Labour Law; P. Cherian Urumis Vs. Labour Court [Kerala High Court, 29-09-2016]

Labour Law – When the enquiry was found to have been held in violation of principles of natural justice and the punishment of dismissal is set aside seeing that the charges are not proved, as a normal and natural consequence, the employee ought to have been put back to his position as if there was no order of dismissal. Hence the setting aside of the punishment of dismissal cannot also be said to be perverse. The declaration of entitlement of the workman for reinstatement was only a consequential order.

# Enquiry

IN THE HIGH COURT OF KERALA AT ERNAKULAM

P.V.ASHA, J.

W.P.(C) Nos.18148 & 12129 of 2008

Dated this the 29th day of September, 2016

ID.NO. 49/1993 OF LABOUR COURT, ERNAKULAM

PETITIONER

P. CHERIAN URUMIS, ALUVA.

BY ADVS.SRI.P.CHANDRASEKHAR SRI.S.PRASANTH SRI.SOORAJ T.ELENJICKAL SRI.T.S.SARATH SRI.P.A.MOHAMMED SHAH

RESPONDENT(S)

1. THE LABOUR COURT, ERNAKULAM.

2. HINDALCO INDUSTRIES LIMITED, (FORMERLY INDIAN ALUMINIUM COMPANY LIMITED), ALUPURAM, SMELTER, ALUPURAM P.O., REPRESENTED BY ITS VICE PRESIDENT.

3. STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, DEPARTMENT OF LABOUR, SECRETARIAT, THIRUVANANTHAPURAM.

R1 & R3 BY GOVERNMENT PLEADER SRI.GIKKU JACOB R2 BY SRI.M.PATHROSE MATTHAI,SENIOR ADVOCATE ADVS. SMT.MARIAM MATHAI SRI.SAJI VARGHESE

JUDGMENT

Both these writ petitions are filed challenging the award of the Labour Court in ID No.49 of 1993 dated 12.7.1995. W.P.(C) No.12129 of 2008 is filed by the management, the Hindalco Industries Ltd. and W.P.(C) No 18148 of 2008 is filed by the workman to the extent the Labour Court limited the back wages to 25%. The parties and documents referred to in this judgment are as described in W.P.(C) No. 18148 of 2008 filed by the workman.

2. The petitioner was working as Fitter Grade I in the 2 nd respondent Company. It is the common case of both sides that at the time of joining the company, all the Fitters are given a set of tools and they were allotted a locker for keeping the tools locked. The key of the lockers are to be kept by the Fitters.

3. According to the management there were a series of complaints as to missing of tools. Therefore an inspection was conducted in the company. In the inspection, the security officer found that several tools were kept in the locker of the petitioner which were not supplied to him and not included in the list of tools supplied to him. Thereupon Ext.P1 memo of charges was issued to him on 14.9.1991. The allegation was that when the security officer checked the personal tool locker of petitioner to verify its contents in the presence of the petitioner, Sri.N.K.John, General Foreman, Mechanical Maintenance, and Sri.K.V.Sebastian, Security Guard, it was found that tools and other items belonging to the company other than those issued to the petitioner for his day to day work were seen removed and kept inside his personal locker. Accordingly a list of tools found there were prepared which the petitioner signed in their presence. Therefore, it was alleged that the petitioner deliberately and unauthorizedly removed the listed tools and other items and thereby committed grave mistake of theft of company property, which if proved would be a major offence under Standing Order 26b(iii). The petitioner was directed to show cause against the proposed disciplinary action.

