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S.K. Raman v. Management Of The Kundah Rural Co-Oparative Agricultural Credit Society Ltd.

Madras High Court

Jul 16, 1986

Judgment

Subsequent
References

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Structured Summary of the Opinion

Factual and Procedural Background

The petitioner was employed as a Security of the first respondent and was removed from service with retrospective effect from the date of suspension; the removal was communicated by an order dated 16th March, 1977. The first respondent stated that dismissal was on the ground of misconduct and issued a charge memorandum containing five charges: disobedience of orders of the Special Officer; staying away from duties; dereliction of duties; negligence of duties; and falsification of accounts.

The petitioner filed an appeal under S.41(2) of the Tamil Nadu Shops and Establishments Act, 1947 before the second respondent, alleging that no proper enquiry had been conducted. The petitioner's appeal pleaded that he had demanded an enquiry, that statements were recorded in circumstances which did not amount to a full enquiry where evidence was recorded by the management, and that the dismissal order dated 16th March, 1977 took retrospective effect from the date of suspension.

The first respondent, by way of counter-statement, denied that an enquiry was demanded and described the interaction as an interview in which a statement was obtained and averred that the applicant admitted some allegations. The second respondent heard the appeal and on 30th January, 1979 dismissed the appeal, holding that statements were given before the enquiry officer and accepting the first respondent's contention that a recorded enquiry, as contemplated by S.41(1) of the Act, had been held.

The petitioner challenged the second respondent's order by filing the present writ petition.

Legal Issues Presented

Whether an employer may lawfully dispense with the services of an employee on a charge of misconduct unless the dismissal is supported by satisfactory evidence recorded at an enquiry held for that purpose, as required by S.41(1) of the Tamil Nadu Shops and Establishments Act, 1947.
Whether the Appellate Authority under S.41(2) can uphold a dismissal where the employer itself has not conducted the statutory enquiry with evidence, or whether the Appellate Authority may conduct an enquiry to supply what the employer omitted.

Arguments of the Parties

Petitioner's (Appellant's) Arguments

The petitioner contended that no proper enquiry was conducted by the employer and that what occurred were interviews or statements but not an enquiry in which evidence supporting the charges was recorded.
Counsel for the petitioner submitted that S.41(1) is mandatory: dismissal on grounds of misconduct requires support of satisfactory evidence recorded at an enquiry held for the purpose; the employer cannot dispense with service on misconduct without that enquiry even if the employee purportedly admitted misconduct.
The petitioner relied on established authorities interpreting S.41 to argue that where the statutory conditions are lacking the appellate authority should allow the appeal and the dismissal is void ab initio.

Respondent's Arguments and Second Respondent's Findings

The first respondent asserted in its counter-statement that the applicant only sought an interview in which a statement was obtained and that the applicant admitted some points of the allegations.
On the evidence before the Appellate Authority (second respondent), the appellant was examined and admitted giving written statements; the second respondent found it difficult to believe the appellant had signed those statements without knowledge of their contents, noting the applicant was literate, and concluded that a recorded enquiry had been held as contemplated by S.41(1).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Venkateswara Bank Ltd., Salem v. Krishnan (1960-II M.L.J. 165) — Rajagopala Ayyangar, J.	Explains S.41(2): the Appellate Authority has jurisdiction to enquire whether statutory conditions of S.41(1) (including an enquiry at which satisfactory evidence is recorded) have been complied with; if those conditions are lacking the appellate authority should allow the appeal.	The court relied on this precedent to emphasise that the employer's “holding” of misconduct must have been on the terms of S.41(1) after an enquiry with satisfactory evidence; absence of such an enquiry invalidates the employer's “holding.”
The Management of Viduthalai v. J. Dravida Arasu (W.P. No. 226 of 1969; Order dated 3-11-1969; reported 1970 1 M.L.J SN 3) — Ismail, J.	Holds that even where an employee admits misconduct, the employer must still conduct an enquiry and evidence must be recorded; absence of such enquiry renders dismissal invalid; appellate authority cannot substitute its own enquiry to validate an otherwise void dismissal.	The court followed this principle to find that a mere admission or statements taken in an interview do not satisfy the statutory requirement and that the second respondent failed to apply this principle.
Kotak and Co. v. Addl. Commissioner, Workmen's Compensation (referenced in the opinion)	Reinforces that the condition precedent for dispensing with services on misconduct is holding an enquiry to establish misconduct by recording evidence, and that deviation from the statutory prescription renders the dismissal ab initio void; appellate authority conducting an enquiry in lieu of the employer would nullify the statutory requirement.	The opinion cites and applies this reasoning (as referred to by earlier judgments) to support interference with the second respondent's order where the statutory enquiry and recording of evidence were not established by the employer.

