THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO.26585 OF 2000 DATED APRIL, 2010 BETWEEN The A.P. State Handloom Weavers’ Co-op. Society Ltd., Hyderabad, Rep. by its Managing Director, Narayanaguda, Hyderabad. … Petitioner And The Presiding Officer, Labour Court-I, Hyderabad. And Another. … Respondents WRIT PETITION NO.1700 OF 2001 DATED APRIL, 2010 BETWEEN Ch.Prasada Rao, Aged 49 Years, S/o (Late) Sri Subba Rao, Dr.No.8-187, Rangubazar, Near Fish Market, Jaggaiahapet, Krishna District, A.P. … Petitioner And The Presiding Officer, Labour Court-I, Hyderabad. And Another. … Respondents THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NOS.26585 OF 2000 AND 1700 OF 2001 COMMON ORDER: The Award dated 27.07.2000 passed by the Labour Court-I, Hyderabad, in I.D. No.33 of 1997 is under attack in both these writ petitions. By the said Award, the Labour Court altered the order of dismissal from service dated 18.09.1994 passed by the A.P. State Handloom Weavers’ Co-operative Society Limited, Hyderabad (hereinafter referred to as ‘the Management’), against Ch.Prasada Rao (hereinafter referred to as ‘the Workman’), by reducing the punishment to postponement of 5 annual increments with cumulative effect and denying him back wages, while granting him continuity of service for the purpose of retirement benefits. The Management filed Writ Petition No.26585 of 2000 aggrieved by the reliefs granted to the Workman while the Workman filed Writ Petition No.1700 of 2001 challenging the reduced punishment imposed upon him and the denial of back wages. The Workman was appointed as an Assistant Salesman in the service of the Management in the year 1973. At the relevant point of time, he had been promoted to the post of an Assistant Manager and was working at the Sales Emporium of the Management at Vijayawada. He was subjected to disciplinary proceedings under charge sheet dated 29.11.1991 in respect of five charges: “1. That he has caused deficit in stock to the extent of Rs.4,02,973.10 ps. at Vijayawada SE No.2 and misappropriated the funds of the Apex Society along with other staff of the Sales Emporium, thereby committed gross misconduct under special Bye-law No.43(xi). 2. That he has disobeyed the lawful and reasonable order of the Managing Director of the Apex Society by absenting himself from duty during stock verification. 3. That he has acted prejudicially to the interest of the Society by giving relief letter on 31.08.1990 addressed to the D.M.O., Vijayawada under copy to Sri Rambabu, A.S.M., whose leave application is dated 01.09.1990. 4. That due to his organized action, the Apex Society sustained huge loss. 5. That he has misused the powers entrusted to the post of the Asst. Manager, Vijayawada, SE No.2 by keeping huge stocks.” Dissatisfied with his explanation, an enquiry was initiated into the matter. Upon submission of the Enquiry Report, the petitioner was once again called upon to submit his explanation and after considering the same he was dismissed from service under order dated 18.09.1994. His appeal having met with failure, the petitioner invoked Section 2-A(2) of the Industrial Disputes Act, 1947 (for brevity, ‘the Act of 947’) in I.D. No.33 of 1997. By order dated 09.02.1999 the Labour Court held that the domestic enquiry conducted against the Workman was vitiated on the ground that the competent authority had not appointed the Enquiry Officer. Pursuant to this finding, both parties were given an opportunity to let in evidence in support of their claims and contentions. The Management examined one G.Damodhar, Senior Assistant, as M.W.1 and adduced documentary evidence, Exs.M.1 to M.10. The Workman examined himself as W.W.1 and marked Exs.W.1 to W.6 in support of his case. Having considered the material on record, the Labour Court came to the finding that the first charge levelled against the petitioner was not specific and clear and owing to the vagueness of the charge, the Labour Court held that it was not proper to hold that the same was proved against the Workman. The Labour Court however found against the Workman in respect of the remaining four charges. The unproved first charge being a major misconduct, the remaining four charges appeared to the Labour Court to be minor charges and applying the doctrine of proportionality, the Labour Court held that dismissal from service was shockingly disproportionate to the proved misconduct under those charges. Opining so, the Labour Court altered the punishment imposed upon the Workman reducing it to withholding of 5 annual increments with cumulative effect and directed denial of back wages with continuity of service for the purpose of retirement benefits. Aggrieved thereby, both the parties are before this Court. At the time of admission of the Management’s writ petition on 29.12.2000 this Court granted stay of all further proceedings in pursuance of the impugned Award. However, the said order was modified on 13.07.2001 and this Court subjected the stay order to the condition that the Management complies with Section 17-B of the Act of 1947. It is stated that pursuant to this order the Management kept the Workman out of service on payment of Section 17-B wages i.e. Rs.1,510/- per month. He attained the age of superannuation in September, 