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K.P Kshatriya v. Khandelwal Udyog Ltd. And Others
Judgment Summary (Per Deshpande, J.)
Factual and Procedural Background
The petitioner was employed as a workman by respondent No. 1. In May 1975 he was served with a show-cause notice and charges were framed; an enquiry was fixed for 22-5-1975. Workmen struck in protest against holding the enquiry; the petitioner did not appear at the enquiry on 22-5-1975. The Enquiry Officer recorded evidence and submitted a report; a dismissal order was passed on 20-6-1975. The Union raised a dispute seeking reinstatement and back-wages; after no response from the employer the Union approached the Conciliation Officer and the dispute was admitted to conciliation on 15-10-1975. Preliminary sittings occurred but the Union later did not remain present before the Conciliation Officer; the Conciliation Officer submitted a failure report on 24-11-1975. On 20-1-1976 the Deputy Commissioner of Labour refused to make a reference, on the ground that principles of natural justice had been complied with. The petitioner challenged that refusal by filing this petition under Article 226 of the Constitution.
Legal Issues Presented
- Whether, after the introduction of section 11A of the Industrial Disputes Act, the Government (under section 10) may lawfully refuse to make a reference to an Industrial Tribunal or Labour Court solely on the basis that the domestic disciplinary enquiry complied with principles of natural justice.
- Whether section 11A entitles the Tribunal to reappraise the evidence in a domestic enquiry and review not only the quantum of punishment but also the finding of misconduct, and whether that right must be taken into account by the Government when deciding whether to refer a dispute.
- Whether the conduct of the employee (non-appearance at the enquiry) or of the Union (absence from conciliation after receiving enquiry papers) can alone justify the Government's refusal to make a reference without considering the altered rights under section 11A.
Arguments of the Parties
Petitioner's Arguments
- The petitioner (through Mr. Narayan B. Shatye) argued that after section 11A was inserted in 1972 the Industrial Tribunal is empowered not only to review the quantum of punishment but also to reappraise findings of misconduct; therefore the Deputy Commissioner's refusal to refer based merely on compliance with natural justice is legally incorrect and irrelevant.
Respondents' Arguments
- Respondents (through Mr. Chopra) relied on the State affidavit and contended that the Government's order was justified because the petitioner did not appear at the enquiry to contest evidence and the Union chose to remain absent after the enquiry papers were made available; ordinarily such conduct disentitles the petitioner to relief under Article 226.
- They argued that review of evidence or quantum of punishment can only arise after a reference is made; hence the Government's discretion to refuse reference should be upheld where, in its view, review would be otiose.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| workmen of 1(Firestone Tyre and Rubber Co. of India v. The Management), (1973) 1 SCC 813 : A.I.R 1973 S.C 1227 | Interpretation of section 11A: that the Tribunal is empowered to reappraise evidence in domestic enquiry and to arrive at its own satisfaction as to whether order of dismissal was justified (i.e., Tribunal may differ from employer's finding). | The court relied on this authority to hold that after section 11A the Tribunal's power to reappraise evidence alters the relevant considerations that the Government must apply under section 10 when deciding whether to refer a dispute. |
| (India Iron and Steel Co. Ltd.) 1958 S.C.R 667; A.I.R 1958 S.C 130 | Earlier limitation on Tribunal's powers (pre-section 11A) that tribunals could not ordinarily interfere with managerial satisfaction unless the finding was perverse or punishment indicated victimisation. | The court observed that the limitations from this earlier decision can no longer be invoked by an employer after section 11A; hence the Government must consider whether the Tribunal might reach a different conclusion on review. |
Court's Reasoning and Analysis
The court proceeded from established facts: the dismissal occurred on 20-6-1975 when section 11A was already in force. Relying principally on the Firestone decision, the court explained that section 11A altered the law by empowering the Industrial Tribunal to reappraise the evidence and to form its own satisfaction as to whether dismissal was justified — thereby reducing the deference previously due to managerial conclusions.
The court recognized that the power under section 10 to make or refuse a reference is discretionary, but emphasized that the Government must exercise that discretion reasonably and by reference to relevant considerations. After section 11A one such relevant consideration is whether the workman would be entitled to have the evidence reviewed and the quantum of punishment reconsidered by the Tribunal. The Government must form a prima facie opinion whether there is anything in the evidence that might persuade the Tribunal to change the conclusion on misconduct or punishment.
