Where a domestic inquiry is vitiated, the Labour Court must allow the employer to prove misconduct before ordering reinstatement.

The respondent was appointed by the petitioner as a Vidyut Sahayak (Helper) on a three-year contractual basis.

During his contractual tenure, he was charge-sheeted for alleged serious misconduct and subjected to a departmental inquiry.

On the basis of the inquiry findings, his services were terminated on 17 January 2011; his departmental appeal and second appeal were rejected on 22 February 2011 and 6 September 2011, respectively.

The respondent thereafter raised an industrial dispute before the Labour Court, Amreli.

The Labour Court held the departmental inquiry to be illegal and contrary to the principles of natural justice, ordered reinstatement, and directed that back wages would be determined after recording evidence.

The petitioner challenged the Labour Court’s order under Articles 226 and 227 of the Constitution, contending that it ought first to have been given an opportunity to lead evidence to establish the misconduct.

Whether the Labour Court erred in ordering reinstatement immediately after holding the departmental inquiry to be illegal, without giving the employer an opportunity to lead evidence to prove the misconduct before the Labour Court?

Whether the Labour Court’s judgment and award dated 14 February 2024 required interference and remand for fresh adjudication?

The Court applied the principle laid down by the Supreme Court in Cooper Engineering Ltd. v. P.P. Mundhe, (1975) 2 SCC 661, that when a dismissal or discharge dispute is referred for industrial adjudication, the Labour Court should first decide, as a preliminary issue, whether the domestic inquiry violated the principles of natural justice.

If the inquiry is found defective or invalid, the employer must be given an opportunity to adduce evidence before the Labour Court to substantiate the charges.

If the employer elects not to lead evidence at that stage, it cannot subsequently raise the issue in further proceedings.

The High Court exercised its supervisory and writ jurisdiction under Articles 226 and 227 of the Constitution.

The High Court held that the Labour Court correctly examined the validity of the departmental inquiry but committed a serious error in proceeding directly to reinstatement after finding the inquiry illegal.

Under Cooper Engineering, a finding that the domestic inquiry is defective does not by itself conclude the dismissal dispute; the employer must first be permitted to prove the alleged misconduct by leading evidence before the Labour Court.

Since the petitioner asserted that it had not been afforded such an opportunity, the Labour Court’s immediate order of reinstatement was legally unsustainable.

The High Court therefore found it necessary to set aside the award and remit the reference for adjudication on merits, while granting the petitioner liberty to challenge the finding on Issue No. 1 if that finding remained adverse to it.

The judgment and award dated 14 February 2024 passed by the Labour Court, Amreli in Reference Case No. 8 of 2013 were quashed and set aside, and the matter was remanded for fresh consideration on merits in accordance with law.

The petitioner was granted liberty to challenge the finding on Issue No. 1, if adverse.

The Labour Court was directed to decide the reference preferably within six months of receiving the High Court’s order, and both parties were directed to cooperate and avoid unnecessary adjournments.