Case: The Workmen of Firestone Tyre and Rubber Co. of India Ltd Vs. The Management and Ors

There is no controversy that in all the four appeals, the reference had been made long before the date of coming into force of Section 11A and the Industrial Disputes were pending adjudication at the hands of the concerned authorities on. In respect of such disputes the concerned Labour Court or Tribunal had to consider the question whether S. 11A applies to those proceedings and also the further question as to the powers to be exercised by them in respect of such disputes. On behalf of the companies, it appears to have been urged that the section does not apply to the disputes which had already been referred to four adjudication and that the management had a right to adduce evidence to justify the action taken against the workmen even though no enquiry had been held before the order of discharge or dismissal had been passed and also in cases where the enquiry held is found to be defective. This claim was resisted on behalf of the Labour on the ground that the section applies to all proceedings which were pending as on1 and that the management, if it had not held any enquiry or if the enquiry conducted by it was found to be defective, has no right to adduce evidence before the authority to justify its action. Different views have been expressed by the Tribunals concerned as will be seen from what is stated below:In Civil Appeal No. 1461 of 1972, the Reference (I.T.) No. 307 of 1968 related to the question of reinstatement of a number of workmen, who had been dismissed. The Industrial Tribunal, Maharashtra, Bombay considered the question whether Section 11A applies to the reference, which had been made as early as 12th August, 1968. The Industrial Tribunal by its order dated April 21, 1972, has held that the restrictions imposed upon the powers of the Labour Court or Tribunal to interfere with orders of dismissal passed by the management, have been removed by Section 11A, which has the effect of affecting the substantive part of the law of master and servant and, therefore, the said section has no retrospective effect. The Tribunal has held that the concerned reference will have to be disposed of as though Section 11A was not in the statute. The workmen have come up in appeal4. Civil Appeal No. 1995 of 1972 arises out of the order dated2 of the Fifth Labour Court at Bombay in Reference (I.D.A.) No. 268 of 1970. The Labour Court has held that Section 11A applies even to all proceedings pending adjudication as on, as it only deals with matters of procedure. The said Court has further held that the new section makes it clear that there must be a proper enquiry by an employer before dismissing or discharging a workman and that if no enquiry has been held or if the enquiry held is found to be defective, there is no option but to reinstate the employee. In this view, the Labour Court has further held that an employer under those circumstances has no right to adduce evidence in the adjudication proceedings to justify his action. In Civil Appeal No. 1996 of 1972 (arising out of reference (I.D.A) No. 207 of 1970) and in Civil Appeal No. 2386 of 1972 (arising out of Reference (I.D.A.) No. 213 of 1970), the same Labour Court has expressed similar views in its orders dated June 27, 1972. Against all these three orders the company has filed appeals5. The management and the workmen concerned in certain other disputes have also intervened in these appeals and they have placed before as copies of the orders passed by other authorities. It will be useful to refer to the views expressed by some of those authorities. In Reference (I.D.A.) No. 79 of 1971, the Second Labour Court in its order dated April 13, 1972 has held as follows :Section 11A gives power to the Labour Court to scrutinise domestic enquiries similar to that of an appellate Court. The said section comes into play only after the Court has come to a conclusion that the enquiry held by an employer was proper. Both parties have still a right to adduce evidence to prove the legality or otherwise of the domestic enquiry. Even if no enquiry has been held by an employer or if the enquiry is held to be defective, reinstatement cannot be ordered straightway as urged by the labour. On the other hand, an employer has got a right to adduce evidence to justify the action taken by him. But S. 11A deals only with procedural matters and, therefore, it operates retrospectively6. Similarly in Reference (I.D.A.) No. 41 of 1966, the First Labour Court Bombay in its order dated January 3, 1973, has held that the section is retrospective in its operation and that the employer has got a right to lead evidence before the Labour Court, if the domestic enquiry has not been held or is found to be defective.

