# WORKMEN OF MESSRS FIRESTONE TYRE & RUBBER COMPANY OF INDIA (P.) LTD v. "-iANAGEMENT & OTHERS (With connected appeals) ·

- **Citation:** [1973] 3 S.C.R. 587
- **Court:** Supreme Court of India
- **Decided:** 1973-03-06
- **Case number:** Civil Appeals Nos. 1995 & 1996 of 1972
- **Bench:** l. D. DUA, C .. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/workmen-of-messrs-firestone-tyre-rubber-company-of-india-p-ltd-v-ianagement-5906
- **Pages:** 37

## Headnote

, JndustriGi Disputes Act 1947 as
anze1i.ded
by
Industrial
Disputes
(Anzendnzent) Act 1971-Sect:on lIA, interpretation of-Power of Tribunal ho•v far nzodificd-Section whether applicable to disputes referred
before 15-12-71, when ft ca1ne into force.
"
The Industrial Disputes (Amendment) Act 1971 ·inter alia introduced
s .. llA int:J the parent Act of 1947. The new Section provided that if in
the course of the adjudication of an Industrial dispute relating to
the
discharge or dismissal of a workm1:i a Labour Court, Tribunal, or Na-
. tionat Tribunal is satisfied that the o:-der of d:scharge or dismissal v1as.
not justified, it may, by its a\vard, set aside the order of discharge or dismissal and direct reinstatement of the workmen or reduce punishment etc.
The proyiso to the section laid do¥/n that i:i a1y procecdirig u:der the
sectio:i the Court or Tribunal in question shall rely only on the material;
on re:ord arid shall not take any fresh evidence jn relatio:i to the matter •
. The sectio:i cam~ into force \Vith effect from D.'!;;:embcr 15, 1971. In the .
pi-esent appeals by special "leave the two questions that arose for considerafon \\·ere: (i) ·whether s. llA had made any changes in the existing legal
situatio:i as laid do\vn by this Cou':"t and if so, to \vhat extent; (ii) wh:!ther
the section was app!icable to industrial disputes which had been already
referred for adjudication and were pending as on December 15, 1972.
HELD : (i) The statement of objects and reasons cannot be taken
into account for the purpose o"f interpreting the plain words of the sec-
.tio:i. But it gives an indicatiori as _to
what the Legislative wanted to
achieve ..
~608 A-BJ
(ii) The .Ac-t is "a beneficial piece of legislation enacted in the interest
cf employees. It is well settled that in construing the provisions of . a
\velfare legislation, courts should adopt, what is described as. a beneficent
rule .of construcfo:t. If t\vo constructions are reasonably possible to
be
placed on the section, it follows that the constructio~ which furthers the
policy and object of the Act and is more. beneficial to the employees has
to be preferred.
The interpretation must be liberal enou~ to achieve
the leg'.slative purpose. It must still be in accordance with the plain v;orCs:
of the statute or the section and must not do violence to the language
useJ by the legislature. It \vill further have to be found from the v.rords
of the section whether it has altered the entire law as laid down in
the
existing decisions and, i'f so, whether there is a clear expression of that
intention in the language of the sect:on. [608 G·H; 609 kC]
· (iii) Both in respect of cases where a domestic enquiry has been held
as also in cases \\'·hen the Tribunal considers the matter on the evidence
adduced before it for the first time, the satisfaction under s. J lA, about
the guilt or otherwise of the workmen concerned is that of the Tribunal.
It has to consider the evidence and
come to a conclusion one way or
other.
Even· in· cases where an enquiry has been held by an Cmployer
and a finding of misconduct arrived at, the Tribunal can now differ from
that finding in a proper case anO hold that no misconduct is proved.
'
.
·. [611 A-CJ
The contention that the ·stage for interference under·section llA by
the Tribunal is reached only when it has to consider the punishment after
588
SUPREME COURT REPORTS
[1973] 3 S.C'.R.
having accepted the finding of guilt recorded by the employee, could not
A
be accepted.. The Tribunal under s. l lA can consider the question of
guilt as well as of punishment. It can also alter the punishment imposed by
an employer. [pll C-H; 612 A·B]
·
It was specifically contended before the Court in Workmen of Motipur
Sugar Factories (Private) Limited, that when an employer had held no
enquiry as required by the Standing Orders, it was not open to him to
add~ce evidence before the Tribunal for the first time and justify the
order of discharge. This contention was reject

## Text

_Characters 0–39,693 of 99,652. This is a partial read: ask again with offset=39693 for what follows._

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WORKMEN OF MESSRS FIRESTONE TYRE &
RUBBER COMPANY OF INDIA (P.) LTD.
v.
"-iANAGEMENT & OTHERS (With connected appeals)
·
March 6, 1973
·
[l. D. DUA & C .. A. VAIDIALINGAM, JJ.]
