Karnataka State Road Transport Corporation v Smt. Lakshmidevamma (2001)

Once it was settled that an employer whose domestic enquiry is found defective may lead evidence before the Tribunal to justify the dismissal on the merits, one question remained and would not go away: when must he ask?

Three answers had been given. Delhi Cloth & General Mills v Ludh Budh Singh said before the proceedings are closed. Cooper Engineering Ltd v P.P. Mundhe said the validity of the enquiry must be tried as a preliminary issue, and the management elects after that decision is pronounced. Shambhu Nath Goyal v Bank of Baroda said the request must be made at the first available opportunity — in the s. 33 application, or in the written statement filed on a s. 10 reference.

Lakshmidevamma is the Constitution Bench that chose between them. It approves Shambhu Nath Goyal. After this case, the management must reserve its right to lead evidence at the threshold, in its own pleading, and not wait to see how the preliminary issue is decided.

Read this brief immediately after Cooper Engineering. The two together are the whole of the law on this question, and an answer that gives Cooper Engineering alone is out of date.

The appeal was referred to a Bench of five Judges by a Bench of two, whose order recorded a conflict:

"In view of the conflict of decisions of this Court in Shambhu Nath Goyal vs. Bank of Baroda & Others, (1984 (1) SCR 85) and Rajendra Jha vs. Labour Court, (1985 (1) SCR 544), we are referring this matter to a larger Bench which has to be a Bench of more than three Judges. Mr. Rao, learned counsel appearing for the respondents, states that there is no conflict in the decisions. According to us, that submission is not correct. Hence, we are referring this to a larger Bench."

The respondents pressed again before the larger Bench that there was no conflict, so the Court examined that first.

Shambu Nath Goyal v Bank of Baroda had held:

"The rights which the employer has in law to adduce additional evidence in a proceeding before the Labour Court or Industrial Tribunal either under section 10 or section 33 of the Industrial Disputes Act questioning the legality of the order terminating the service must be availed of by the employer by making a proper request at the time when it files its statement of claim or written statement or makes an application seeking either permission to take certain action or seeking approval of the action taken by it."

That decision was rendered "while deciding the stage at which the management is entitled to seek permission to adduce evidence in justification of its decision taken on the basis of a domestic enquiry."

Rajendra Jha v Presiding Officer, Labour Court, Bokaro Steel City, though considering a similar question, "did not lay down any law contrary to" Shambu Nath Goyal; it was decided on its own facts. The passage relied on shows why:

"Thus, the order passed by the Labour Court allowing the employers to lead evidence has been accepted and acted upon by the appellant. He has already given a list of his own witnesses and has cross-examined the witnesses whose evidence was led by the employers. It would be wrong, at this stage, to undo what has been done in pursuance of the order of the Labour Court. Besides, the challenge made by the appellant to the order of the Labour Court has failed and the order of the Patna High Court dismissing the appellants writ petition has become final."

The Court therefore held there is no conflict between the two.

But that did not end the appeal. The appellant relied on other earlier judgments said to take a view contrary to Shambu Nath Goyal, and the Court considered it appropriate to decide the question "with a hope of putting a quietus to the same."

A point of first importance, and one candidates regularly get wrong:

"the right of a management to lead evidence before the Labour Court or the Industrial Tribunal in justification of its decision under consideration by such tribunal or Court is not a statutory right. This is actually a procedure laid down by this Court to avoid delay and multiplicity of proceedings in the disposal of disputes between the management and the workman."

Because the right is judge-made and procedural, the Court was free to settle the procedure for exercising it — which is exactly what it did.

Its origin lies in Workmen of Motipur Sugar Factory (P) Ltd v Motipur Sugar Factory, quoted at length: if a dismissal without enquiry had to be set aside on that ground alone, the employer "will immediately proceed to hold the enquiry and pass an order dismissing the employee once again", another dispute would arise, there would be delay, and on the second occasion the employer would have the benefit of a domestic enquiry. Giving him the opportunity to justify the dismissal before the tribunal "clearly would be to the benefit of the employee". Hence the consistent holding that "if the domestic enquiry is irregular, invalid or improper, the tribunal may give an opportunity to the employer to prove his case and in doing so the tribunal tries the merits itself."

The Court's survey found agreement on the existence of the right but "some differences of opinion in regard to the timings of making such application." Some judgments allowed it "at any stage of the proceedings right upto the stage of pronouncement of the order" on the original application under s. 10 or s. 33(2)(b); others held it could be invoked "only at the threshold."

1. Delhi Cloth & General Mills Co. v Ludh Budh Singh. Where the management relies on its domestic enquiry, it "may request the Tribunal to try the validity of the domestic inquiry as a preliminary issue and also ask for an opportunity to adduce evidence before the Tribunal if the finding on the preliminary issue is against the management." If the finding goes against it, the Tribunal must give that opportunity and a corresponding opportunity to the employee to lead evidence contra. "But the management should avail itself of the said opportunity by making a suitable request to the Tribunal before the proceedings are closed. If no such opportunity has been availed of before the proceedings were closed, the employer can make no grievance that the Tribunal did not provide for such an opportunity."