4. Petitioner submitted Ext.P2 explanation dated 1.10.1991 saying that the tools found in his box were those allotted to him, when he joined in the company as Fitter in April 1977 and those issued thereafter by way of replacement or addition. He also stated that the duplicate keys of the tool boxes allotted to the Fitter group are kept with the supervisor who has free access to the tool boxes/lockers. After receipt of petitioner’s explanation, an enquiry officer was appointed for conducting a domestic enquiry against the petitioner; the enquiry officer Sri.V.G.Ranganathan fixed the enquiry on 9.10.1991. While so Ext.P3 charge sheet dated 10.10.1991 was issued, amending the memo of charges to the effect that the petitioner had deliberately and unauthorizedly removed the listed tools and other items and that the above act, if proved, would constitute theft or fraud or dishonesty connected with the business of the company or the property of the company or its employees:- a major offence under standing order 26(b)(iii). Thereafter the enquiry was fixed on 31.10.1991.

5. The complaint of the petitioner is that the presenting officer examined all the three witnesses on the same day, though petitioner objected to the same saying that the list of witnesses or list of documents relied on by the management were not given to him. Petitioner submits that he did not either cross examine the witnesses of the management or examine any witness on his side; the enquiry officer closed the evidence on the same day; while he was waiting for the enquiry report, the petitioner received Ext.P4 letter dated 2.1.1992 of the Enquiry Officer informing him that the presenting officer Sri.R.Padmanabhan requested to record his statement in the enquiry to be treated as his oral evidence and he wanted to give additional evidence. It was informed that the presenting officer Sri.R.Padmanabhan wanted to give additional evidence and requested to treat the statement recorded by him as oral evidence and therefore allowing his request, enquiry officer requested the petitioner to appear before the enquiry officer on 13.1.1992, to cross examine Sri.R.Padmanabhan. The petitioner was also informed that he can bring a co-worker of his choice for his defence. The petitioner submits that the enquiry officer erred in reopening the evidence without notice to the petitioner on the request and calling for his objections on it. Therefore the entire proceedings starting from the re-opening of evidence was illegal and an intimation given after the reopening of evidence would not satisfy the principles of natural justice or the prescribed procedure for departmental inquiry. Petitioner, though appeared before the inquiry officer, did not cross examine the presenting officer. Thereafter the petitioner received Ext.P5 order dated 28.1.1992 informing him that he was dismissed from service with immediate effect. Petitioner challenged Ext.P5 order taking up the matter under the Industrial Disputes Act. The Labour Court passed Ext.P6 award in ID.No.49 of 1993 and upheld the order of dismissal. Petitioner challenged the award filing O.P.No.5517 of 1997 before this court. In the judgment-Ext.P7 dated 1.9.2005, this court found that the dismissal from service of the petitioner without furnishing him a copy of the enquiry report was in gross violation of the principles of natural justice and therefore remitted the matter to the Labour Court for fresh consideration. The management took up the contention that no prejudice was caused to the petitioner by not furnishing the enquiry report and in the absence of any prejudice the order of dismissal was not liable to be interfered with. But this court found that an opportunity was inevitable in the case, even going by the very conduct of the disciplinary authority in imposing the punishment. This court found that when the enquiry officer had held that the charges were proved, the disciplinary authority went beyond the findings holding that materials were kept in the personal locker with the ulterior motive of removing the same from the factory itself and that in case the delinquent was given an opportunity at any stage before the findings were accepted or before the punishment was imposed then only the disciplinary authority would have been justified in saying that enquiry was conducted in a reasonable manner. The contention of the management that non-supply of inquiry report did not cause any prejudice to the petitioner was already repelled by this court, distinguishing the judgment in Union Bank of India V Vishwamohan : [(1998)4 SCC 310] relied on by them. It was further found that the disciplinary authority examined the past record of overstayal of petitioner, which had no relevance in imposing punishment for the impugned misconduct. The matter was remitted to the the Labour Court to find whether the disciplinary authority had rendered a proper satisfaction on the guilt of the petitioner in tune with the principles of natural justice. The management took up the matter in W.A.No.2296 of 2005 and the Division Bench in Ext.P8 judgment dated 1.8.2006 found that there was no plea raised before the Labour Court regarding non supply of copy of the enquiry report and the management should be given an opportunity to put forward their plea on that question. The Division Bench found that the Labour Court justified the punishment even before considering the validity of the inquiry. The Division Bench directed that the Labour Court had to consider all the points with reference to the violation of principles of natural justice and then arrive at a finding and thereafter to consider the aspect of punishment, after hearing both sides. Ext.P9 award dated 26.3.2007, which is impugned in these cases was passed by the Labour Court thereafter.

