Workmen of Hindustan Steel Ltd & ANR
Vs. Hindustan Steel Ltd. & Ors [1984] INSC 233 (12 December 1984)
DESAI, D.A.
DESAI, D.A.
KHALID, V. (J)
CITATION: 1985 AIR 251 1985 SCR (2) 428 1984
SCC Supl. 554 1984 SCALE (2)927
CITATOR INFO :
RF 1985 SC 722 (4) R 1986 SC1571 (58,67)
E&F 1991 SC 101 (5,20,88,174,195,223,239,263,2
ACT:
Industrial Disputes Act 1947 Schedule 2 Item
No. 3 and Schedule 2 Item 6.
Public Scctor Undertaking-Standing Order No.
32- General Manager empowered to dismiss workman without holding an enquiry if
'inexpedient or against the interests of security to continue to employ the
workman-Such Standing Order whether violative of the principles of natural
justice-Dismissal of employee without holding domestic enquiry under the
Standing Order Whether valid, legal and permissible.
Constitution of India 1950 Article 311(Z)
provisos (b) and (c).
Power of dismiss civil servant without
holding inquiry-When arises- Introduction of safeguard-That authority must
specify reasons why not reasonable practicable to holding inquiry.
Practice and Procedure-Labour
disputes-Adjudication of-Dismissal of employee-Decision of employer to dispense
with domestic enquiry questioned- Deputy of employer to satisfy the court that
holding of enquiry would be counterproductive or cause irreparable and
irreversible damage.
HEADNOTE:
Standing Order 31 of the 1st
Respondent/Public Sector Undertaking prescribed a detailed procedure for
dealing with cases of misconduct; and for imposing major penalty, the employer
had to draw up a chargesheet and give an opportunity to the delinquent workman
to make his representation within 7 days. If the allegations were controverted,
an enquiry had to be held by an officer to be nominated by the management and
in such an enquiry reasonable opportunity of explaining and defending the
alleged misconduct had to be given to the workman.
Suspension of the delinquent workman pending
enquiry was also permitted. At the end of the enquiry, if the charges were held
proved, and it was provisionally decided to impose a major penalty, the
delinquent workman bad to be afforded a further reasonable opportunity to
represent why the penalty should not be imposed on him.
Standing Order 32 provided for a special
procedure in case of a workman was convicted for a criminal offence in a court
of law or where the General Manager was satisfied for reasons to be recorded in
writing that it was inexpedient or against the interests of security to
continue to employ the workmen', viz., the workman could be removed or
dismissed from service without following the procedure laid down in Standing
Order No. 31.
429 The appellant an Assistant in the 1st
Respondent- undertaking was A removed from service on the ground that it was no
longer expedient to employ him. The management dispensed with the departmental
enquiry, after looking into the secret report of one of their officers that the
appellant had misbehaved with the wife of an employee and that a complaint in
respect thereof had been lodged with the police.
In the reference to the Industrial Tribunal,
the Tribunal held that as the employer dispensed with the disciplinary enquiry
in exercise of the power conferred by Standing Order 32, it could not be said
that the dismissal from service was not justified, and that if there were
allegations of misconduct, the employer was quite competent to pass an order of
removal from service without holding any enquiry any in view of the provisions
contained in Standing Order 32, and rejected the reference.
Allowing the appeal, by the employee to this
Court,
HELD: 1. The reasons for dispensing with the
enquiry do not spell out what was the nature of the misconduct alleged to have
been committed by the appellant and what prompted the General Manager to
dispense with the enquiry.
[437D]
2. As there was no justification for
dispensing with the enquiry, imposition of penaly of dismissal without the
disciplinary enquiry as contemplated by Standing Order 31 is illegal and
invalid. [437F] 3 The respondent shall recall and cancel the order dated August
24, 1970 removing the appellant from service and reinstate him and on the same
day the appellant shall tender resignation of his post which shall be accepted
by the respondent. The respondent shall pay as and by way of back wages and
future wages, a sum of Rs. l.5 lakhs to the appellant within 2 months which
shall be spread over from year to year commencing from the date of removal from
service. The appellant shall be entitled to relief under Section 89 of the
Income-tax Act, 1961 for which he shall make the necessary application to the
appropriate authority.
who would consider granting of relief.
[438C-D;F] F 4. Where an order casts a stigma or affects livelihood, before
making the order, principles of natural justice in a reasonable opportunity to
present one s case and controvert the adverse evidence must have full play.