Court's Reasoning and Analysis

The court examined the record and the pleadings and made the following analytical steps, using only the material before it:

Identified that the first respondent never pleaded in its counter-statement that it had in fact held an enquiry where evidence was recorded and found satisfactory support for the misconduct charge; instead it stated that the applicant was interviewed and that a statement was obtained and that the applicant admitted some allegations.
Compared the factual posture to the statutory requirement in S.41(1) which, as interpreted by binding authorities, mandates that dismissal on grounds of misconduct must be supported by satisfactory evidence recorded at an enquiry held for that purpose.
Recalled and applied the established authorities (Venkateswara Bank Ltd. and The Management of Viduthalai) which instruct that: (a) the employer must conduct the enquiry and record evidence; (b) an appellant under S.41(2) may challenge whether statutory conditions were complied with; and (c) an appellate authority cannot cure an employer's omission by itself conducting an enquiry in place of the employer, because that would negate the statutory prescription and render the requirement meaningless.
Concluded that the second respondent's finding that a recorded enquiry had been held was not in order given the first respondent's own pleading and that a mere interview or self-incriminating statement cannot substitute for the statutory enquiry and recording of evidence required by S.41(1).
On that basis, the court held that the second respondent omitted to apply the controlling principles and therefore interference by way of writ jurisdiction was warranted.

Holding and Implications

Core Ruling: WRIT PETITION ALLOWED; MATTER REMITTED TO THE SECOND RESPONDENT FOR FRESH CONSIDERATION.

Direct consequences for the parties:

The order of the second respondent dated 30th January, 1979 (which dismissed the appeal and upheld the dismissal) is set aside to the extent that it failed to apply the statutory principles requiring an enquiry with recorded evidence under S.41(1).
The matter is remitted to the second respondent to consider the appeal afresh in the light of the principles stated in the opinion and to pass such orders as are appropriate and in accordance with law.
The court made no order as to costs.

Broader precedent implications: The opinion applies and reiterates established principles from prior authorities on the mandatory nature of S.41(1) and the limits on the Appellate Authority under S.41(2). The court did not purport to create a new rule of law beyond those principles—its decision directed re-application of those existing principles to the facts before it.

VCS.

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1. The petitioner, who was employed as a Security of the first respondent, was sent out of service on 16th March, 1977. It is the case of the first-respondent that the petitioner was so sent out of service on a charge of misconduct. The charge memorandum issued contains as many as five charges and they relate to disobedience of orders of the Special officer; staying away from duties; dereliction of duties; negligence of duties and falsification of accounts. The petitioner filed an Appeal under S. 41(2) of the Tamil Nadu Shops and Establishments Act, 1947, hereinafter referred to as ‘the Act’, to the second respondent. In that Appeal petition, as we could see from the copy furnished by the learned counsel for the petitioner, the petitioner would contend that there was no enquiry conducted. The relevant averments are found in paragraphs 10 to 14 in the Appeal Petition, as follows:—

“The Special Officer of the Society framed charge memo on 4th September, 1976 and the applicant was called for to submit his explanation. The charges were so elaborated and was not specific The Applicant not only denied the allegations, but has demanded for an enquiry.

The special officer did not conduct an enquiry. On the other hand, he framed a show cause notice on 15th October, 1976 and called for explanation which was offered on 23rd October, 1976. The applicant has in his explanation demanded for an enquiry.

The special officer has thereafter fixed 13th November, 1976 as date for oral enquiry. On the said date, the Special Officer obtained a statement from the Applicant. There was no attempt made to prove the charges by the Management.

By the Memo dated 13th December, 1976, the Special Officer again instituted an enquiry on 17th December, 1976. On the said date also no enquiry was held. But the statement of the applicant was alone recorded.

After the same, the Special Officer of the Society by his proceedings, dated 16th March, 1977 passed orders dismissing the Applicant from services of the Society to take retrospective operation from the date of suspension.”

The first-respondent filed a counter-statement and with regard to the enquiry, paragraph 6 of the counter statement alone refers to it in the following terms;

“It is not correct to state that the Applicant demanded an enquiry. In fact, he only requested for an interview, in which a statement was obtained from the applicant. The applicant has admitted some points of allegations made against him”.