The impugned order relied solely on a finding that principles of natural justice had been complied with. The court found that that alone is not a sufficient justification for refusing to make a reference because even with evidence meeting natural justice requirements the Tribunal might still come to a different conclusion on the facts or on the adequacy of punishment. The court also addressed the respondents' contention regarding the petitioner's and Union's conduct (non-appearance and absence): while such conduct would ordinarily disentitle the petitioner to relief in proceedings under Article 226, those considerations did not absolve the Government of its duty to bear in mind the new statutory rights conferred by section 11A when exercising its discretion under section 10.
Concluding, the court held that the Government had not shown that it considered whether the Tribunal might reappraise evidence or alter the quantum of punishment, and therefore the refusal to refer was vitiated for not keeping the relevant considerations in mind.
Holding and Implications
Holding: The petition was allowed; the impugned order refusing reference was set aside and the rule made absolute. The court directed the Government to reconsider the matter in the light of the observations made. There was no order as to costs.
Implications: The direct effect is that the Government must reconsider whether to make a reference, taking into account that under section 11A an Industrial Tribunal can reappraise domestic enquiry evidence and review the quantum of punishment. The decision requires the Government, in exercising its discretion under section 10, to form a prima facie view whether the evidence might persuade the Tribunal to reach a different conclusion; a refusal to refer based solely on compliance with natural justice will not suffice. The opinion did not purport to lay down a distinct new precedent beyond applying and following the interpretation of section 11A as expounded in the cited authority.
(Per Deshpande, J.):—
2. In this petition under Article 226 of the Constitution, the petitioner challenges the order of the Deputy Commissioner of Labour refusing to make reference with regard to the dispute raised by the petitioner and the Union in regard to his reinstatement and back-wages.
3. The petitioner was employed as a workman with respondent No. 1, On 8-5-1975 a show cause notice was served on him in regard to certain acts of misconduct. Charges ware framed on 9-5-1975 and 11-5-1975. On 16-5-1975 the petitioner was informed that an enquiry will be held into the charges by one Dholakia on 22-5-1975. It appears that all the workmen employed by the employer went on strike against this act of holding enquiry by the employer against the petitioner. On 22-5-1975 the petitioner did not appear at the enquiry. The Enquiry Officer recorded evidence of the witnesses produced before him and submitted his report to the employers. On the strength thereof, dismissal order was passed on 20-6-1975. The Union raised a dispute with regard to his dismissal claiming reinstatement and backwages. As there was no response from the employers, the Canciliation Officer was approached by the Union. On 15-10-1975 the dispute was admitted in canciliation. Preliminary sittings were held on two occasions. Union complained that copies of the enquiry papers and the dismissal order were not given to the employees. It appears that the Union did not remain present thereafter before the Canciliation Officer. On 24-11-1975 the Canciliation Officer submitted his failure report. The impugned order was passed on 20-1-1976 refusing to make any reference on the ground that the principles of natural justice were found to have been complied with. It is the validity of this order that is challenged in this petition.
4. Mr. Narayan B. Shatye, the learned advocate appearing for the petitioner, contends that after introduction of section 11A in the Industrial Disputes Act in 1972, the employees protected by the Industrial Disputes Act are entitled not only to have the quantum of punishment reviewed by the Industrial Tribunal but also finding as to the misconduct reappraised by the Tribunal. The grievance of Mr. Shatye, therefore, is that the Deputy Commissioner's view that mare compliance with the principles of natural justice was sufficient to refuse to make reference is based on irrelevant grounds and is not legally correct.
5. This contention of Mr. Shatye appears to us to be well founded. The petitioner was dismissed from service on, 20-6-1975. On that dates section 11A was on the statute book. The of section 11A cams up for consideration before the Supreme Court in the case of workmen of 1(Firestone Tyre and Rubber Co. of India v. The Management), (1973) 1 SCC 813 : A.I.R 1973 S.C 1227. The learned Judges reviowed the case law as to the scope of the powers of the Tribunal before its amendment in 1972 and after the introduction of section 11A thereunder. Summary of the case law can be found in para 27 of the judgment at page 1238. The learned Judges then proceeded to consider what alteration is made in the said law by the introduction of section 11A with effect from 15-12-1971. This is what the learned Judges observed:
“The conduct of disciplinary proceeding and the punishment to be imposed were all considered to a managerial function, which the Tribunal had no power to interfere unless the finding was perverse or the punishment was so harsh as to lead to an inference of victimisation or unfair labour practice.”