Reasoning:
31. We cannot accept the extreme contentions advanced on behalf of the workmen and the employers. We are aware that the Act is a beneficial piece of legislation enacted in the interest of employees. It is well settled that in construing the provision of a welfare legislation, Courts should adopt, what is described as a beneficent rule of construction. If the constructions are reasonably possible to be placed on the section, it follows that the construction which furthers the policy and object of the Act and is more beneficial to the employees, has to be preferred. Another principle to be borne in mind is that the Act in question which intends to improve and safeguard the service conditions of an employee, demands an interpretation liberal enough to achieve the legislative purpose37. We are not inclined to accept the contentions advanced on behalf of the employers that the stage for interference under Section 11A by the Tribunal is reached only when it has to consider the punishment after having accepted the finding of guilt recorded by an employer. It has to be remembered that a Tribunal may hold that the punishment is not justified because the misconduct alleged and found proved is such that it does not warrant dismissal or discharge. The Tribunal may also hold that the order of discharge or dismissal is not justified because the alleged misconduct itself is not established by the evidence. To come to a conclusion either way, the Tribunal will have toreappraise the evidencefor itself. Ultimately it may hold that the misconduct itself is not proved or that the misconduct proved does not warrant the punishment of dismissal or discharge. That is why, according to us, section 11A now gives full power to the Tribunal to go into the evidence and satisfy itself on both these points. Now the jurisdiction of the Tribunal toreappraise the evidenceand come to itsconclusion enures to it when it has to adjudicate upon the dispute referred to it in which an employer relies on the findings recorded by him in a domestic enquiry. Such a power to appreciate the evidenceand come to itsown conclusion about the guilt or otherwise was always recognised in a Tribunal when it was deciding a dispute on the basis of evidence adduced before it for the first time. Both categories are now put on a par by Section 11A38. Another change that has been effected by Section 11A is the power conferred on a Tribunal to alter the punishment imposed by an employer. If the Tribunal comes to the conclusion that the misconduct is established, either by the domestic enquiry accepted by it or by the evidence adduced before it for the first time, the Tribunal originally had no power to interfere with the punishment imposed by the management. Once the misconduct is proved, the Tribunal had to sustain the order of punishment unless it was harsh indicating victimisation. Under S. 11A, though the Tribunal may hold that the misconduct is proved, nevertheless it may be of the opinion that the order of discharge or dismissal for the said misconduct is not justified. In other words, the Tribunal may hold that the proved misconduct does not merit punishment by way of discharge or dismissal. It can, under such circumstances, award to the workman only lesser punishment instead. The power to interfere with the punishment and alter the same has been now conferred on the Tribunal by S. 11A41. We have already indicated our views regarding the scope of Section 11A and held that the right of an employer to adduce such evidence before the Tribunal has not been taken away.Mr. Deshmukh referred us to Section 23 of the Act prohibiting a workman from going on strike in the circumstances mentioned therein and further pointed out that if a strike is illegal, it cannot be lawful. Similarly, an illegal act of an employer in not holding a domestic enquiry cannot be made legal42. In our opinion, the analogy placed before us by the counsel cannot stand scrutiny. It is no doubt true that Standing Orders, which have been certified under the Industrial Employment (Standing Orders) Act, 1946, become part of the statutory terms and conditions of service between the industrial employer and his employee and that they govern the relationship between the parties. But there is no provision either in this statute or in the Act which states that an order of dismissal or discharge is illegal if it is not preceded by a proper and valid domestic enquiry. No doubt it has been emphasised in the various decisions of this Court that an employer is expected to hold a proper enquiry before dismissing or discharging a workman. If that requirement is satisfied, an employer will by and large escape the attack that he has acted arbitrarily or mala fide or by way of victimisation. If he has held a proper enquiry, normally his bona fides will be established. But it is not correct to say that this Court, when it laid down that an employer has a right to adduce evidence for the first time before the Tribunal, was not aware of a breach committed by an employer of the provisions of the Standing Orders. A similar contention, though in a different form, advanced on behalf of the workmen was rejected by this Court in Workmen of Motipur Sugar Factory (P.) Ltd. (1965) 3 SCR 588   = (AIR 1965 SC 1803  )It was specifically contended before this Court by the workmen therein that when an employer had held no enquiry, as required by the Standing Orders, it was not open to him to adduce evidence before the Tribunal for the first time and justify the order of discharge. This contention was rejected by this Court and it was held that if the enquiry was defective or no enquiry had been held, as required by the Standing Orders, the entire case would be open before the Tribunal and the employer would have to justify, on evidence as well that its order of dismissal or discharge was proper. Therefore, this contention cannot be accepted. We may also state that the Industrial Employment (Standing Orders) Act, 1946 applies only to those industrial establishments which are covered by Section 1 (3).But the field of operation of the Act is much wider and it applies to employers who may have no standing orders at all. If the contention of Mr. Deshmukh regarding Standing Orders is accepted, then the Act will have to be applied in a different manner to employers, who have no Standing Orders, and employers who are obliged to have Standing Orders. That is certainly not the scheme of the Act43. We will now pass on to consider the proviso to Section 11A.Mr. Deshmukh relied on the terms of the proviso in support of his contention that it is now obligatory to hold a proper domestic enquiry and the Tribunal can only take into account the materials placed at that enquiry. The counsel emphasised that the proviso places an obligation on the Tribunal to rely only on the materials on record and it also prohibits the Tribunal from taking any fresh evidence in relation to the matter. According to him, the expression materials on record refers to the materials available before the management at the domestic enquiry and the expression fresh evidence refers to the evidence that was being adduced by an employer for the first time before the Tribunal. From the wording of the Proviso, he wants us to infer that the right of an employer to adduce evidence for the first time has been taken away, as the Tribunal is obliged to confine its scrutiny only to the materials available at the domestic enquiry.44. We are not inclined to accept the above contention of Mr. Deshmukh. The Proviso specifies matters which the Tribunal shall take into account as also matters which it shall not. The expression materials on record occurring in the Proviso, in our opinion, cannot be confined only to the materials which were available at the domestic enquiry. On the other hand, the materials on record in the Proviso must be held to refer to materials on record before the TribunalWe are not inclined to limit that expression as meaning only that material that has been placed in a domestic enquiry. The Proviso only confines the Tribunal to the materials on record before it as specified above, when considering the justification or otherwise of the order of discharge or dismissal. It is only on the basis of these materials that the Tribunal is obliged to consider whether the misconduct is proved and the further question whether the proved misconduct justifies the punishment of dismissal or discharge. It also prohibits the Tribunal from taking any fresh evidence either for satisfying itself regarding the misconduct or for altering the punishment. From the Proviso it is not certainly possible to come to the conclusion that when once it is held that an enquiry has not been held or is found to be defective, an order reinstating the workman will have to be made by the Tribunal. Nor does it follow that the Proviso deprives an employer of his right to adduce evidence for the first time before the Tribunal.The expression fresh evidence has to be read in the context in which it appears namely, as distinguished from the expression materials on record". If so read, the Proviso does not present any difficulty at allThe contention of Mr. Deshmukh that if no enquiry is held, the order of dismissal will have to be set aside, if accepted, will lead to very incongruous results. The Tribunal would have allowed an employer to adduce evidence before it is proceedings under Section 33 for the first time, even though no domestic enquiry had been held. If it is held that another Tribunal, which adjudicates the main dispute, has to ignore those proceedings and straightway order reinstatement on the ground that no domestic enquiry had been held by an employer, it will lead to very startling results. Therefore, an attempt must be made to construe S. 11A in a reasonable manner. This is another reason for holding that the right to adduce evidence for the first time recognised in an employer, has not been disturbed by Section 11A47. There may be other instances where an employer with limited number of workmen may himself be a witness to a misconduct committed by a workman. He will be disabled from conducting an enquiry against the workman because he cannot both be an enquiry officer and also a witness in the proceedings. Any enquiry held by him will not be in keeping with the principles of natural justice. But he will certainly be entitled to take disciplinary action for which purpose he can serve at and, after calling for explanation, impose the necessary punishment without holding any enquiry. This will be a case where no enquiry at all has been held by an employer. But the employer will have sufficient material available with him which could be produced before any Tribunal to satisfy it about the justification for the action taken. Quite naturally, the employer will place before the Tribunal, for the first time, in the adjudication proceedings material to support his action. That material will have to be considered by the Tribunal. But if the contention of Mr. Deshmukh is accepted, then the mere fact that no enquiry has been held, will be sufficient to order reinstatement. Such reinstatement, under the circumstances mentioned above, will not be doing justice either to the employer or to the workman and will not be conducive to preserving industrial peace48. We have indicated the changes effected in the law for Section 11A. We should not be understood as laying down that there is no obligation whatsoever on the part of an employer to hold an enquiry before passing an order of discharge or dismissal. This Court has consistently been holding that an employer is expected to hold a proper enquiry according to the Standing Orders and principles of natural justice. It has also been emphasised that such an enquiry should not be an empty formality. If a proper enquiry is conducted by an employer and a correct finding arrived at regarding the