, JndustriGi Disputes Act 1947 as
anze1i.ded
by
Industrial
Disputes
(Anzendnzent) Act 1971-Sect:on lIA, interpretation of-Power of Tribunal ho•v far nzodificd-Section whether applicable to disputes referred
before 15-12-71, when ft ca1ne into force.
"
The Industrial Disputes (Amendment) Act 1971 ·inter alia introduced
s .. llA int:J the parent Act of 1947. The new Section provided that if in
the course of the adjudication of an Industrial dispute relating to
the
discharge or dismissal of a workm1:i a Labour Court, Tribunal, or Na-
. tionat Tribunal is satisfied that the o:-der of d:scharge or dismissal v1as.
not justified, it may, by its a\vard, set aside the order of discharge or dismissal and direct reinstatement of the workmen or reduce punishment etc.
The proyiso to the section laid do¥/n that i:i a1y procecdirig u:der the
sectio:i the Court or Tribunal in question shall rely only on the material;
on re:ord arid shall not take any fresh evidence jn relatio:i to the matter •
. The sectio:i cam~ into force \Vith effect from D.'!;;:embcr 15, 1971. In the .
pi-esent appeals by special "leave the two questions that arose for considerafon \\·ere: (i) ·whether s. llA had made any changes in the existing legal
situatio:i as laid do\vn by this Cou':"t and if so, to \vhat extent; (ii) wh:!ther
the section was app!icable to industrial disputes which had been already
referred for adjudication and were pending as on December 15, 1972.
HELD : (i) The statement of objects and reasons cannot be taken
into account for the purpose o"f interpreting the plain words of the sec-
.tio:i. But it gives an indicatiori as _to
what the Legislative wanted to
achieve ..
~608 A-BJ
(ii) The .Ac-t is "a beneficial piece of legislation enacted in the interest
cf employees. It is well settled that in construing the provisions of . a
\velfare legislation, courts should adopt, what is described as. a beneficent
rule .of construcfo:t. If t\vo constructions are reasonably possible to
be
placed on the section, it follows that the constructio~ which furthers the
policy and object of the Act and is more. beneficial to the employees has
to be preferred.
The interpretation must be liberal enou~ to achieve
the leg'.slative purpose. It must still be in accordance with the plain v;orCs:
of the statute or the section and must not do violence to the language
useJ by the legislature. It \vill further have to be found from the v.rords
of the section whether it has altered the entire law as laid down in
the
existing decisions and, i'f so, whether there is a clear expression of that
intention in the language of the sect:on. [608 G·H; 609 kC]
· (iii) Both in respect of cases where a domestic enquiry has been held
as also in cases \\'·hen the Tribunal considers the matter on the evidence
adduced before it for the first time, the satisfaction under s. J lA, about
the guilt or otherwise of the workmen concerned is that of the Tribunal.
It has to consider the evidence and
come to a conclusion one way or
other.
Even· in· cases where an enquiry has been held by an Cmployer
and a finding of misconduct arrived at, the Tribunal can now differ from
that finding in a proper case anO hold that no misconduct is proved.
'
.
·. [611 A-CJ
The contention that the ·stage for interference under·section llA by
the Tribunal is reached only when it has to consider the punishment after
588
SUPREME COURT REPORTS
[1973] 3 S.C'.R.
having accepted the finding of guilt recorded by the employee, could not
A
be accepted.. The Tribunal under s. l lA can consider the question of
guilt as well as of punishment. It can also alter the punishment imposed by
an employer. [pll C-H; 612 A·B]
·
It was specifically contended before the Court in Workmen of Motipur
Sugar Factories (Private) Limited, that when an employer had held no
enquiry as required by the Standing Orders, it was not open to him to
add~ce 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 inquiry 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.
There is no provision
either in the Industrial Employment (Standmg Orders) Act 1948 or in
the Industrial Disputes Act which states that an order of dismissal or di&-
charge is illegal if it is not recorded by a proper · and valid domestic
enquiry.
Therefore, the contention that such an enquiry being illegal,
the Tribunal has now under s. llA no alternative but to order reinstatement could not be accepted.
Moreover tho Industrial
Disputes
Act
cannot be differently applied to employees who are governed by tho Standing Orders Act and those who are not governed by it.
~612 H; 613 A-0]
Tho expression 'materials on record' occurring iii tho proviso to s. !IA
cannot be confined only to tho materials which
wore available at tho
domestic enquiry.
On tho other hand the 'materials on record' in the
proviso must be held to refer to materials on record before the Tribunal.
They take io (I) the evidence taken by the management at the enquiry
and the proceedings of the enquiry, or (2) the above evidence and in
addition any 'further evidence led before the Tribunal, or (3 J evidence
placed before the Tribunal for the first time in support of the action
taken by the employer as well as the evidence adduc& by the workmen
contra.