2009. Heard Sri Ch.Jagannadha Rao, learned counsel for the Management and Sri S.Ravindranath, learned counsel for the Workman. The admitted fact is that the Labour Court rendered a finding that the domestic enquiry held against the Workman was vitiated owing to the incompetence of the authority which appointed the Enquiry Officer. Trite to state, a defective enquiry is as good as there being no enquiry at all. That being so, the proceedings of such defective enquiry ceased to be ‘material on record’ for the purposes of Section 11-A of the Act of 1947. Reference in this regard may be made to NEETA KAPLISH v. PRESIDING OFFICER, LABOUR COURT[1] wherein the Supreme Court observed: “27. The record pertaining to the domestic enquiry would not constitute “fresh evidence” as those proceedings have already been found by the Labour Court to be defective. Such record would also not constitute “material on record”, as contended by the counsel for the respondent, within the meaning of Section 11-A as the enquiry proceedings on being found to be bad, have to be ignored altogether. The proceedings of the domestic enquiry could be, and were in fact, relied upon by the Management for the limited purpose of showing at the preliminary stage that the action taken against the appellant was just and proper and that a full opportunity of hearing was given to her in consonance with the principles of natural justice. This contention has not been accepted by the Labour Court and the enquiry has been held to be bad. In view of the nature of objections raised by the appellant, the record of enquiry held by the Management ceased to be “material on record” within the meaning of Section 11-A of the Act and the only course open to the Management was to justify its action by leading fresh evidence as required by the Labour Court. If such evidence has not been led, the Management has to suffer the consequences.” This Court also finds guidance from the principles enumerated by the Supreme Court in WORKMEN v. FIRESTONE TYRE & RUBBER CO. OF INDIA (P) LTD.[2]: “32. From those decisions, the following principles broadly emerge: ……………….. (5) The effect of an employer not holding an enquiry is that the Tribunal would not have to consider only whether there was a prima facie case. On the other hand, the issue about the merits of the impugned order of dismissal or discharge is at large before the Tribunal and the latter, on the evidence adduced before it, has to decide for itself whether the misconduct alleged is proved. In such cases, the point about the exercise of managerial functions does not arise at all. A case of defective enquiry stands on the same footing as no enquiry. (6) The Tribunal gets jurisdiction to consider the evidence placed before it for the first time in justification of the action taken only, if no enquiry has been held or after the enquiry conducted by an employer is found to be defective. (7) It has never been recognised that the Tribunal should straightaway, without anything more, direct reinstatement of a dismissed or discharged employee, once it is found that no domestic enquiry has been held or the said enquiry is found to be defective. (8) An employer, who wants to avail himself of the opportunity of adducing evidence for the first time before the Tribunal to justify his action, should ask for it at the appropriate stage. If such an opportunity is asked for, the Tribunal has no power to refuse. The giving of an opportunity to an employer to adduce evidence for the first time before the Tribunal is in the interest of both the management and the employee and to enable the Tribunal itself to be satisfied about the alleged misconduct. ………………..” As pointed out by the Supreme Court in GUJARAT STEEL TUBES LTD. V. GUJARAT STEEL TUBES MAZDOOR SABHA[3], once an enquiry is held to be defective, it is irrelevant whether the Workman participated in the enquiry or withdrew from it. The whole case was therefore open before the Labour Court to decide for itself whether the charge of misconduct is proved and what punishment should be imposed. This being the legal position, the procedure adopted by the Labour Court in the present case has to be examined in the light thereof. As pointed out supra, the Management chose to examine only one witness, a Senior Assistant. A copy of his deposition is placed before the Court. It is evident therefrom that the witness gave evidence basing on the records and did not claim any personal cognition. He marked in evidence 10 documents. Ex.M.6 was the Enquiry Report founded on the vitiated domestic enquiry. Ex.M.6(a) is said to be the deposition of the Workman during the said enquiry. In the light of the law laid down in NEETA KAPLISH1 the enquiry report and the proceedings during such enquiry ceased to be relevant for the purpose of the case before the Labour Court once the enquiry was found defective. However, a perusal of the Award under challenge discloses that the Labour Court at every turn and opportunity referred to and relied upon the Enquiry Report and the findings recorded therein. While dealing with the second charge, the Labour Court held: “The enquiry officer has rightly held that the petitioner disobeyed the lawful and reasonable orders of the Managing Director of the Apex Society, and