Even he Constitution which permits dispensing
with the inquiry under Article 311 (2) a safeguard is introduced that the
concerned authority must specify reasons for its decision why it was not
reasonably practicable to hold the inquiry. [435 A-B]
5. (i) Standing Order 32, nowhere obligates
the General Manager to record reasons for dispensing with the inquiry as
prescribed by Standing Order 31. On the contrary, the language of Standing
Order 32 enjoins a duty upon the General Manager to record reasons for his
satisfaction why it was inexpedient at against the interest of the security of
the State to continue to employ the workman. Ressons for dispensing with the
enquiry an reasons for not continuing to employ the workman stand, wholly apart
from each other.
[435C-D] 430 (ii) A Standing Order which
confers such arbitrary.
uncanalised and drastic power to dismiss an
employee by merely stating that it is inexpedient or against the interest of
security to continue to employ the workman is violative of the basis c
requirement of natural justice, as the General Manger can impose penalty of
such a drastic nature as to affect the livelihood and put a stigma on the
character of the workman without recording reasons why disciplinary enquiry is
dispensed with and, what was the misconduct 13 alleged against the employee.
[435D-E] 6 When the decision of the employer to dispense with the enquiry is
questioned, the employer must be in a position to satisfy the Court that
holding of the enquiry will be either counter-productive or may cause such
irreparable and irreversible damage which in the facts and circumstances of the
case need not be suffered- This minimum requirement cannot and should not be
dispensed with. [436B- C] L. Michael and Anr. v. M/s. Johnston Pumps India Ltd
[1975] 3 SCR 489, referred to.
7. It is time for the 1st respondent-public
sector undertaking to recast Standing Order 32, and to bring it in tune with
the philosophy of the Constitution failing which the vires of the said standing
Order would have to be examined in an appropriate proceeding. [438D]
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
1 1 37 of 1981 .
From the Award dated 22nd December, 1978 of
the 9th Industrial Tribunal, West Bengal in Industrial Case No. X- 7/74 (G.O.
No. 8231-IR-IR-IOL-3 (K)/73.
R.K. Garg, P.K. Chakravarti and A K. Ganguli
for the Appellants.
G.B. Pai, S. Chatterjee, Altaf Ahmed and A K
Panda for the Respondents.
The Judgment of the Court was delivered by
DESAI, J. In exercise of the power conferred by Sec.
10 of the Industrial Disputes Act, 1947, the
Government of the State of West Bengal as an appropriate Government referred
the following dispute to the Ninth Industrial Tribunal, West Bengal for
adjudication. The reference reads as under:
"Whether the termination of services of
Shri Manas Kumar Mukherjee is justified ? To what relief, if any is he entitled
?" Hindustan Steel Ltd. ('Employer' for short) dismissed Manas Kumar
Mukherjee('Workman' for short) without holding any inquiry 431 and without
giving any opportunity to the workman to question or A correct the allegation
of misconduct levelled against him and in violation of principles of natural
justice. The employer tried to sustain its action by invoking its powers under
Standing Order 32 of the certified Standing Orders of the Hindustan Steel Ltd.
S.O. 32 reads as under: B "32. Special Procedure in certain cases.
Where a workman has been convicted for a
criminal offence in a Court of Law or where to General Manager is satisfied,
for reasons to be recorded in writing, that it is inexpedient or against the
interests of security to continue to employ the workman, the workman may be
removed or dismissed from service without following the procedure laid down in
Standing Order 31." S.O. 31 prescribed detailed procedure for dealing with
cases of misconduct. Briefly stated, the procedure prescribed in S.O. 31 for
imposing major penalty is that the employer has to draw up a charge-sheet and
give an opportunity to the delinquent workman to make his representation within
seven days. If the allegations are controverted, an enquiry has to be held by
an officer to be nominated by the management and in such an enquiry reasonable
opportunity of explaining and defending the alleged misconduct must be given to
the workman. The delinquent workman may also be given the assistance of a
fellow employee. The procedure also permits suspension of the delinquent
workman pending enquiry. At the end of the enquiry. if the charges are held
proved, and it is provisionally decided to impose major penalty, the delinquent
workman has to be afforded a further resalable opportunity to represent why the
penalty should not be imposed on him. According to the employer it can dispense
with such an enquiry in exercise of the power conferred by S.O. 32. The scope
and ambit of S.O. 32, will be presently examined.
The Tribunal held that as the employer
dispensed with the disciplinary enquiry in exercise of the power conferred by
S.O. 32, it cannot be said that dismissal from service was not justified. The
Tribunal observed that even if there were allegations of misconduct, the
employer was quite competent to pass an order of removal from service without
holding any enquiry in view of the provision contained in S.O. 32- The Tribunal
concluded that the employer accused the workman of committing misconduct and
proceeded to pass the order of removal from service without holding any enquiry
into the allegations of misconduct, it cannot be said to be a colorable
exercise of power and the workman would not be entitled to any relief. The
Tribunal accordingly rejected the reference. Hence this appeal by special
leave.