The expression 'fresh evidence' has to be read in the context in
which it appears, namely, as distinguished from the expression 'materials
on record'. The Tribunal, for the purpose of determining the question
of misconduct or punishment or relief to be granted to workmen, has to
act only on the basis of the 'materials on record" before it and cannot
call for fresh evidence 3.s an appellate authority can normally. do.
[613H; 614 A·H; 615A·Dl
(iv) The words "i'n a proceeding under this section" in the proviso to
s. l lA are very significant.
There cannot be a "proceeding under this
section,' before the section has come into force. A proceeding under that
section can only be on or after 15-12'-1971. That also gives an indication that section llA applies only to disputes which are referred for adjl.1"'
dication after the section has come into !Orce.
There
arc no express
words in s. llA which would make it applicable even to disputes referred
before it came into force nor could such an inference be gathered
by
nec .. sary intendment,, The section therefore does not apply to proceedings before 15-12-1971. [.619 E-0; 622 D-01
The following cases were referred to in the judgment :
(1) Indian Iron & Steel Co. Ltd .. anli Another v. Their
Workmen
[1958] S.C.R. 667, Buckingham and Carnatic Company Ltd. by its Manag.
ing Agents Binny & Co., Madras v. Workmen of the Company represented
by the Madras Labour Union and Madras Texti~ Workmerl's
Unibn,
(1952] Labour Appeal Cases 490, Shri Ram Swarath' Singh Righa, MuUlf·
ferpur v. The Management of the Belsund Sugar Company limited
Righa, Muzafferpur, [1954] Labour Appeal Cases 697; The Punjab Na'.
3
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WORKMEN V. FIRESTONE TYRE & RUBBER CO.
589
(Vaidialingam, J.)
tional Bank Ltd. v. Workmen [1960] 1 S.C.R. 806, Mjs. Bl1arat Sugar
Mills Ltd. v. Shri Jai Singh and Others, [1962] 3 S.C.R. 684, Management
of Ritz Theatre (P) Ltd. v. Its Workmen, [1963] 3 S.C.R. 461, Khardah
Co. Ltd. y, Their Workmen, [1966] 3 S.C.R. 506, Workmen of Motipur
Sugar Factory (Private) Limited v. Motipur Sugar
Factory,
[1965] 3
S.C.R. 588, State Bank of India v. R. K. Jain & Ors., [J9n] 1 S.C.R.
755, Delhi Cloth and General Mills Co. Ltd. v. Ludh Budh Singh, {1972]
l L.L.J. 180.
The Management of Panitole Tea Estate v. The Workmen
[1971] 1 S.C.R. 742, Garikapatti Veeraya v. N.
Subbish
Choudhury,
[1957] S.C.R. 488, Keshavlal lethalal Shah v. Mohan/al Bhagwandas &
Anr., [1968] 3 S.C.R. 623, The State of Maharashtra v. Vishnu Ramachandra, [1961) 2 S.C.R. 26, Barber v. Pigdon, [1937] 1 AIL B.R. 115,
Bir/a Brothers Ltd. v. Molak l.L.R., 1948 (11)
Cal. 209, lshiruddin v.
K. D. Sethi, Factory Manager, The Model Mills , Nagpur Ltd., [1966] 2
S.C.R,
660,
Shah Bhojraj Kavar Oil Mills and Gining
Factory
v:
Subhash Chandra Yograj Singh [1962] 2 S.C.R. 159, and Keshavlal letMJa/ Shah v, Mohan/a/ Bhagwandas & Anr. [1898] 2, Q.B. 547.
CIVIL APPELLAT.E JURISDICTION : Civil Appeal No. 1461 of
1972.
Appeal by special leave from the judgment and . order dated
April 21, 1972 of the Industrial Tribunal, Maharashtra in I.T.
No. 307 of 1968.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1995
& 1996 of 1972.
Appeals by special leave from the Awards dated June 28 and
June 27, 1972 of the Fifth Labour Court, Bombay in References
Nos. {IDA) 268 and 270 of 1970.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2336 of
1972.
Appeal by Special Leave from the judgment and order dated
June 27. 1972 of the Fifth Labour Court, Bombay in Ref. (IDA)
F
No. 213 of 1970.
Indira Jai Singh, A. D. Shastri and Umffla Simr, for the
appellant (in C.A. No. 1461).
M. C. Setalvad, V. M. Tarkunde and Rameshwar Nath, for
the respondent No. 1 (in C.A. No. 14~1) .
.G
F. D. Damania, D.R. Nath, Bhuvanesh Kumari, 0. C. Mathur,
Ravinder Narain, J. B. Dadachanji, for the Interveners (Mahindra
& Mahindra) .
Madan Mohan, for the intervener (Kulwant Singh).
M. C. Stalvad, F. D. Damania M. A. Gagrat, S. M. Patel and
'H
I. N. Shroff for the appellant. (in C.A. No. 1995).
M. A. Gagrat,_ S. M. Patel and I. N. Shroff, for the appellant
(in C.A. No. 1996).