The trouble lay in those very words. "The words before the proceedings are closed gave rise to some doubts as to whether it is open to the management to seek this right of leading fresh evidence at any stage, including at a stage where the Tribunal/Labour Court had concluded the proceedings and reserved its judgment on the main issue."

2. Cooper Engineering Limited v Sri P.P. Mundhe. The Court set out the familiar passage in full: where dismissal or discharge is referred for industrial adjudication, the Labour Court "should first decide as a preliminary issue whether the domestic enquiry has violated the principles of natural justice"; where there is no enquiry, or a defective enquiry is admitted, there is no difficulty, but where the matter is in controversy "that question must be decided as a preliminary issue"; "On that decision being pronounced it will be for the management to decide whether it will adduce any evidence before the Labour Court. If it chooses not to adduce any evidence, it will not be thereafter permissible in any proceeding to raise the issue." No party may stall the final adjudication by challenging the decision on the preliminary issue, and "It will be also legitimate for the High Court to refuse to intervene at this stage" — the observations being made "in our anxiety that there is no undue delay in industrial adjudication."

So Cooper Engineering required the validity of the enquiry to be tried as a preliminary issue, and only "thereafter, if necessary, the management was to be given an option to adduce fresh evidence. But the problem did not stop at that."

3. Shambu Nath Goyal again. The difficulty with waiting for the preliminary issue was practical: "after the decision in the preliminary issue on the validity of the domestic enquiry, either way, there was nothing much left to be decided thereafter." Shambu Nath Goyal, after discussing the earlier cases including Shankar Chakravarti v Britannia Biscuit Co. Ltd. (a decision later than Cooper Engineering), laid down that where the management has applied under s. 33 for permission or approval, it is made aware of the workman's case against the enquiry by the workman's written statement of defence, and "if the management chooses to exercise its right it must make up its mind at the earliest stage and file the application for that purpose without any unreasonable delay."

Where the question arises on a s. 10 reference after the workman has been punished, no separate application is needed at all: the objection to the enquiry is taken in the workman's claim statement, the management sees it before filing its written statement, "and could make the request for the opportunity in the written statement itself. If it does not choose to do so at that stage it cannot be allowed to do it at any later stage of the proceedings by filing any application for the purpose which may result in delay which may lead to wrecking the morale of the workman and compel him to surrender which he may not otherwise do."

The Court noted a detail of Shambu Nath Goyal worth knowing: the judgment of Vardarajan J in that case "does not refer to the case of Cooper Engineering", but the concurring judgment of D.A. Desai J "specifically considers this case." The effect of Goyal was that the management had the right to lead evidence only if it had reserved that right in its s. 33 application or in its objection to the s. 10 reference — "meaning thereby the management had to exercise its right of leading fresh evidence at the first available opportunity and not at any time thereafter during the proceedings".

The Court approved the Shambu Nath Goyal procedure as "just and fair", for four reasons.

1. No prejudice to the management. "There can be no complaint from the management side for this procedure because this opportunity of leading evidence is being sought by the management only as an alternative plea and not as an admission of illegality in its domestic enquiry." This is the answer to the old dilemma that asking for the opportunity looked like abandoning the enquiry.
2. Advantage to the workman. The workmen "will be put to notice of the fact that the management is likely to adduce fresh evidence, hence, they can keep their rebuttal or other evidence ready."
3. It prevents delay. The procedure "eliminates the likely delay in permitting the management to make belated application whereby the proceedings before the Labour Court/Tribunal could get prolonged."
4. Stare decisis. Shambu Nath Goyal was delivered on 27 September 1983, had taken note of almost all the earlier judgments, and had laid down a procedure "which we have held is neither oppressive nor contrary to the object and scheme of the Act." Having held the field for nearly eighteen years, "the doctrine of stare decisis require us to approve the said judgment to see that a long standing decision is not unsettled without strong cause."

1. There is no conflict between Shambu Nath Goyal and Rajendra Jha; the latter was decided on its own facts and laid down no principle of law.
2. The management's right to lead evidence before the Labour Court or Tribunal in justification of its order is not a statutory right, but a procedure evolved by the Supreme Court to avoid delay and multiplicity of proceedings.
3. "the law laid down by this Court in the case of Shambu Nath Goyal vs. Bank of Baroda & Others (1984(1) SCR 85) is the correct law on the point." The management must make the request at the time it files its statement of claim or written statement, or makes its application for permission or approval — that is, at the first available opportunity — and not later.
4. On the facts: "the appellant employer did not seek permission to lead evidence until after the Labour Court had held that its domestic enquiry was vitiated." Applying those principles, the High Court had rightly dismissed the employer's writ petition. The appeal was dismissed with costs.

Where an employer defends a dismissal before a Labour Court or Industrial Tribunal on the strength of a domestic enquiry whose validity is challenged, his opportunity to lead independent evidence in justification of the dismissal must be claimed at the first available opportunity — in the application under s. 33 seeking permission or approval, or in the written statement filed after a reference under s. 10 — and cannot be claimed after the Court has pronounced against the enquiry. The right being procedural and judge-made, the request is an alternative plea and carries no admission that the enquiry was bad.