Setting aside departmental inquiry findings invalidates consequential punishment, precluding imposition of penalty for alleged misconduct.

The respondent, a bus conductor employed since 1997, was charge-sheeted for misappropriation of ₹57/- after allegedly recycling tickets between two groups of passengers.

Following a departmental inquiry, he was punished with a permanent stoppage of two years' increment on December 30, 2003.

On appeal, the penalty was reduced to 1.5 years in 2004; a second appeal was dismissed in 2006.

The respondent filed a reference (IT No. 39 of 2009) before the Industrial Tribunal, Bhavnagar. The Tribunal, via an order below Exhibit 15, quashed the inquiry proceedings and subsequently set aside the punishment.

The petitioner (Corporation) challenged this award in the High Court, primarily on grounds of limitation and the existence of inquiry documents.

1. Whether the reference was barred by limitation due to the delay between the departmental orders and the filing of the reference in 2009.

2. Whether the Industrial Tribunal was justified in setting aside the punishment in light of the quashing of the departmental inquiry and the nature of evidence produced.

The court applied principles of administrative and labor law concerning the validity of domestic inquiries and the burden of proof in industrial disputes; if the foundational order of a departmental inquiry is quashed and remains unchallenged, the consequential punishment cannot be sustained.

The absence of vital witness testimony (such as the person who recorded the workman’s statement) or lack of knowledge by the management's witness vitiates the findings.

The Court rejected the petitioner’s argument on limitation, noting that while the original punishment was in 2003, the second appeal was only dismissed in 2006, making the 2009 reference reasonable.

The Court observed that the Industrial Tribunal’s earlier order (below Exhibit 15) quashing the inquiry was never challenged by the Corporation and had attained finality; thus, no penalty could survive in the absence of a valid inquiry.

The Court scrutinized the evidence and found the Corporation’s witness (Exhibit 40) lacked personal knowledge of the incident and route, and noted the failure to examine the reporter/officer who recorded the respondent’s statement.

Consequently, the petitioner failed to prove the legality of the punishment or any perversity in the Tribunal’s award.

The High Court dismissed the petition, holding that the impugned order of the Industrial Tribunal was just and proper and all interim relief was vacated.