590
SUPREME COURT REPORTS
[1973] 3 S.C.R ..
S. J. Deshmukh and Indira Jai Singh, for the respondents. (in
C.A. Nos. 1995-96 and C.A. No. 2386) and for the Intervener
(M. Vasudeo) (in C.A. No. 1461).
The Judgment of the Court was delivered by
VAIDIALINGAM, J. In these appeals, by special leave, two
a.
common questions arise for consideration :-
(1) proper interpretation of section llA of the Industrial
Disputes Act; and
(2) whether the above section applies to industrial disputes which have already been referred to for adjudication and were 'pending as on 15-12-1971.
Section I IA was incorporated in the Industrial Disputes Act
1947 (hereinafter referred to as the Act) by section 3 of the
Industrial Disputes (Amendment) Act 1971 (hereinafter referred
to as the Amendment Act). The Amendment Act passed by
Parliament, received the assent of the President on December 8,
1971.
Sub-section 2 of section I provided for its coming into
force on such date as the Central Government by notification in
the official gazette appoints. The Central Government by notification No. F.S.-11013/1/71-LR.I dated 14-12-1971 appointed
the 15th day of December, 1971, as the date on which the said
Act would come into force.
Accordingly, the Amendment Act
came into force with effect from December
15, 1971. The
Amendment Act introduced various amendments to the Act. In
particular by section 3, it inserted the new section I IA in the Act.
The new section I IA so inserted runs as follows :-
Powers of Labour Courts, Tribunals and National Tribunals to
give appropriate relief in case of discharge or dismissal of
workmen
"11 A. Where an industrial dispute relating to the
discharge or dismissal of a workman has been referred
to a Labour Court, Tribunal or National Tribunal for
adjudication and, in the course of the adjudication proceedings, the Labour Court, Tribunal or National Tri-
. bunal, as the case may be, is satisfied that the order of
discharge or dismissal was not justified, it may, by its
award, set aside the order of discharge or dismissal and
direct reinstatement of the workman on such terms and
conditions, if any, as it thinks fit, or give such other relief to the workmen including the award of any lesser
punishment in lieu of discharge or dismiS!ial as the circumstances of the case may require;
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WORKMEN V. FIRESTONE TYRE & RUBBER CO.
5 9 t
(Vaidialingam, J.)
Provided that in any proceeding under this section
the Labour Court, Tribunal or National Tn'bunal, as
the case may be, shall rely only on the materials on record and shall not take any fresti evidence in relation to
the matter".
Regarding section 11 A; in the Statement of · objects
and
reasons it is stated as follows :-
"In Indian Iron and Steel Company Limited and
another v. their workmen (AIR 1958 S.C. 130 at 138),
the Supreme Court, while considering the Tribunal's
power to interfere with the managemenfs decision to
dismiss, discharge or terminate the services of a workman, has observed that in case of dismissal on misconduct, the Tribunal does not act as a court of appeal and
substitute its own judgment for that of the management
and that the Tribunal will interfere only when there is
want of good faith, victimisation, unfair labour practice,
etc. on the part of the management.
The International Labour Organisation, in its recommendation (No.· 119) concerning termination of
employment at .the initiative of the employer, adopted
in June 1963, has recommended th!lt a worker aggrieved by the termination of his employment should be entitled to appeal against the termination among ofhers;
to a neutral body such as an arbitrator, a court, an arbi'
tration committee or a similar body and that the neutral
body concerned should be empowered to examine the
reasons given in ·the termination of employment and the
other circumstances refating to the case and to render a
decision on the justification of the termination. The
International Labour Organisation has further recommended that the neutral body should be empowered (if
it findg fhat the termination of employment was unjustified) to order that the worker concerned, unless reinstated with unpaid wages, should be paid adequate compensation or afforded some other relief.
In accordance with these recommendations, it is
considered that the Tribunal's power in an adjudication
proceeding <"elating to discharge or dismissal of a workman should not be limited and that the Tribunal should
have the. power in cases "'.herever necessal!', to s~t aside
the order of discharge or dismissal and d1rect remstatement of the workman on such terms and conditions, if
any, as it thinks fit or give such other relief t? the wor~
men including the award of any lesser pumshment m
lieu of discharge or dismissal as the circumstances of the
S92
SUPREME COURT REPORTS
(1973] 3 S.C.R,
case may require. For this purpose, a new section l lA
A
is propOsed to be inserted in the Industrial Disputes
Act, 1947 , ....... "
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 1 IA and the industrial disputes were pending adjudicaB
lion at the hands of the concerned authorities on 15-12-1971. In
respect of such disputes the concerned labour court or Tribunal
had· to consider the quesiion whether section 11 A applies to those
proceedings and also the ftirther 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 for adjuC
dication 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 dis·
missal had been passed and al'so in caSes where the enquiry held
is found to be defective. This claim was resisted on hebalf of
the labour on the ground that the section applies to all proceedings
D
which were pending as on 15-12-1971 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:-
E
In Civil Appeal No. 1461 of 1972, the Reference (l.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
llA 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 l lA, which has the effect of affecting tfie 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 1 lA
was not in the statute. The workmen have come up in appeal.