6. The learned Judges then observed:
“This position, in our view, has now been changed by section 11A. The words in the course of the adjudication proceeding, the Tribunal is satisfied that the order of discharge or dismissal was not justified clearly indicate that the Tribunal is now clothed with the power to reappraise the evidence in the domestic enquiry and satisfy itself whether the said evidence relied on by an employer established the misconduct alleged against a workman. What was originally a plausible conclusion that could be drawn by an employer from the evidence, has now given place to a satisfaction being arrived at by the Tribunal that the finding of misconduct is correct. The limitations imposed on the powers of the Tribunal by the decision in 2(India Iron and Steel Co. Ltd.) 1958 S.C.R 667; A.I.R 1958 S.C 130, case can no longer be invoked by an employer. The Tribunal is now at liberty to consider not only whether the finding of misconduct recorded by an employer is correct; but also to differ from the said finding if a proper case is made out. What was once largely in the realm of the satisfaction of the employer, has ceased to be so; and now it is the satisfaction of the Tribunal that finally decides the matter.”
7. There is no doubt that the power Conferred under section 10 of the Industrial Disputes Act to make reference or not to make the same, is indeed discretionary and that the Government is not bound to make reference of any dispute to any Industrial Court or Labour Court because a party or a Union or the employer demands such a reference. Even so, the Government is under an obligation to exercise the ???, reasonably and by reference only to relevant considerations. One of the relevant considerations, while making or refusing to make reference, after the introduction of section 11A in the Industrial Disputes Act, must necessarily be that the employee is entitled to get the evidence as to the proof of his misconduct reviewed in such a reference as also the quantum of punishment, even if the misconduct is held to have been proved. In other words, the circumstance that the Disciplinary Authority or the Appellate Authority over the same has applied its mind to the evidence on record and had bona fide come to soma conclusion as to the proof of misconduct and the quantum of punishment by itself is not sufficient to refuse to make reference. The Supreme Court has no doubt, held that the Government is entitled to form prima facie opinion as to whether reference in a given case is justified or not. It can only mean in the altered legal situation that the Government has to consider prima facie whether there is anything in the evidence which may of goad or persuade the labour Court or the Industrial Tribunal to change its opinion as to the conclusion of misconduct or the quantum of punishment therefor. The Government may refuse to make reference if in their prima facie opinion the right of getting evidence reviewed already recorded and the right of getting reviewed the quantum of punishment awarded, is bound to be of no practical use in a particular case. In that case refusal of making reference will be justified and can be said to have been arrived at and reached by keeping the relevant considerations in mind. Where the Government does not appear to have borne these considerations in mind, the order refusing to make reference is liable to be quashed. All that the impugned order indicates is that the principles of natural justice were found by the Government to hove been complied with. This, to our mind, does not appear to be a sufficient justification for refusing to make reference, because even on such evidence possibility of the reference authority coming to some different conclusion cannot be ruled out. Even if the authority found on review of evidence that the misconduct is proved, even then the said authority can find that the punishment imposed was not celled for, in this view of the matter, the impugned order is liable to be set aside. The Government shall have to reconsider the question of reference in the light of the observations made above.
8. Mr. Chopra, the Learned advocate appearing for the respondents 2 and 3, drew our attention to the affidavit filed on behalf of the State in support of the order. Mr. Chopra's main contention was that no fault can be found with the order of the Government, if the employee-petitioner did not display any interest and did not appear at the enquiry to contest the evidence led against him and also when the Union chose to remain absent after the enquiry papers were made available to them on their own raising an objection to that effect, before the Canciliation Officer. This conduct of the employees undoubtedly should ordinarily disentitle the petitioner from claiming any relief from this Court, while exercising our discretionary powers under Article 226 of the Constitution. This, however, cannot be relevant before the Government, who were, in our opinion, bound to bear in mind, the new rights created in favour of the employee under section 11A of the Industrial Disputes, Act. Mr. Chopra is right in contending that the question of reviewing the evidence afresh, or quantum of punishment can only arises if the reference is made. The question of employees exercising any such right cannot arise, if in its discretion the Government refuses to make any reference. This contention, in our opinion, is misconceived, Powers under section 10 cannot be held to have been properly exercised by the Government, unless it is shown to have these rights of the workman before its mind, while refusing to make the reference.
9. We accordingly allow this application, set aside the impugned order and make the rule absolute.
10. We direct the Government to reconsider the matter in the light of the above observations.
11. In the circumstances of this case, there will be no order as to costs.
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