The only question that must engage our
attention is what is the scope and ambit of S.O 32. It has already been
extracted. Upon its true construction the standing Order does not provide that
for reasons to be recorded in writing, an enquiry into misconduct can be
dispensed with. S.O. 32 clearly confers power upon the General Manager that on
his being satisfied that it is inexpedient or against the interest of security
to continue to employ the workman, then for reasons to be recorded in writing
the workman may be removed or dismissed from service without following the
procedure laid down in Standing Order 31. This archaic standing order
reminiscent of the days of hire and fire is relied upon by a public sector
undertaking to sustain an utterly unsustainable order and to justify an action
taken in violation of the principles of natural justice, an action which has
the- effect of denying livelihood and casting a stigma. One can appreciate-that
in a given situation, and enquiry into misconduct may be counter-productive.
Constitution itself contemplates such a
situation when it enumerates siltations in which a punishment of dismissal,
removal or reduction in rank can be imposed without holding a disciplinary
enquiry. Let it be extracted:
"311. Dismissal, removal or reduction in
rank of persons employed in civil capacities under the Union or a State- ( 1)
... ... ... ... ... ... ... ... ... ... ...
(2) No such person as aforesaid/shall be
dismissed or removed or reduced in rank except after an inquiry in which he has
been informed of the charges against him and given a reasonable opportunity of
being heard in respect of those charges:
... ... ... ... ... ... ... ... ...
... ... ... ... ... ... ... ... ...
433 Provided further that this clause shall
not apply- A (a) where a person is dismissed or removed or reduced in rank on
the ground ' of conduct which has led to his conviction on a criminal charge:
or (b) where the authority empowered to dismiss or remove a person or to reduce
him in rank is satisfied that for some reason, to be recorded by that authority
in writing, it is not reasonably practicable to hold such inquiry; or (c) where
the President or the Governor as the case may be, is satisfied that in the
interest of the security of the State it is not expedient to hold such
inquiry." A bare perusal of the situations and contingencies in which a
disciplinary enquiry affording a reasonable opportunity of being heard before
imposing the enumerated penalty can be dispensed with will clearly show that
the power is not given to dismiss remove or reduce in rank the delinquent
worker but the power conferred by the afore- mentioned provision is to dispense
with an enquiry before imposing major penalty. Sub-art- (3) of Art- 311
provides that 'if, in respect of any such person as aforesaid, a question
arises whether- it is reasonably practicable to hold such inquiry as is
referred to in clause (2). The decision thereon of the authority empowered to
dismiss or remove such person or to reduce him in rank shall be final.' Now the
three situations contemplated by the provision arc such that holding of an
enquiry would be counter-productive.
Where the penalty of dismissal, removal or
reduction in rank is to be imposed on the ground of a conduct which has led to
his conviction on a criminal charge, obviously, the enquiry will be superfluous
or a repeat performance because a judicial tribunal has held the charges
proved. But where the authority empowered to impose the penalty is satisfied
for reasons to be recorded by it in writing to dispense with an enquiry, the
reasons so recorded must ex-facie show that it was not reasonably practicable
to hold a disciplinary enquiry. Similarly, where in the interest of the
security of the State, the President or the Governor, as the case may be, is
satisfied that it is not expedient to hold such enquiry; the same can be
dispensed with. In the last mentioned situation, the highest executive of the
country, the President and the highest executive of State the Governor alone is
entitled to dispense with the inquiry, if it is satisfied that in the interest
of the security of the State, it is not 434 expedient to hold such enquiry
Dispensing with the enquiry in the first and third situation does not present a
difficulty because in the first situation there is a conviction by a criminal
court and in the third situation, the highest executive in the Centre and the
State is empowered to dispense with the enquiry. It is in the second fact
situation that one must evaluate the width of discretionary power to dispense
with enquiry. The appointing authority is invested with power to dispense with
enquiry.
And in case of persons belonging to Class IV
services, the appointing authority may be some-one in the lower administrative
hierarchy and such an officer is invested with such draconian powers. Where
such a power is conferred, on an authority entitled to impose penalty of
dismissal or removal or reduction in rank, before it can dispense with the
inquiry, it must be satisfied for reasons to be recorded in writing that it is
not reasonably practicable to hold such an enquiry. Power to dispense with
enquiry is conferred for a purpose and to effectuate the purpose power can be exercised.
But power is hedged in with a condition of setting down reasons in writing why
power is exercised.