. Civil Appeal No. 1995 of 1972 arises out of the order dated
28-6-1972 of the Fifth Labour Court at Bombay in Reference
(l.D.A.) No. 268 of 1970. The Labour Court has held that section 11A applies even to all proceedings pending adjudication as
on 15-12-1971, as it only .deals with matters of procedure. The
said Court has further held that the new section makes it clear that
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WORKMEN V. FIRESTONE TYRE & RUBBER CO.
~93
(Vaidialingam, J.)
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 enquiiy 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 o(
Reference (LO.A.) No. 207 of 1970] and in Civil Appeal No.
2386 of 1972 [arising out of Reference (LO.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 appeals.
The management and the workmen concerned in certain other ·
disputes have also intervened in these appeals and they have
placed before us 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 (LO.A.) No. 79 o( 1971, the Second
Labour Court in its order dated April 13, 1972 has held as
follows:-
Section 11 A 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
th~
labour. On the other hand, an employer has got a right to adduce
evidence to justify the action taken by· him. But section 1 lA
deals only with procedural matters and, therefore, it operates retrospectively.
Similarly in Reference (LO.A.) No. 41 of 1956, 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.
From what is stated above, it is clear that there is a very wide
divergence of views expressed by the various authorities, both
regarding the applicability of the section to pending proceedings
as well as the interpretation to be placed on the said section.
We will first take up the question regarding the proper interpretation to be placed on section I IA. The contentions of Mr.
Oeshmukh. learned counsel, who advanced the main arguments irr
this regard on behalf of the workmen are as follows :-·
. 594
SUPREME COURT REPORTS
(1973] 3 S.C.R •
Originally limitations had been placed by judicial decisions in
resp~ct of the jurisdiction of the Labour Tribunals when considering the action of an employer in the matter of discharge or dismissal of a workmen. lt a domestic enquiry had been held by an
.employer on the basis of which a workman is dismissed or discharged, the Labour Courts can interfere with the decision of the
management only if the domestic enquiry is vitiated by the circumstances mentioned by this Court m Indian Iron & Steel Co.
Ltd. & Another v. Their workmen(1). Once ·the Tribunals hold
that the domestic enquiry has been conducted properly and the
action of an employer is bona fide and the conclusions arrived at
therein are plensible, they had no ju~isdiction to substitute their
own judgment.
In cases where the misconduct is founci to be
proved by a valid and proper domestic enquiry, the Tribunal had
no power to alter the punishment imposed by an employer. Even
in cases where the domestic enquiry is held to be defective or even
if no domestic enquiry had been conducted by an employer before
passing an order of termination or discharge, the employer was
given an opportunity to adduce evidence before the Tribunal to
justify his action.
Once the Tribunal accepts that evidence and
holds that the misconduct is pro\\ed, it had no power to interfere
with the discretion of the management regarding the quantum of
punishment.
The abo\>e position has been completely changed by section
! !A. It is now obligatory on an employer to' hold a proper domestic enquiry in which all material e.vidence will have to be adduced.
When a dispute is referred for adjudication and it is found that
the domestic enquiry conducted by the management is defective
or if it is found that no domestic enquiry at all had been conducted, the order of discharge or termination passed by the employer
becomes, without anything more, unjustified and the Labour Tribunals have no option but to direct the reinstatement of the workmen concerned, as his discharge or dismissal is illegal. Even in
cases where a domestic enquiry has been held and finding of misconduct recorded, the Labour Tribunals have now full power and
jurisdiction to reappraise the evidence and to satisfy themselves
whether the evidence justifies the finding of misconduct.
Even
if the enquiry proceedings are held to be proper and the finding
of misconduct is also accepted, the Tribunal has now power to
consider whether the punishment of dismissal or discharge was
necessary for the type of misconduct of which the workman is
found guilty.
In such circumstances, the Tribunal can also give
any other relief to the workman, including the imposing of a
lesser punishment. In cases where an employer had not conducted any enquiry or when the enquiry conducted by him is held to
'be defective, the employer wi11 not be given any opportunity to
(I) [1958] S.C.R. 6€7,
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WORKMEN V • . FIRESTONE TYRE & RUBBER CO.
595
(Vaidialingam, J.)
adduce evidence before the Labour Tribunal for justifying his
action.
Various decisions of this court have emphasised that
there is an obligation on the part of an employer to hold a proper
enquiry before dismissing or discharging a workman. And it has
also been stated that the enquiry should conform to certain well
defined principles and that it should not be an empty formality.
