Phulbari Tea Estate v Its Workmen (1959)

When an employer dismisses a workman after a domestic enquiry, the Tribunal does not sit in appeal over the employer's findings. But the enquiry must be a real one. Phulbari sets out the minimum natural justice demands of that enquiry: the witnesses against the workman should be examined in his presence, and he must know in full what they say before he is asked to question them.

It also does something of lasting practical importance. It holds that a defective enquiry is not fatal in itself: the employer can cure the defect by producing the witnesses before the Tribunal and letting the workman cross-examine them there. This principle, taken from Sasa Musa Sugar Works and extended here to adjudication under s. 15, is the root of the later law on leading evidence before the Tribunal to justify a dismissal.

B.N. Das, a workman of the Phulbari Tea Estate, was charged with having, on the night of 6/7 February 1955, stolen two lorry wheels complete with tyres and tubes from the company's lorry along with another employee, Samson — gross misconduct under the Standing Orders. The case was reported to the police, and Das was arrested and remained in jail until released on bail on 25 February. When he reported for duty on 28 February he was suspended for ten days.

On 10 March 1955 he was charge-sheeted. He replied on 11 March that as the case was sub judice in the criminal court, the question of dismissal did not arise at that stage. On 12 March the manager held an enquiry and dismissed him the same day. On 23 March the magistrate, on the police's final report, discharged Das.

At the enquiry, witnesses whose statements the manager had earlier recorded in Das's absence were present. Das was asked whether he had anything to say, and said he knew nothing about the theft. He was told the people who had given evidence against him were present and he should ask them what they had to say; he said he would put no questions. The witnesses were then asked whether their earlier evidence was correct, and said it was. Das was not given copies of their statements, nor were the statements read over to him.

The union, the Assam Chah Karmchari Sangh, took up the case and the Government of Assam referred it to the Industrial Tribunal on 8 March 1956. Before the Tribunal the company produced only the recorded statements, not the witnesses. The Tribunal held the dismissal unjustified, both because proper procedure had not been followed and for want of legal evidence, and awarded compensation in lieu of reinstatement. The company appealed by special leave.

1. Could the company challenge, for the first time in the Supreme Court, the competence of the one-member Tribunal under s. 7 as it then stood?
2. Did the enquiry of 12 March 1955 satisfy the principles of natural justice?
3. Could a defect in the domestic enquiry be cured before the Tribunal, and was it cured here?

The appeal was dismissed, with the compensation limited to the sum of Rs 11,125 deposited in the Court. Parties bore their own costs.

Competence of the Tribunal

The Tribunal, Shri Hazarika, was an Additional District and Sessions Judge. Whether he was qualified under s. 7 — for instance as having been a District Judge elsewhere, or as qualified for appointment as a High Court Judge — needed investigation, which never happened because the point was not raised before the Tribunal. The Court was "not prepared to allow the company to raise this question before us for the first time".

The Tribunal does not sit in appeal — but procedure matters

The Court accepted that, on the second of the Tribunal's reasons (want of legal evidence), there was "force in the criticism on behalf of the company that the Tribunal had proceeded as if it was sitting in appeal on the enquiry held by the company." But the Tribunal's other finding — that proper procedure had not been followed — still had to be examined.

What natural justice requires in the enquiry

The Court applied Union of India v T.R. Varma, where Venkatarama Ayyar J said that the rules of natural justice require "that the evidence of the opponent should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party". Those principles "were not followed in the enquiry which took place on March 12, inasmuch as the witnesses on which the company relied were not examined in the presence of Das."

The Court recognised, citing New Prakash Transport Co v New Suwarna Transport Co, that the rules of natural justice vary with the setting. But even the lesser standard applied there — that the party was informed of the material to be used against him and given an opportunity to explain it — was not met, because there was no evidence that copies of the statements were supplied to Das or that they were read out to him. Hence "one of the basic principles of natural justice in an enquiry of this nature was not observed".

A defective enquiry can be cured before the Tribunal

"The defect in the conduct of the enquiry could have been cured if the company had produced the witnesses before the Tribunal and given an opportunity to Das to cross-examine them there." Drawing on Sasa Musa Sugar Works (P) Ltd v Shobrati Khan (an application under s. 33), the Court held: "The same principle would apply in case of adjudication under s. 15 of the Act, and if there was defect in the enquiry by the employer he could make good that defect by producing necessary evidence before the tribunal."

That was not done. The company produced only the manager's recorded statements, and so "Das had never an opportunity of questioning the witnesses after knowing in full what they had stated against, him." The Tribunal's finding that the enquiry was not proper was correct and had to stand.

In a domestic enquiry into a workman's misconduct, natural justice requires that the witnesses relied on by the employer be examined in the workman's presence, that he know in full what they have said against him, and that he have the opportunity to question them. Where the employer's enquiry is defective, the defect can be made good in adjudication under s. 15 (as under s. 33) by producing the witnesses and the relevant evidence before the Tribunal and giving the workman an opportunity to cross-examine them; if the employer does not do so, the finding that the enquiry was improper stands. A question of the Tribunal's competence that turns on facts must be raised before the Tribunal itself.

• Direct question: What are the essentials of a fair domestic enquiry? Can a defective enquiry be cured before the Industrial Tribunal? Use Phulbari for both limbs: the T.R. Varma requirements, and the cure by leading evidence before the Tribunal.
• Problem question: an employer dismisses a workman on statements recorded behind his back, then produces only those statements before the Tribunal. Apply Phulbari: the enquiry is vitiated and the defect has not been cured.
• Point worth marks: the Tribunal does not sit in appeal over the employer's findings — the Court accepted the company's criticism on this — but it can still set aside a dismissal where the enquiry itself breached natural justice.
• Link: read it with Sasa Musa Sugar Works v Shobrati Khan (s. 33) and, for the effect of holding no enquiry at all, with the later line of cases including Workmen of Motipur Sugar Factory v Motipur Sugar Factory.