Copies of the Appeal petition and counter-statement, were produced by the learned counsel for the petitioner. The respondent in their (sic) counter-statement, replied the appeal petition preferred by the petitioner as above, passed the following order, on 30th January, 1979.

“Thiru S.K Raman preferred an appeal under S.41(2) of the Tamil Nadu Shops and Establishments Act. 1947 against the orders of his dismissal by the Kundah Rural Co-operative Agricultural Credit Society Limited, Kundah Bridge Post. Nilgiris District. He stated that he was unjustifiably dismissed without proper enquiry. The respondent in their counter-statement, replied that the dismissal was made only after proper enquiry. It was further added that an industrial Disputes were not recommended by the Government for adjudication.

The case was taken up for hearing on several dates and finally on 30th January, 1979. The Appellant was examined. He stated that no enquiry was conducted in his presence. He was on medical leave. He was suspended while he was on leave. During cross-examination, he has replied that he gave a written-statement to the enquiry officer which was filed. But he did not know the contents of the statement. He added that he was asked to sign and he signed. Again another statement was obtained from him. He admitted that he did not report to anybody that his signature was obtained unlawfully. It was argued on behalf of the applicant that the dismissal was made without a proper enquiry and therefore it was illegal.

From the evidence let in and after hearing the arguments of both the parties, I find that the statements were given by the applicant before the enquiry officer. It is difficult to believe that he signed the statements without knowing the contents. The Applicant is a literate person. Under the circumstances, I am inclined to accept the contention of the respondent that the applicant was dismissed after a recorded enquiry held for the purpose as contemplated in S. 41(1) of the Tamil Nadu Shops and Establishments Act, J947. No order as to costs.”

The above order is being impugned in the present Writ Petition.

2. Mr. A.L Somayaji, learned counsel Appearing for the petitioner, would submit that the case of the first respondent being that the service of the petitioner was dispensed with on a charge of misconduct, it could be done only with the support of a satisfactory evidence recorded at an enquiry held for the purpose, and in the instant case, it is not the case of the first-respondent that there was an enquiry conducted where any evidence was recorded, much lets satisfactory evidence in support of the charge of misconduct. Learned counsel submits that the provisions of S. 41(1) of the Act are mandatory in nature and whether the employee demanded an enquiry or not, and whether the employee admitted the guilt or not, the employer if be wants to dispense with the service of the employee on a charge of misconduct, it must have the support of satisfactory evidence recorded at an enquiry held for the purpose. S. 41(1) of the Act reads as follows:—

“No employer shall dispense with the services of a person employed continuously for a period of not less than six months, except for a reasonable cause and without giving such persons at least one month's notice or wages in lieu of such notice, provided, however, that such notice shall not be necessary where the services of such person are dispensed with on a charge of misconduct supported by satisfactory evidence recorded at an enquiry held for the purpose.”

We are not facing a case of dispensing with the service of an employee for reasonable cause, and after giving such persons at least one month's notice or wages in lieu of such notice. Here we are facing a specific case of the employer, the first-respondent, that the service of the petitioner was dispensed with on a charge of misconduct. Rajagopala Ayyangar, J. as he then was, in Venkateswara Bank Ltd. Salem v. Krishnan . 1960-II-M.L.J 165. had an occasion to consider the scope and implication of S. 41 of the Act, and the summed up the position in the following terms:

“It is in the light and context of these elements of protection granted to the servant that the terms of S. 41(2) have to be understood Under S. 41(2) the grounds of Appeal are two: (1) that there was no reasonable cause for dispensing with the services and (2) that the employee (appellant) had not been guilty of mis-conduct as held by the employer. It would be seen that these two terms are related to the two limbs of sub S. (1) of S. 41 to which I have already referred. I will refrain from dealing with the first of the grounds of appeal, namely, that there was no reasonable cause for dispensing with the services which applies to cases where notice of at least one month or wages in lieu of notices is given as that is not relevant to the present case and confine myself only to the other grounds, namely, ‘the applicant had not been guilty of misconduct’ as held by the employer. The Appellate Authority under S. 41(2) must be held to have jurisdiction to enquire whether the statutory conditions subject to which alone a servant could dismissed have been complied with. When it finds that this is lacking, I consider that it would be the duty of that authority to allow the Appeal. It must be remembered that S. 41(2) of the Act enacts that it is the misconduct which has been held by the employer to have been established that is made the subject matter of enquiry by the Appellate Authority. That “holding” can only arise on the terms of S. 41(1) after an enquiry at which satisfactory evidence has been recorded. When those conditions are wanting the terms of S. 41(1) would not be satisfied.”