1f the management, being fully aware of this position in law, does
not conduct an enquiry or conducts a defective enquiry, the order
passed by it is illegal and it cannot take advantage of such illegality or wrong committed by it and seek a further opportunity before the Tribunal of adducing evidence for the first time.
Generally, the Standing Orders al,so provided for the conduct of an enquiry before imposing a punishment. The Standing Orders have
been held to be statutory terms of conditions of service. If an
employer does not conform to the provisions of the Standing
Orders, he commits an illegality and an order passed, which is
illegal, has only to be straightway set aside by the Tribunal. Decisions of this Court, while recognising that an opportunity has to
be given to an employer to adduce evidence before the Tribunal
for the first time, have not 'given the importance to the effect of a
breach of a statutory obligation committed by an employer in not
conducting a proper and valid enquiry as per the Standing Orders.
This anomaly has now been rem.oved by the legislature.
The above is the line of argument adopted by Mr. Deshmukh.
He referred us to certain decisions of this Court in support of his
contentions that the opportunity that was so far directed to be
given to an employer to adduce evidence for the first time before
the Tribunal was not by way of recognising a right in an employer
?ut rea!IY for the benefit of the workman, who will otherwise be
Jeopardi~ by a further enquiry being conducted by the employer
after fi!ling up the lacunae that are found in the original enquiry.
H~ pomted out that when the Tribunals have now been clothed
with .full po~er to reappraise the evidence adduced in the domcitic
enqmry, which an employer is under obligation to conduct and
when they have ~1.1 clothed with powers to hold as un·u~tified
~nf or~er of termmation because of the enquiry oroc~,didg being
~e
eb~;: 1~r on. f!le ground ~hat no enquiry at all was conducted,
dence before g~~n~ ~~ e~p oye[ an opportunity to adduce eviwas prepared to ac;p~~at ~~eno~~C:, ftuf:i~es.
Mr. Des~ukh
~~u~~ ~~enc.e beffore the Tri?unal, strictl:~iiul~eJ11~0 pt:;:-~~a1~
oloyer.
Tu!':~:i o a .domes!ic en~uiry conducted by an eml !Ajn support 0/~L ~~~te~~~n h:~l~ ?n t~~ oroviso to section
employer to conduct a ro
:t 1. Is 0 1g_atory now for an
an order of dismissal or ~is::r;d valid enquiry before passing
596
SUPREME COURT REPORTS
[1973] 3 s.c.R.
The above contentions of Mr. Deshmukh have been adopted
by Miss ~dira Jai Singh, Mr. Madan Mohan and Mr.13handare,
counsel appearing for certain other workmen.
Mr.
Bhandare,
however, was prepared to take a slightly different stand regarding;
the proviso to section l!A. According to_ him only such evidence,
which could and should have been produced by the parties in the
domestic enquiry, is not allowed to be adduced before the Tribunal
'
Mr. Damania, learned counsel, who advanced the leading
arguments on behalf of the employers broadly contended as
follows:-
The restrictions imposed upon the jurisdiction exercised by
the Labour Tribunals in respect of disputes arising out of orders
passed by way of dismissal or discharge, as laid down by this
Court in a number of decisions over a period of years, have not
been altered by the new section. The right of an employer 'to
manage his affairs in his own way, provided he does not act arbitrarily, is kept intact. The commo~ law relationship of master
and servant was recognised, except to the extent that it was modified by the decision of this Court in lizdian Iron & Steel Co. Ltd.
& Another v. Their workmen(1). All employer is expected to
liold a domestic enquiry before an order of dismissal or termination is passed.
He is also bound to ·follow, in such cases, the
principles of natural justice and the procedure laid down by the
relevant Standing Orders.
The Tribunal will not interfere with
the findin3 recorded by an employer in a proper enquiry merely
on the ground that it would have come to a different conclusion.
The punishment to be noted out was entirely within the powers
and jurisdiction of an employer and it was no part of the jurisdiction of a Tribunal to de<:ide whether the said punishment was
justified except in very rare cases where the punishment imposed
is grossly out of proportion, so as to suggest victimisation or
unfair labour practices. This was the .position vis-a-vis the
management as on 15-12-1971.
But under section llA, after
the Tribunal holds tha~ the enquiry has been conducted properly
by an employer and that the finding about misconduct is correct,
it has jurisdiction to consider whether the punishment requires
modification. If it holds that the punishment has to be modified,
it has power to do so and award a lesser punishment.
Section
1 lA comes into effect only at the time when the Tribunali considers about the punishment to be imposed. While previously the
Tribunal had no power to interfere with the punishment, it is
now clother with such a power. This is the only modification regarding the powers of the management that has been introduced
by section llA. Neither the fact that no enquiry at all .has been
belil by an employer nor the circumstance that the enquiry, if any
(ll [1958] S.C.R. 667.
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WORKMEN v. FIRESTONE TYRE & RUBBER CO.
