Termination of a permanent employee for misconduct without departmental inquiry violates natural justice.

The petitioner was appointed as a Typist by respondent No. 1 on probation on 17 May 1988 and was subsequently confirmed as a permanent employee after satisfactorily completing probation.

In 2000, he remained absent from duty on account of illness. Respondent No. 1 issued him a charge-sheet on 11 May 2000, to which he replied by attributing his absence to ill-health.

Without conducting a departmental inquiry or providing an opportunity to substantiate his defence, respondent No. 1 terminated his services on the basis of the charge-sheet and reply.

The petitioner raised an industrial dispute, which was referred to the Labour Court, Junagadh, as Reference Case No. 202 of 2001.

By award dated 16 June 2011, the Labour Court held that the petitioner was a regular employee but awarded only lump-sum compensation of ₹50,000 in lieu of reinstatement, continuity of service and full back-wages, partly relying on the alleged absence of a fitness certificate.

The petitioner challenged the award under Articles 226 and 227 of the Constitution and the Industrial Disputes Act, 1947, seeking reinstatement-related and consequential monetary benefits.

Whether the termination of a confirmed permanent employee for alleged unauthorized absence, without conducting a departmental inquiry, violated the principles of natural justice and applicable disciplinary procedure?

Whether the Labour Court erred in treating the petitioner as medically unfit and awarding only ₹50,000 as compensation in lieu of reinstatement?

Whether the petitioner was entitled to reinstatement, continuity of service and back-wages, or an appropriate monetary and retiral-benefit relief after attaining superannuation?

The Court exercised jurisdiction under Articles 226 and 227 of the Constitution in relation to the Labour Court’s award and applied the principles governing disciplinary action under the Industrial Disputes Act, 1947.

A confirmed permanent employee cannot be dismissed for alleged misconduct, including unauthorized absence, without establishing the charge through the prescribed departmental inquiry and affording a reasonable opportunity of defence; issuance of a charge-sheet and consideration of the employee’s reply do not substitute for a disciplinary inquiry where a major penalty is proposed.

The Court relied on Ratnesh Kumar Choudhary v. Indira Gandhi Institute of Medical Sciences, (2015) 15 SCC 151, and Chamoli District Co-operative Bank Ltd. v. Raghunath Singh Rana, (2016) 12 SCC 204, for the principle that termination founded on misconduct without compliance with disciplinary procedure and natural justice is unsustainable.

However, back-wages are not an automatic consequence of an illegal termination and must be determined on the basis of the circumstances of each case, including length of service, nature of termination, conduct of the parties and other relevant factors.

The Court found that the petitioner had acquired permanent status after completing probation and had rendered approximately 12 years of service.

His absence on account of illness constituted an allegation of misconduct requiring proof in accordance with the applicable disciplinary procedure. Since respondent No. 1 admittedly conducted no departmental inquiry before imposing the major penalty of termination, the termination violated natural justice and could not be sustained merely because a charge-sheet had been issued and a reply received.

The Labour Court also erred in inferring medical unfitness solely from the petitioner’s failure to produce a fitness certificate. There was no cogent medical evidence establishing permanent incapacity, and respondent No. 1 had not otherwise established that the petitioner was unfit for duty.

Although the termination was illegal, the Court declined to direct reinstatement because the petitioner had already reached superannuation.

Considering the petitioner’s long service, the violation of natural justice, the absence of proof of gainful employment, and the fact that back-wages are discretionary rather than automatic, the Court considered 50% back-wages together with continuity for retiral and service-benefit purposes to be appropriate relief.

The Court held that the petitioner’s termination was illegal and contrary to the principles of natural justice because it was imposed without a departmental inquiry.

Since the petitioner had attained superannuation, reinstatement was not ordered.

The intervening period was directed to be treated as continuous service for consequential retiral and service benefits.

Respondent No. 1 was directed to pay 50% of the back-wages from the date of dismissal until the date of superannuation, subject to adjustment of the ₹50,000 already awarded or paid, and to compute and pay the consequential benefits within 12 weeks of receiving the order.

No order as to costs was made.