Obviously therefore the reasons which would
permit exercise of power must be such as would clearly spell out that the
inquiry if held would be counter-productive. The duty to specify by reasons the
satisfaction for holding that the inquiry was not reasonably practicable cannot
be dispensed with. The reasons must be germane to the issue and would be
subject to a limited-judicial review. Undoubtedly Sub-art.
(3) of Art. 311 provide that the decision of
the authority in this behalf is final. This only means that the Court cannot
inquire into adequacy or sufficiency of reasons. But if the reasons ex-facie
are not germane to the issue namely of dispensing with enquiry the Court in a
petition for a writ of certiorari can always examine reasons ex-facie and if
they are not germane to the issue record a finding that the pre-requisite for
exercise of power having not been satisfied, the exercise of power was bad or
Without jurisdiction. If the court is satisfied that the reasons which prompted
the concerned authority to record a finding that it was not reasonably
practicable to hold the enquiry, obviously the satisfaction would be a veneer
to dispense with the inquiry and the court may reject the same. What is
obligatory is to specify the reasons for the satisfaction of the authority that
it was not reasonably practicable to hold such an inquiry. Once the reasons are
specified and are certainly subject to limited judicial review as in a writ for
certiorari, the court would examine whether the reasons were germane to the
issue or was merely a cloak, device or a pretence to dispense with the inquiry
435 and to impose the penalty. Let it not be forgotten what is laid down A by a
catena of decisions that where an order casts a stigma or affects livelihood
before making the order, principles of natural justice namely a reasonable
opportunity to present one's case and controvert the adverse evidence must have
full play Thus even where the Constitution permits dispensing with the inquiry,
a safeguard is introduced that the concerned authority must specify reasons for
its decision why it was not reasonably practicable to hold the inquiry.
Turning to S.O 32, it nowhere obligates the
General Manager to record reasons for dispensing with the inquiry as prescribed
by S.O. 31. On the contrary, the language of S O. 32 enjoins a duty upon the
General Manager to record reasons for his satisfaction why it was inexpedient
or against the interest of the security of the State to continue to employ the
workman. Reasons for dispensing with the inquiry and reasons for not continuing
to employ the workman stand wholly apart from each other. A Standing Order
which confers such arbitrary, uncanalised and drastic power to dismiss an
employee by merely stating that it is inexpedient or against the interest of
the security to continue to employ the workman are violative of the basic
requirement of natural justice inasmuch as that the General Manager can impose
penalty of such a drastic nature as to affect the livelihood and put a stigma
on the character of the workman without recording reasons why disciplinary
inquiry is dispensed with and what was the misconduct alleged against the
employee. It is time for such a public sector undertaking as Hindustan Steel
Ltd to recast S.O. 32 and to bring it in tune with the philosophy of the
Constitution failing which it being other authority and therefore a State under
Art. 12 in an appropriate proceeding, the vires of S O. 32 will have to be
examined. It is not necessary to do so in the present case because even on the
terms of S.O. 32, the order made by the General Manager is unsustainable.
The view we are taking gets some support from
a decision of this Court. In a slightly different situation, this Court in L.
Michael & Anr. v. M/s Johnston Pumps India Ltd ll) observed that discharge
simplicitor on the ground of loss of confidence when questioned before a court
of law on the ground that it was a colorable exercise of power or it is a mala
fide action, the employer must disclose that he has acted in good faith and for
good and objective reasons.
Mere ipse dixit of the employer in such a
situation is of no significance. Where a disciplinary enquiry is dispensed with
on the specious plea that it was not reasonable practicable to hold one and a
penalty (1) [1975] 3 S.C.R.489.
436 of dismissal or removal from service is
imposed, if the same is challenged on the ground that it was a colorable
exercise of power or mala fide action, the same situation would emerge and the
employer must satisfy the Court the good and objective reasons showing both
proof of misconduct and valid and objective reasons for dispensing with the
enquiry. In our opinion, when the decision of the employer to dispense with
enquiry is questioned, the employer must be in a position to satisfy the Court
that holding, of the enquiry will be either counter-productive or may cause
such ireparable and irreversible damage which in the facts and circumstances of
the case need not be suffered. This minimum requirement cannot and should not
be dispensed with to control wide discretionary power and to guard against the
drastic power to inflict such a heavy punishment as denial of livelihood and
casting a stigma without giving the slightest opportunity to the employee to
controvert the allegation and even without letting him know what is his
misconduct.