597
(Vaidialingam, J,) \
held, is found to be defective, stands in the way of an employer
adducing evidence before tiie Tribunal for the first time to jmtify
his action taken agains~ a w01kman.
Mr; Setalvad, learned counsel, appearing for Larsen & TOllbro
Ltd, adopted these contentions of Mr. Damania. He, howner,
referred us to the provisions of section 3 3 of the Act. According
to him when tlie previous permission or an approval for disJni,s.
ing discharging a w01kman has been obtained under section .33,
the Tribunal concerned would have. applied its mind and safuficd
itself at least prima facie that the proposed action of the employer
was justified. Such satisfaction may _be airived at on perusal of
the records of clomstic enquiry, if one had been conducted. or on
tk basis of evidence placed bef01e the Tribunal by an employer
f01 the first time. The said order of dismissal .or discharge can
nevertheless be the subject of an industrial dispute. When such
dispute is being adjudicated by the Tribunal, the records pertaining to the proceedings under section 33 will be relied on by an
employer as material on record. It will lead to an anomaly it it is
held that the Tribunal can straightaway order reinstatement ~
ly because no domestic enquiry has been held or the domestic.enquiry conduc:ed is defective fOI one reason or other. Therefore,
he pointed out that the pr0per way of interpreting section UA
would be to hold that it comes into play after a Tribunal has·.hcld
the enquiry proceedings conducted by the management to. be 1'%0per and the finding of guilt justified. It is then that the Trib?l!lal
can consider whether the punishment imposed. is justified. If it
is of the opinion that the punishment is not justified, it can aller
the same.
We have broadly indicated aboVe the stand taken on behalf
•f the workmen and the employers· regarding the interpretation
of section l lA.
Bef01e we proceed to col)Sider the contents of the sectio•,
having due regard to the arguments advanced before us, it ii!
necessary to indicate the legru position as on 15-12-1971 regarding the powers of a Labour Court or Tribunal when deciding a
dispute arising out of dismissal or discharge of a workman. Thcrt
are several decisions of this Court, ·as .also of the Labour Appellate Tribunal laving down the principles in this regard, but we will
refer only to a few of them.
In its very early decision in Buckingham and· Cerna tic. Com·
pany . Ltd, by its Managing A11ents Binny &: Co., Madras v.
Workers of the Comvanv revresented by the"Madras Labour
Union,and Madras Textile Workers Union(•), the Labour Appel-
(!} [19~2] Labour AJipeal Cases490.
6-L761SupCI73
'
598
SUPREME COURT REPORTS
(1973] 3 s.c.R.
late Tribunal held that the decision of the Management in relation
to i:he charges against the employee will not prevail-if
(a)
the~ is want of bana fide, ot
( b) it is a case of victimisation or unfair labour practice
or violation of the principles of natural justice, or
( c) there is a basic errer of facts or,
( d) there has been ~ perverse finding on the materials.
It was further laid down that an employer ought to have the right
to decide what the appropriate punishment for a misconduct
should be and its exercise of the discretion in this regard should
not be interfered with by a Tribunal unless the punishment is
unjust. In Shri Ram Swarath Sinha, Righa, Muzafjerpur v. The
Management of the Belsund Sugar Company Limited, Righa
Muzaffarpur(' ), the Labour Appellate Tribunal has recognised
the right of a management to ask for permission to adduce evidence for the first time before the Tribunal to justify its action
though no domestic enquiry had been held by it.
It has been
emphasised that the permission asked for cannot be thrown out
in limine on the ground that the management had not made any
previous enquiry into the charge. We may say that this decision
was in respect of a proceeding under section 33 of the Act, but,
as held by this Court, there is no difference in such matters
whether the Tribunal was deciding a dispute referred to it under
section 10 or an application filed before it under section 33 of the
Act.
In discussing the nature of the jurisdiction exercised by an
Industrial Tribunal when adjudicating a dispute relating to dismissal or discharge, it has been emphasised by this Court in
hzdian Iron & Steel Co. Ltd.(2 ) as follows :
"Undoubtedly, the management of a concern has
power to direct its own internal administration and discipline; but the power is not unlimited and when a dispute arises, Industrial Tribunals have been given the
power to see whether the termination of service of a
workman is justified to give appropriate relief. In cases
of dismissal on misconduct, the Tribunal does not, however, act as a Court of appeal and substitute its own
judgment for that of the management. It wiJl interfere
(i) when there is want of good faith; (ii) when there
is victimisation or unfair Labour practice, (iii) when
the management has been gui!tv of a basic error or violation of a nrincinle of natural justice. and (iv) when
on the materials the finding is completely baseless or
perverse".
~ ·
rtf1~4J Labour APpeaJ Cases 697.
(2) 1958 S.C.R. 667.
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WORKMEN V. FIRESTONE TYRE & RUBBER CO,
599
( Vaidialingam, J.)