misconduct, the Tribunal, even though it has now power to differ from the conclusions arrived at by the management, will have to give very cogent reasons for not accepting the view of the employer. Further by holding a proper enquiry, the employer will also escape the charge of having acted arbitrarily or mala fide. It cannot bed that conducting of a proper and valid enquiry by an employer will conduce to harmonious and healthy relationship between him and the workmen and it will serve the cause of industrial peace. Further it will also enable an employer to persuade the Tribunal to accept the enquiry as proper and the finding also as correct51. The learned counsel on both sides have referred us to several decisions where a statute or a section thereof, has been held to be either retrospective or not. They have also referred us to certain passages in text books on interpretation thereof. It is needless to state that a decision has to be given one way or other having regard to the scheme of the statute and the language used therein. Hence we do not propose to refer to those decisions, nor to the passages in the text books, as the principle is well established that a retrospective operation is not to be given to a statute so as to impair an existing right. This is the general rule. But the Legislature is competent to pass a statute so as to have retrospective operation, either by clearly expressing such intention or by necessary and distinct intendment. The principles regarding the retrospectivity or otherwise of a section or a statute have been laid down by this Court in Garikapatti Veerava v. N. Subbiah Choudhury, 1957 SCR 488   = (AIR 1957 SC 540  ) and Keshavlal Jethalal v. Mohanlal Bhagwandas, (1968) 3 SCR 623   = (AIR 1968 SC 1336  )52. Miss Indira Jai Singh, learned counsel, placed considerable reliance on the use of the expression has been referred in Section 11A, as indicating that the section applies even to all references made before53. The words has been referred in Section 11A are no doubt capable of being interpreted as making the section applicable to references made even prior tot is the section so expressed as to plainly make it applicable to such references? In our opinion, there is no such indication in the section.In the first place, as we have already pointed out, the section itself has been brought into effect only some time after the Act had been passed.The proviso to Section 11A which is as much part of the section, refers to "in any proceeding under this section." Those words are very significant. There cannot be a "proceeding under this section", before the section itself has come into force. A proceeding under that section can only be on or after. That also gives an indication that S. 11A applies only to disputes which are referred for adjudication after the section has come into force55. The decision of the Court of Appeal in Barber v. Pigden, (1937) 1 All ER 114 is also not of any material assistance to the workmenIn our opinion, the principles stated in In re Athlumney; Ex Parte Wilson,2 QB 547 are more apposite to the case on hand58.We have already expressed our view regarding the interpretation of Section 11A. We have held that the previous law, according to the decisions of this Court, in cases where a proper domestic enquiry had been held, was that the Tribunal had no jurisdiction to interfere with the finding of misconduct except under certain circumstances. The position further was that the Tribunal had no jurisdiction to interfere with the punishment imposed by an employer both in cases where the misconduct is established in a proper domestic enquiry as also in cases where the Tribunal finds such misconduct proved on the basis of evidence adduced before it. These limitations on the powers of the Tribunals were recognised by this Court mainly on the basis that the power to take disciplinary action and impose punishment was part of the managerial functions. That means that the law, as laid down by this Court over a period of years, had recognised certain managerial rights in an employer. We have pointed out that this position has now been changed by Section 11A.The section has the effect of altering the law by abridging the rights of the employer inasmuch as it gives power to the Tribunal for the first time to differ both on a finding of misconduct arrived at by an employer as well as the punishment imposed by him. Hence in order to make the Section applicable even to disputes, which had been referred prior to the coming into force of the section, there should be such a clear, express and manifest indication in the section. There is no such express indication. An inference that the section applies to proceedings, which are already pending, can also be gathered by necessary intendment. In the case on hand, no such inference can be drawn as the indications are to be contrary. We have already referred to the proviso to Section 11A which states in any proceeding under this section. A proceeding under the section can only be after the section has come into force. Further the section itself was brought into force some time after the Amendment Act was passed. These circumstances as well as the scheme of the section and particularly the wording of the Proviso indicate that Section 11A does not apply to disputes which had been referred prior to. The section applies only to disputes which are referred for adjudication on or after. To conclude, in our opinion, Section 11A has no application to disputes referred prior toh disputes have to be dealt with according to the decisions of this Court already referred to59. In Civil Appeal No. 1461 of 1972, the Industrial Tribunal had considered only the question regarding the applicability of the section to disputes which had been referred before the section came into force. The Tribunal has held that the section does not apply to such disputes. This view is in accordance with our decision and as such is correct.