ors. AIR
1973 SC 1227 as to the jurisdiction of the Tribunal to take
evidence to decide the merit of the charges and it was laid
down that in spite of the prohibition contained in the
proviso to section 11A the Tribunal in order to satisfy
itself as to the guilt of the persons charged had the
jurisdiction to take the evidence and that the law in that
regard had not undergone any change. It was pointed out that
if the domestic enquiry had been held by the employer the
Tribunal will examine the merits of that enquiry and would
confine itself to the evidence already on record. But where
the enquiry was defective the Tribunal could still take
fresh evidence to decide the merits of the charges.
15. This decision has since been followed by this court in
a number of cases including The East India Hotels vs. Their
Workman & ors. AIR 1974 SC 696; The cooper Engineering Ltd.
vs. P.P. Mundhe AIR 1975 SC 1900; Ruston & Hornsby Ltd. vs.
T.B. Kadam. AIR 1975 SC 2025, and in a recent decision in
Bharat Forge co. Ltd. vs. A.B. Zodge & Anr.,(1996) 4 SCC
374, in which it was again reiterated that the parties have
the right to adduce evidence before the Tribunal and the
Tribunal can, on the basis of such evidence, come to its own
conclusion as to the guilt of the employee.
16. we may now proceed to consider the provisions of
section 41 and Rule 9 which are quoted below :-
"Section 41. Notice of dismissal-
(1) No employer shall dispense with
the services of a not less than six
months except for a person at least
one month’s except for reasonable
cause and without giving such lieu
of such notice provided however
that such notice shall not be
necessary where the services of
such persons are dispensed with on
satisfactory evidence recorded at
an enquiry held for purpose.
(2) The person employes shall have
a right to appeal to such authority
and within such time as may
prescribed either on the ground
that there was no reasonable cause
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for dispensing with his services or
on the ground that he had not been
guilty of misconduct as held by the
employer.
(3) The decision of the appellate
authority shall be final and
binding on both the employer and
the person employed."
Rule 9. Appeals under section 41(1)
- The deputy commissioners of
Labour in their respective areas
assigned to them by the
commissioner of Labour shall be the
authorities for the purposes of
hearing appeals under sub-section
(2) of section 41 of the said Act.
Provided that the commissioner of
Labour may, by order in writing on
the on the representation made by
either of the parties any case
under this Act. pending before an
authority fr disposal. Such
authority to whom the case is so
transferred may, subject to the
special direction in the order of
transfer proceed either de-novo or
from the stage at which it was so
transferred.
(2) Any appeal under sub-section
(2) of section 41 shall be
preferred by the person employed
within thirty days from the date of
service of the order terminating
the service with the employer such
service to be deemed effective if
carried out either personally or if
that br not practicable. by prepaid
registered post to the last known
address whin the date of such
service shall be deemed to be the
date when the letter would arrive
in ordinary course of post.
[provided that an appeal may be
admitted after the said period of
thirty days if the appellant
satisfies the appellate authority
that he had sufficient cause for
not preferring the appeal within
that period.]
(3) The procedure to be followed by
the appellate authority (Deputy
commissioner of Labour), when
hearing appeals preferred to him
under sub-section (2) of section 41
shall be summary. He shall record
briefly the evidence adduced before
him and then pass orders giving his
reasons therefor. The result of the
appeal shall be communicated to he
parties as soon as possible. Copies
of the orders shall also be
furnished to the parties. if
required by them."
17. From a perusal of the provisions quoted above. it will
be seen that the jurisdiction of the Appellate Authority to
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record evidence and to come to its own conclusion on the
questions involved in the appeal is very wide. Even if the
evidence is recorded in the domestic enquiry and the order
of dismissal is passed thereafter, it will still be open to
the appellate Authority to records. if need be, such
evidence as may be produced by the parties. Conversely, also
if the domestic enquiry is ex parte of no evidence was
recorded during those proceedings, the Appellate Authority
would still be justified in taking additional evidenced to
enable it to come to its own conclusions on the articles of
charges framed against the delinquent officer.
18. This court in Remington Rand of India Ltd. vs. Thiru R.
Jambulingam, (1975) 2 SCR 17, has already considered the
scope of the provisions of section 41 of the Act and held
that the jurisdiction of the commissioner (Deputy Labour
commissioner) who is the Appellate Authority under the Act
is of wider scope unlike that of the tribunal in an
application under section 33 of the Industrial Disputes Act.
It was further held that the commissioner was competent to
re-hear the matter completely and come to its own conclusion
after re-appreciation of the evidence or entertaining
additional evidence, if necessary, in the interest of
justice.
19. A similar provision was considered by There Judges
Bench of this court in chairman M/s Brooke Bond India Pvt.
Ltd. vs. Chandra Nath Choudhary, (1969) 1 SCR 919. In that
case, the court considered the provisions of the Bihar shops
and commercial Establishment Act and the Rules framed
thereunder. Sub-section (1) of section 26 of the Bihar Act
provided that no employer shall dismiss or discharge an
employee except on a reasonable cause and without giving
such employee at least one month’s notice or month’s wages
in lieu thereof. the proviso to sub-section (1) laid down
that the notice shall not be necessary where the services
are dispensed with on a charge of misconduct. It was
provided by sub-section (2) that every employee, dismissed
or discharged. May file a compliant to the prescribed
authority (Labour Court ) on three grounds, namely -
(1) that there was no reasonable
cause for dispensing with his
services, or
(2) that no notice was served on
him as required by sub-section 1,
or
(3) that he was not guilty any
misconduct as held by the employer.