This is the decision which has been referred to in the Statement
of objects and reasons alr7ady adverted t?. It may b~ ~ote~ that
the four ·circumstances pomted out by this Court iustlfymg mterference at the hands of the Tribunal are substantially the same as
laid down by the Labour Appellate Tribunal in Buckingha1r11 and
Carnatic Company ( 1).
Following the decision in Indian Iron & Steel Co. Ltd.('),
this Court in The Punjab National Bank Ltd. v. Its Workmen(')
held:
"In cases where an industrial dispute is raised on
the ground of dismissal and it is referred to the tribunal
for adjudication, the Tribunal naturally wants to know
whether the impugned dismissal was preceded by a proper enquiry or not. Where such a proper enquiry has
been held in accordance with the provisions of the relevant standing orders and it does riot appear that the
employer was guilty of victimisation or any
unfair
labour practice, that tribunal is generally reluctant to
interfere with the. impugned orders".
It was further emphasised that :
'There is another principle which has to be borne in
mind when the tribunal deals with an industrial dispute
arising from the dismissal of an employee.
We have
already pointed -0ut that before an ·einployer can dismiss
his employee he has to hold a proper enquiry into the
alleged misconduct of the employee and that such an
enquiry must always begin with the supply of a specific
charge-sheet to the employee".
The effect of an employer not holding an enquiry has been stated
as follows :-
"But it follows that if no enquiry has in fact been
held by the employer, the issue about the merits of the
i111pugned order of dismissal is at large before the tribunal and, on the evidence adduced before it, the tribunal has to decide for itself whether the misconduct alleged is proved, and if yes, what would be proper order
to. make. In such a case the point about the exercise of
managerial functions does 11ot arise at alt".
In Mis. Bharat Sugar Mills Ltd. v. Shri Jai Singh and
o~hers('.), the question arose regarding the powers of an Industrial Tnbunal to permit an employer to adduce evidence before it
{I) [1952] Labour Appeal Cases 490.
(2) [1958] S.C.R. 667.
(3) [1960) (1) S.C.R. 806.
(4) [1962] (3) S.C.R. 684.
600
SUPREME COURT REPORTS
[1973] 3 s.c.R.
justifying its action after the domestic enquicy was held to be
defective. It was contended on behalf of the workmen that when
· once the domestic enqulry was found to be defective, the tribunal
had no option but to dismiss the applicatiop. filed by an employer
for approval and that it cannot allow an employer to adduce evi•
dence before it justifying its action.
This Court rejected
this
contention as follows :
"When an appliyation for pennission for dismissal
is made on the allegation that the workman has been
guilty of some misconduct fo[ which the management
considers dismissal the app_roppat~ punishment the Tribunal has to satisfy itself that there is a prima facie
case for such dismissal. Where there has been a proper
enquicy by the management itself the Tribunal, it has
been settled by a number of decisi~ns of this . Court, has
to accept the finding .arrived at in that enquiry ullless it
is perverse and should give the permission asked for
unless it has reason to believe that. the management is
guilty of . victimisation or has been guilty of unfair
labour practice or is acting ma/a fide. But the mere fact
that no enqulry has been held or that the enqulry has
not been properly conducted cannot absolve the Tribunal of its duty to decide whethe.r the case that lhe workman has been guilty of the alleged misconduct has been
made out. The proper way Of performing this duty
where there has not been a proper enquiry by the
management is for the Tribunal to take evidence of
both sides in respect of the alleged misconduct. When
such evidence is adduced before the Tribunal the
management is deprived of the ben~fit of · having the
findings of the domestic tribunal being accepted as
prima facie proof of the alleged misconduct unless the
finding is perverse and to prove to the satisfaction o!
the Tribunal itself that the workman was guilty of the
alleged misconduct. We do not think it either just to
the management or indeed even fair to the workman
himself that in such a case the Industrial Tribunal
should refuse to take> evidence and thereby drive the
management to make a further application for permission after holding a proper enquiry and deprive the
workman of the benefit of the Tribunal itself being satisfied on evidence adduced before it that he was 'guilty
of the alleged misconduct''.
In the above decision, this Court quoted with approval the
decision of the Labour Appellate Tribunal in Buckingham and
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WORKMEN V. FIRESTONE TYRE & RUDDER CO.
601
( Vaidialingam, !. )
Carnatic Company Ltd. (supra) holding that the materials on
which a Tribunal acts may consist of :-
"( 1) entirely the evidence taken by the management
at the enquiry and the proceedings of the enquiry, or
(2) that evidence and in addition thereto further evidence led before the Tribunal, or
(3) evidence placed before the Tribunal for the first
time in support of the charges".
It was further emphasised tl)at :
"for a long time now, it has been settlecl law that in the
case of an adjudication of a dispute arising out of a
dismissal of a workman by the management (as distinct from an application for permission to dismiss
under s.