there is no reason to interfere with the findings of the Enquiry Report. Hence the charge is proved against the petitioner.” Similar is the approach of the Labour Court in respect of the third charge dealing with which, it observes: “The enquiry officer found that the petitioner is not competent to relieve co-employee, Sri Ch.Rambabu, Assistant Sales Manager ………” Again, in respect of the fourth charge, the Labour Court said: “Enquiry officer found guilty the petitioner in that aspect that the petitioner colluded with his co-employees against the interest of the Apex Society. There is no reason to interfere in the findings of the enquiry officer. Hence this charge is also proved against the petitioner.” In respect of the fifth charge, the Labour Court once again placed reliance upon the Enquiry Report by stating: “……… that the enquiry officer found the charge was proved against the petitioner. There is no ground to interfere in the findings of the enquiry officer in this regard. Hence, this charge is also proved against the petitioner.” Though the Award under challenge also reflects some amount of independent discussion there is no separate material to support the same and the repeated copious references to the findings of the Enquiry Officer clearly indicate that the Labour Court relied upon the report of the defective domestic enquiry. It is no doubt true that it was open to the Management to question the decision of the Labour Court with regard to the validity of the domestic enquiry after passing of the final Award (COOPER ENGINEERING LTD. v. P.P.MUNDHE[4]). However, the Management did not choose to challenge the said finding in the present case. In fact, the affidavit filed in support of its writ petition demonstrates a complete lack of understanding as to the reason for the finding of the Labour Court in this regard. The Award under challenge reflects that the domestic enquiry was held to be vitiated on the ground that no document had been filed to show that the competent person had appointed the Enquiry Officer. While so, the affidavit of the Management speaks to the effect that the Labour Court held that the enquiry was in violation of the principles of natural justice as the Enquiry Officer’s report had not been given along with the Show Cause Notice. Further, the Management did not choose to challenge the finding of the Labour Court on this preliminary issue and limited its attack to the final Award on the ground that it disclosed an error apparent on the face of the record as grave charges had been treated as minor charges. Thus, the finding on the lack of validity of the domestic enquiry has attained finality. The Labour Court having recorded such a finding misdirected itself in relying upon the report based on such a vitiated domestic enquiry. Fresh consideration of the relevant material placed on record by the Management to prove its case is therefore imperative. It is no doubt true that the Workman has attained the age of superannuation but at the same time it is relevant to note that the Workman was charged with misappropriation of the stocks of the Management worth over Rs.4 lakhs, a major misconduct. That being so, the Workman cannot be given a clean chit merely because of his having reached retirement age or owing to the procedural lapses, be it on the part of the Management in conducting the enquiry or on the part of the Labour Court in exercising jurisdiction under Section 11-A of the Act of 1947. When the charges levelled against an employee are not of a minor or trivial nature, it would not be proper to foreclose the right of the employer to hold a fresh enquiry only on the ground that the employee has since retired from service (U.P.CO-OPERATIVE FEDERATION LTD. v. L.P.RAI[5]). The matter therefore requires fresh consideration by the Labour Court, duly eschewing the record pertaining to the defective domestic enquiry, including the enquiry report and the proceedings therein. The Management, having already availed the opportunity of adducing evidence before the Labour Court, cannot be permitted at this stage to adduce further evidence, as laid down by the Supreme Court in FIRESTONE2. Such request had to be made by the Management at the appropriate stage and having availed of such opportunity once, the Management cannot seek to adduce further evidence so as to fortify its case belatedly. The impugned Award is therefore set aside. The matter is remanded to the Labour Court-I, Hyderabad, for fresh consideration in accordance with the observations made hereinbefore and for exercise of jurisdiction under Section 11-A of the Act of 1947. As the dispute has been kept alive for sufficiently long, the interest of justice requires that it be given a quietus expeditiously. The Labour Court shall therefore dispose of the I.D. within six months from the date of receipt of a copy of this order. The writ petitions are accordingly allowed to the extent indicated above, but in the circumstances without costs. ____________________ SANJAY KUMAR, J. _________ APRIL, 2010. Note: 1) Issue C.C. in one week. 2) Record be transmitted back to the Labour Court-I, Hyderabad, immediately. B/o VGSR/PGS [1] (1999) 1 SCC 517 [2] (1973) 1 SCC 813 [3] (1980) 2 SCC 593 [4] (1975) 2 SCC 661 [5] (2007) 7 SCC 81