3. In The Management of Viduthalai v. J. Dravida Arasu . W.P No. 226 of 1969, Order dated 3rd November, 1969 vide 1970 1 M.L.J S.N 3., Ismail, J, (as he then was), held that whether the employee admits the misconduct or not the employer must conduct an enquiry to substantiate the misconduct on the basis of which the employer dispensed with the services of the employee, and in the absence of such an enquiry, the order of dismissal would be invalid. The learned Jude dealt with the point in the following language:

“Hereagain, admittedly, no enquiry was conducted by the petitioner and no evidence was recorded to support the misconduct at such an enquiry. The learned counsel for the petitioner contends that when the employee has admitted the misconduct, such an enquiry and recording of evidence is unnecessary. As the statute stands at present, I do not think that there is any scope for such an argument and there is no escape from the conclusion that whether the employee admits the misconduct or not the employer must conduct an enquiry and evidence must be recorded at the enquiry evidence to substantiate the misconduct on the basis of which the employer dispensed with the services of the employee. On the terms of the statute, in my opinion, the contention of the learned counsel for the petitioner that no such enquiry is necessary simply because the first-respondent had admitted his misconduct cannot stand.”

The learned Judgs also referred to and followed the ratio of Rajagopala Ayyangar, J., (as he then was) in Venkateswara Bank Ltd., Salem v. Krishnan. The very same learned Judge, while repelling the contention, that in the absence of an employer holding an enquiry under S. 41(1), the Authority under the Act, could take evidence and upheld the order of the employer, observed as follows in Kotak and Co. v. Addl. Commissioner, Workmen's Compensation 1. 1960-II-M.L.J 165.;

“From the language of that Section already extracted, it is clear it is a statutory pre-requisite for an employer to dispense with the services of an employee on the ground of misconduct to conduct an enquiry for the purpose of establishing that misconduct. That means, the condition precedent to the exercise of the power of dispensing with the services of an employee on the ground of misconduct is the holding of the enquiry for the purpose of establishing the misconduct by recording evidence at such an enquiry. When a statute states that a particular thing should be done in a particular manner it is impliedly prohibits the doing of the same in any other manner. Therefore, when the employer does not follow the statutory prescription and fulfill the condition precedent, the action of the employer dispensing with the services of an employee will be ab initio void. When the appellate authority dismisses the appeal preferred by the employee, it merely sustains or confirms the order of the employer. When the action of the employer is ab initio void, there cannot be any subsequent confirmation or upholding of the same. When an order is ab initio void, in the eye of the law, it has no existence.

… … … … … …

In other words, to hold that when the employer himself had not conducted the enquiry contemplated by S. 14(1) of the Act, the Appellate Authority can conduct that enquiry and on the basis of the said enquiry, uphold the order of the employer dispensing with the services of the employee is to wipe out the statutory requirement and to render the same totally nugatory”.

Here we find the first-respondent never pleaded that there was an enquiry into the charge of misconduct conducted by it where evidence was recorded in support of such charge and which it found to be satisfactory and on the basis of which, a warrant was found to dispense with the service of the petitioner. What all the first respondent stated in the counter-statement, as we could see from the extract made above, is that the petitioner only requested for an interview in which a statement was obtained from him and the petitioner admitted some points of allegations made against him. The second-respondent was not strictly in order when be observed that the first respondent in the counter statement replied that the dismissal was made only after proper enquiry. A mere interview where a statement, may be self-incriminating was taken from the employee is certainly not a substitute for an enquiry into the charge of misconduct where evidence should be recorded. To hold so, would be making a mockery of statutory mandate. The charges levelled against the petitioner were elaborate indeed, and they required substantiation by evidence to be recorded at the enquiry. Even the counter-statement filed by the first respondent only states that the petitioner admitted some points of allegations made against him. The second respondent has obviously omitted to take note of the principles governing cases where the employer puts forth a plea of dispensing with the service of an employee on a charge of misconduct. As observed by Ismail, J., as he then was, when a statute states that a particular thing should be done in a particular manner, it impliedly prohibits the doing of the same in any other manner. Since there is an omission on the part of the second respondent to keep in mind and adhere to the principles discussed above, I feel obliged to interfere in writ jurisdiction. Accordingly, the Writ Petition is allowed, and the matter shall stand remitted to the file of the second-respondent for him to consider the same afresh in the light of the above principles and pass the appropriate orders in accordance with law. I make no order as to costs.