6. The Labour Court considered three issues viz. whether the inquiry was held complying with the principles of natural justice; whether the findings of inquiry officer are in conformity with evidence in the inquiry and whether the punishment is proportionate to the misconduct. After perusing the enquiry files, Labour Court found that the list of witnesses or of documents were not furnished to the delinquent; the presenting officer examined all the witnesses and marked all the documents in a single day and that after completing the entire proceedings of enquiry, when it was posted for hearing, the presenting officer gave a letter to the inquiry officer requesting to adduce additional evidence and inquiry officer without furnishing a copy of the letter to petitioner, permitted to adduce additional evidence, in order to cover up the lacuna created by other witnesses on the aspect of “intention of dishonest”, which was not proved in the inquiry, on a finding from the inquiry officer. The Labour Court found that the enquiry officer was biased. It was found that before permitting the presenting officer to tender additional evidence the enquiry officer ought to have called for objections, if any, of the petitioner. Seeing that the copy of the inquiry report was not furnished to the workman, on account of which he lost his opportunity to give explanation on the findings against him, Labour Court found that the enquiry officer had acted in violation of the principles of natural justice and therefore the enquiry report was liable to be set aside. Further, it was found that the charge itself was vague and management was not sure whether it was fraud or theft or dishonest act connected with the business of the company. On the charges alleged, the Labour Court found that the tools were not taken outside the factory; therefore, at the most the management could have taken action for return of the tools entrusted. From the deposition of the petitioner as WW1, the Labour Court found that the workman was not given any list of tools given to him at the time of joining. Accordingly, it was found that the enquiry officer’s finding as to the guilt of the petitioner was incorrect and that the charges were not proved. Hence the punishment was set aside and it was ordered that the petitioner would be reinstated in service with continuity and 25% back wages. It is that part of the award which is under challenge in the writ petition filed by the workman in not granting full backwages, whereas the management challenges the entire award.

7. According to the petitioner, when the Labour Court found that the punishment was illegal, there was no reason for limiting the back wages to 25% that too without assigning any reason for the same. The learned counsel for the petitioner argued that there will be extra tools in the locker of every workman since the additional supply of tools were not being incorporated in the list and in the case of the petitioner right from 1977 there had been several additions/replacement of tools which were not incorporated in the list and there was no reason for the allegations levelled against him.

8. The learned counsel for the petitioner relied on the judgment of the Apex Court in

# Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya (D.Ed.) and others, (2013) 10 SCC 324

in support of the claim for full backwages on reinstatement. The judgment of the Apex Court in

# Union of India and others v. Mohd Ramzan Khan, AIR 1991 SC 471

was relied on and it was argued that when a delinquent is awarded punishment denying the materials against him, the punishment would be vitiated for violation of principles of natural justice. It was further contended that in the light of the judgment in

# Ram K.V.S. v. Bangalore Metropolitan Transport Corpn., (2015) 12 SCC 39

interference under Article 226 was not warranted against the award passed in view of section 11A of the Industrial Disputes Act.