Turning to the facts of the case, a bare
perusal of the impugned order is both instructive and provides ample material
for pointing out how the drastic power can be arbitrarily exercised without
keeping in view the prerequisite to be satisfied for exercise of the power. The
order reads as under:
" HINDUSTAN STEEL LIMITED DURGAPUR STEEL
PLANT Ref. No. Order/PF/MN 1215 24th August, 1970 O R D E R Having considered
the matter fully, I am satisfied that it is no longer expedient to employ Shri
Manas Mukharjee, Assistant, Order Department, Durgapur Steel Plant any further.
It is therefore ordered that Shri Manas
Mukherjee be removed from the service of the Company with effect from 24. 8.
1970.
He is allowed/three months' salary which he
may collect from the cash section of the Finance Department by 26.8.1970.
Sd/ Maj. ,Gon.
Director Ineharge.
437 The expression 'no longer expedient' as
used in the order A clearly spells out the fact that some enquiry was started.
What prompted the General Manager to close the enquiry, one cannot gather from
the order- But our attention was invited to Ann. R-2 which according to the
respondents specifies the reasons recorded in writing for dispensing with the
enquiry. Briefly, in Ann. R-2, it is stated that the authority concerned has
looked into the secret . report sent to him by Shri P S- Rao Naidu, Planning
& Progress Officer, Order Deptt. and the comments of DGM thereon. He has
also stated that he has looked into- the report received from Sr. AO (E) and
the copy of the complaint lodged by Smt.
Gita Majumdar, wife of an employee in the
plant with the police. These recitals have been considered sufficient to
dispense with the enquiry. If Smt. Gita Majurndat did file a report with the
police making accusation against the appellant, she would have to be examined
in the criminal case. She could have been more conveniently called before the
enquiry officer, and the secret reports remain secret.
The reason for dispensing with the enquiry do
not spell out what was the nature of the misconduct alleged to have been
committed by the appellant and what prompted the General Manager to dispense
with the enquiry. It is difficult to hold that the recitals of the order spell
out some objective reasons and the reasons were germane to the question of
dispensing with the enquiry - Frankly speaking, we are not satisfied in this
case that for valid, objective and relevant reasons, the enquiry was dispensed
with.
An attempt was made to urge that some
annexures to the counter-affidavit would show certain complaints received
against; the appellant. We decline to look into them as they were not given to
the appellant in the course of enquiry to meet or explain the same. We consider
them irrelevant at this stage, Once we hold that there was DO justification for
dispensing with the enquiry, imposition of penalty of dismissal without
disciplinary enquiry as contemplated by S- O 31 would be illegal and invalid.
Two options are thereupon open to us. One
would be to permit the General Manager, if he is so minded to hold the
disciplinary enquiry and come to his own decision and the second would be to
remit the matter to the Labour Court to permit the respondent-employer if it is
entitled in law to substantiate the charges of misconduct before the Tribunal.
The order removing the appellant from service
was passed way back on August 24, 1970. More than 14 years have rolled by. H
438 In such a situation, to start the whole thing de nevo would neither be of
any help to the appellant nor would be conducive to the maintenance of
discipline in the plant.
Undoubtedly, once a workman is removed from
service a stigma attaches to him, and if the order is held to be not in
consonance with the provisions of the relevant standing orders at any rate, the
stigma has to be removed Having given the matter our anxious consideration, we
dispose of the appeal as under The respondent shall recall and cancel the order
dated August 24, 1970 removing the appellant from service and reinstate him and
on the same day the appellant shall tender resignation of his post which shall
be accepted by the respondent. The respondent shall pay as and by way of back
wages and future wages, a sum of Rs. 1,50,000 to the appellant within 2 months
from today to be spread over from year to year commencing from the date of
removal from service. We give one more opportunity to the respondent to recast
its Standing Order 32 within a period of two weeks to be brought at best in
conformity with the second proviso to sub-art. (2) of Art. 311 failing which
its validity will be re-examined by this Court.
The amount of Rs. 1, 50,000 directed to be
paid to the appellant by the respondent comprises backwages, and all other
allowances admissible to him from year to year from 1970 up to the end of 1984.
The amount shall be spread over from year to year. If because of the lump sum
payment as directed herein the respondent is required to deduct Income- tax as
enjoined by Sec. 192 of the y Income-tax Act, 1961, the appellant shall be
entitled to relief under Sec. 89 of the Income Tax Act, 1961. For this purpose,
the appellant shall make an application as required by Sec. 89 read with Rule
21A to the appropriate authority, who would consider granting of relief to the
appellant under Sec. 89 of the Income-tax Act. The proceeding in this behalf
shall be disposed of within a period of six months. The appeal is disposed of
in these terms with no order as to cost.
N.V.K. Appeal allowed.
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