20. Sub-section (5) of section 26 enabled the competent
authority to record evidence and come to its own findings on
such evidence. It was held that the authority was required
to come to its own independent findings on the evidence
adduced by the parties and recorded by it independently of
the findings given in the domestic enquiry. It was no doubt
laid down that the proceedings under section 26 were not by
way of appeal against the order passed as a result of the
domestic enquiry and that they were independent and original
proceedings but the jurisdiction to record evidence so as to
enable the prescribed authority to come to its own
conclusion irrespective of the findings and evidence
recorded in the domestic enquiry, was similar to the
jurisdiction of the appellate Authority under the Tamil Nadu
Act. Here also the Authority (Deputy Labour Commissioner)
has also been given the power and jurisdiction to take
additional evidence and to come to its own conclusion in
respect of the charges framed against an employee. In view
of the wide jurisdiction of the Appellate Authority, it
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cannot be legally to record evidence would be limited only
to those cases where no evidence was recorded at the
domestic enquiry and the principles of natural justice where
violated. In addition to such cases. namely, cases in which
an opportunity of hearing was not given to the employee or
the principles of natural justice were, in any way,
violated, the Appellate Authority shall also have
jurisdiction to record evidence, if necessary, in question
whether the employee was guilty or not of the charges framed
against him.
21. The Madras High Court in Salem- shevapet Sri
Venkateswara Bank, Ltd. vs. Krishnan (K.K.) and another.
(1959) 2 Ltd. 797, held that the Appellate Authority under
section 41(2) had the jurisdiction to enquire whether the
statutory conditions subject to which alone a servant could
be dismissed, have been complied with. It would imply that
the Appellate Authority can also record evidence specially
when it has also to record the findings whether the charges
were established or not.
22. The Madras High court again in Srirangam Janopakara
Bank, Ltd. vs. Rangarajan (S.) and another, (1964) 1 LLJ
221, considered the ambit and scope of section 41 read with
Rule 9 and laid down that :-
" It appears to us that this rule
is not intended to confer, on the
appellate authority, a power to
take evidence de hors procedure,
that the hearing of appeals shall
be summary, that when orders are
passed. reasons should be given.
There is dissociated from s. 41(2),
and to decide that rule 9(2) went
far beyond the rule makings power
under S.49, on the ground that it
confers power to take additional
evidence on the appellate
authority.
It would also appear necessary in
the interests of the proper working
of an enactment like the Madras
shops and Establishments Act. to
confer on the appellate authority
the power to take evidence itself,
if the circumstances of a case
justify it."
23. In view of the above decisions, there remains no doubt
that the Appellate Authority has jurisdiction to take
evidence at the appellate stage and to come to its own
conclusion about the guilt of the delinquent employee.
24. If the instant case is analysed in the light of the
principles laid down above, it will be noticed that the
Appellate Authority has interfered with the order of
discharge/dismissal of the respondent on the ground only
that a domestic enquiry was not held into the imputations
made against the respondent. It did not decide the
application of the appellant for recording evidence. The
Appellate Authority, therefore. committed grave error in the
exercise of its jurisdiction by not disposing evidence and
proceeding to dispose of the appeal on the ground that the
order of dismissal having been passed without holding a
domestic enquiry was bad in law.
25. We may now consider the contention of the learned
counsel for the respondent relating to the principles of
nature justice which were not observed at the initial stage,
namely, at the time of the domestic enquiry. Whether the
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defect is curable at the appellate stage or not is the
question.
26. Learned counsel, in support of his arguments that the
defect is not curable has placed reliance on the decision of
this court in Institute of chartered Accountants of India
vs. L.K Ratna & ors.,(1935) 4 SCC 537. It was no doubt. laid
down in this case that a post-decisional hearing cannot be
an effective substitute of pre-decisional hearing and that
if an opportunity of hearing is not given before a decision
is taken at the initial stage. it would result in serious
prejudice, inasmuch as if such an opportunity is provided at
the appellate stage, the person is deprived of his right of
appeal to another body. There may be cases where opportunity
of hearing is excluded by a particular service or statutory
rule. In union of India & Anr. vs. Tulsiram Patel, (1985) 3
SCC 398, pre-decisional hearing stood excluded by the second
proviso to Article 311(2) of the constitution and,
therefore, the court took the view that though there was no
prior opportunity to plead in an appeal filed by him that
the charges for which he was removed from service were not
true. Principles of nature justice in such a case will have
to be held to have been sufficiently complied with. In Mrs.
Menka Gandhi vs. Union of India & Anr. (1978)1 SCC 248 and
in Liberty oil mills & ors. vs. Union of India & ors. (1934)
3 SCC 465 an opportunity of making a representation after
the decision was taken, was held to be sufficient
compliance. All depends on acts of each case.
27. In the instant case the appellant has contended that
the respondent did not participate in the domestic enquiry
in spite of an opportunity of hearing having been provided
to him. He was also offered the inspection of the document
but he did not avail of that opportunity. He himself invoked
the jurisdiction of the Appellate Authority and the order of
dismissal passed against him was set aside on the ground
that the appellant did not hold any domestic enquiry. it has
already been seen above that the Appellate Authority has to
come to its own conclusion on the guilt of the employee
concerned. since the Appellate Authority has to come to its
own conclusion on the basis of he evidence recorded bu it ,
irrespective of the findings recorded in the domestic
enquiry the rule laid down in Ratna’s case (supra) will not
strictly apply and the opportunity of hearing which is being
provided to the respondent at the appellate stage will
sufficiently meet his demands for a just and proper enquiry.
28. In view of the above, the appeal is allowed. The
Judgment and order dated 12.2.1996 passed by the Appellate
Authority is set aside and the case is remanded back to the
Appellate Authority to dispose of the appeal filed by the
respondent under section 41 of the Act afresh in accordance
with law in the light of the observations made above. No.
costs.