9. In the writ petition filed by the 2 nd respondent the award of the Labour Court is challenged on various grounds. The management submits that the workman was given sufficient opportunity in the domestic enquiry conducted against him. It was on the basis of several complaints received from the Mechanical Department about missing of several items of tools that the Security Officer wanted to check the personal tool locker of the workman; on such inspection 32 tools were found to have been removed and kept in his locker, unauthorisedly. Those were not tools entrusted to him but he had removed it from other maintenance area of the factory and kept it hidden in his locker. It was thereupon the memo of charges were issued to him. According to them the workman had admitted in the enquiry that the tools mentioned in the list were taken out of his locker in his presence. Those tools were identified in the enquiry by the 4 witnesses examined in the domestic enquiry. But in the enquiry the workman did not cooperate; even though he was informed that he could bring a co-worker of his choice, he did not want any of his co-workers to assist him for defence; he did not want to cross examine the witnesses, though he was given opportunity. The charges alleged against him were found proved on the basis of the testimony of 4 witnesses, apart from the admission of petitioner that the tools in the list were removed from his locker in his presence. The order of dismissal was passed on the basis of the findings in the enquiry. It is the further contention of the management that the copy of the enquiry report was given to the lawyer of the workman when the matter was pending before the Labour Court. It is their further case that the non furnishing of the copy of the enquiry report did not cause any prejudice to the petitioner and he did not have any complaint before the Labour Court as to non furnishing of the report. The entire enquiry files along with the findings of the Enquiry Officer were produced as M1 (a) to M1(d) before the Labour Court where the workman had also given evidence. The Labour Court had already found that the enquiry was conducted in consonance with the principles of natural justice. In the first award of the Labour Court, it was found that the enquiry was conducted after affording sufficient opportunity to the petitioner and the punishment awarded was upheld. However in the 2 nd award after the matter was remitted to the Labour Court on the basis of the judgment of this court, the Labour Court found that the enquiry was held in violation of the principles of natural justice without referring to the evidence adduced by the management on the basis of the enquiry files. According to the management the Enquiry Officer cannot be found fault with for examining all the witnesses in a single day. There was nothing illegal in examining the presenting officer or in allowing him to adduce additional evidence. The management contends that in the domestic enquiry the theory of preponderance of probabilities alone is required and that was fully satisfied. The procedure adopted for recalling a witness cannot also be said to be illegal. Referring to the judgments of the apex court, it was contended that unless and until the workman proves the prejudice caused to him on account of the non furnishing of the enquiry report, the enquiry report or the order passed on the basis of the findings therein imposing punishment cannot be set aside. It is contended that the workman had not raised any objection as to non receipt of any of the documents. The 2 nd charge sheet was issued only to see that it is in consonance with the terms contained in the standing order and not to fill up any lacuna. It was pointed out that even after reopening of the evidence the workman had not raised any objection; proceedings show that the workman was informed of his right to avail the assistance of a co-worker for which he did not take any steps and he did not also make any attempt to cross examine any of the witnesses. It is urged that the evidence adduced in the enquiry by the management was not considered by the Labour Court while declaring that the punishment was illegal. Referring to the judgments of the Apex Court , the learned Counsel for the respondents argued that it is for the workman to plead and prove the prejudice caused, as held by the Apex Court in the judgments in

# S.K. Singh v. Central bank of India and others, (1996) 6 SCC 415

# State Bank of Patiala and others v. S.K.Sharma, (1996) 3 SCC 364

# Sarva Uttar Pradesh Gramin Bank v. Manoj Kumar Sinha, (2010) 3 SCC 556

etc. Further it is pointed out that the Labour Court ought to have interfered with the punishment only if it was found shockingly disproportionate to the gravity of the charges. There was no such circumstance in the case.

10. I heard the Sri.Syamkumar, learned counsel appearing for the petitioner and Sri.Saji Varghese, learned counsel appearing for the 2nd respondent and considered the contentions.

11. It is an admitted fact that petitioner was not given the copy of the inquiry report even at the stage of punishment. The disciplinary authority directly proceeded to award punishment without forwarding a copy of the enquiry report. Though it is true that the petitioner did not cross examine the witnesses or object to the re-opening of evidence at the relevant time, fact remains that evidence was re-opened several months after closing the evidence and inquiry officer found the charge as proved on the basis of such additional evidence also. Petitioner did not get any opportunity to raise any contention against it because of the non-supply of the inquiry report. The finding of the Labour Court that inquiry officer was biased on account of the re-opening of the evidence in order to fill up the lacuna in the evidence adduced, bringing out materials in support of amended charge of dishonest intention, cannot be said to be erroneous in the circumstances of the case. After closing the evidence on 31.10.1991, the inquiry officer re-opened the evidence in January 1992 and it was thereafter Ext.P4 notice was issued to petitioner saying that the presenting officer requested to adduce further evidence. The contention of the management that the Labour Court did not consider the evidence adduced in the domestic inquiry cannot be accepted. The Labour Court found that prejudice was caused to petitioner by non-supply of inquiry report since he lost his opportunity to furnish explanation on the findings therein. Petitioner could have pointed out the illegality in re-opening of the evidence and the illegality in arriving at the findings on the basis of such evidence in his explanation to the inquiry report, if it was furnished to him. At any rate he lost his opportunity to disabuse the mind of the disciplinary authority before arriving at the decision to award the major penalty of dismissal from service, as held by the apex court in

# Union of India and others v. Mohd Ramzan Khan, AIR 1991 SC 471

relied on by the learned counsel for the petitioner. It was held there that in a quasi judicial matter when a delinquent is being deprived of materials against him and he is faced with punishment, the punishment would be vitiated for violation of principles of natural justice.

12. Now I shall examine the judgments relied on by the management. The judgment in State Bank of Patiala and others v. S.K.Sharma (supra) was with respect to an enquiry conducted against an employee of a bank on allegations relating to misappropriation, which amounted to violation of regulation 15 (4) of State Bank of Patiala Officers Service Regulations. The delinquent was the manager of the bank at the relevant time. In that case removal was ordered, accepting the enquiry report. The delinquent employee raised a contention before the High Court that the copies of documents were not supplied to him. On the ground of non furnishing of copies of statement and necessary documents the High Court found that there was violation of regulation 68, which provided for supply of copies of statement of witnesses if any, 3 days before commencement of examination of witnesses. Apex court found that though copies of statements were not given, he was allowed to peruse the statements and examination of witnesses were completed only after a month; there was no provision for furnishing copies of documents and thus there was substantial compliance of the regulation. In paragraph 33 of the judgment the apex court summarized the principles where punishments can be interfered with in disciplinary proceedings. It was held that the order of punishment shall not be set aside automatically, whenever non compliance of rules or regulations governing enquiries were found; the court should enquire whether the non-compliance is substantial or procedural. Clause 5 thereof deals with a case where the enquiry is not governed by any rules/regulations or statutory provisions. In such cases, it was held that the only obligation is to observe the principles of natural justice; the court or tribunal should make a distinction between the total violation of natural justice/no opportunity and violation of a part of the rule/no fair hearing. In a case of ‘no fair hearing’ the effect of violation should be examined with reference to the prejudice. In that case it was found that copies of statements of the witnesses, though not furnished, the employee was permitted to peruse them and take notes from them and when the witness was examined the employee had not raised any objection. There was no finding as to any prejudice caused to the delinquent. In that view of the matter, it was found that there was no violation and the enquiry proceedings were not liable to be interfered with. In the judgment in S.K. Singh V. Central bank of India and others (supra) the question regarding the non supply of enquiry report was considered and since it was found that the petitioner therein did not have an answer before the High Court as to the prejudice he suffered for non supply thereof, the judgment of the High Court was upheld. However it was observed therein that it is settled law that copy of inquiry report has to be furnished to the employee enabling him to submit his explanation before a decision as to quantum of punishment is taken. In

# Sarva Uttar Pradesh Gramin Bank v. Manoj Kumar Sinha, (2010) 3 SCC 556

also the apex court after referring to a series of judgments reiterated the position that the non supply of enquiry report to delinquent employee would not ipso facto vitiate the order of punishment unless and until the prejudice caused to him was established. There the charges related to the conduct of the officer of the Bank including misappropriation, fraud and irregularities with regard to the maintenance of accounts. The punishment was awarded after granting opportunities for personal hearing, when the inquiry report was with the delinquent. Punishment of reduction of pay was upheld seeing that his case was considered sympathetically. The apex court reiterated the position regarding the non supply of enquiry report.

13. In all these cases it can be seen that the copy of the enquiry report was furnished to the delinquents at some stage before the punishment was awarded. But in the present case there was no such occasion. In the light of the above discussion, the conclusion can only be that punishment was awarded in violation of principles of natural justice and hence it cannot be sustained.

14. The Labour Court found that the charge that petitioner removed the tools, cannot be said to have been proved, as the tools were not removed. The finding of the Labour Court that the charges were not proved cannot be said to be perverse. Even assuming that the charges were proved the extreme penalty of dismissal was not at all warranted.

15. When the enquiry was found to have been held in violation of principles of natural justice and the punishment of dismissal is set aside seeing that the charges are not proved, as a normal and natural consequence, the employee ought to have been put back to his position as if there was no order of dismissal. Hence the setting aside of the punishment of dismissal cannot also be said to be perverse. The declaration of entitlement of the workman for reinstatement was only a consequential order.

16. Now the next question to be considered is on the quantum of backwages. The Labour Court while directing 25% of back wages did not state any reason for limiting it to 25%. When the charges were not found proved and re-instatement was ordered, it was incumbent on the Labour Court to state reasons for denying back wages. When dismissal is set aside, the ouster of the workman on account of dismissal becomes illegal. The normal rule is that when the order of dismissal is set aside the employee would be entitled to all consequential benefits which includes continuity of service along with back wages. In Deepali Gundu Surwase (supra), relied on by Sri.Syamkumar, apex Court held that when an employee has suffered the illegal act of the employer by denying him employment, it is the normal consequence when that order is found unjustifiable, to direct payment of back wages. Restoration of the employee who was dismissed or removed from service makes the employer liable for payment of wages also, which he was denied on account of the illegal action of the employer. The Apex Court was considering the case of a teacher in a primary school who was placed under suspension pending disciplinary action and then dismissed from service. When the employee challenged the dismissal before the Tribunal, the Tribunal found that the order of termination was illegal and the appellant was entitled to reinstatement in the original post along with back wages from the date of termination. It was found that on reinstatement of an employee on the basis of a finding by a competent court either on violation of statutory provisions or principles of natural justice, the employer is liable to pay back wages. Similarly when the termination of service is found bad, relief of reinstatement along with continuity of service is liable to be granted. In that case the apex court found that the workman was entitled to full back wages which is the normal rule or otherwise the party disputing it should prove that there are cogent and convincing reasons for denying the back wages. Therefore, as rightly contended by the learned Counsel, the Labour Court ought not have limited the backwages to 25% to the petitioner, while declaring his entitlement for re-instatement with continuity of service. Petitioner is entitled to be compensated by payment of wages for the period during which he was kept out of service illegally. Therefore the denial of back wages or limiting the backwages to 25%, is unreasonable. In the above circumstances the award Ext.P9 to the extent it limits back wages to 25% and it denies the back wages can only said to be perverse. It is therefore declared that the petitioner would be entitled to back wages in full.

The contention of 2 nd respondent management that the findings of the Labour Court are perverse cannot be accepted. The Labour Court rightly found that the non-furnishing of inquiry report caused prejudice to the petitioner. In the judgment in

# Ram K.V.S. v. Bangalore Metropolitan Transport Corpn., (2015) 12 SCC 39

the apex court considered the question regarding the scope of interference under Article 226 against the award passed in view of section 11A and it was found that the High Court has to limit its interference within the parameters laid down by the apex curt. Thus the award of of the Labour Court declaring the entitlement of petitioner for re-instatement does not require any interference by this court. It is settled law that the interference of this court under section 11 A of the ID Act on the punishment awarded should not be made as a matter of course and it is only in the limited circumstances when the findings are perverse or contrary to any statutory provision that this court can interfere with the findings. No such circumstance arise in this case. Therefore W.P.(C) No. 12129 of 2008 filed by the management is dismissed and W.P.(C) No. 18148 of 2008 filed by the workman is allowed.

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