DISCIPLINARY INQUIRY BEFORE DISMISSAL OF EMPLOYEE NOT MANDATORY AN ANALYSIS

In other words, Employers may not have to go through the entire process of disciplinary enquiry if there is leading evidence against the dismissed employee warranting such action

The employer and employee relationship as known to the world has witnessed sea changes through the course of time as the world progressed towards the modern age of industrial revolutions. Both the employer and employee traversed through economic activities of a nation and world at large, progressing from an elementary form of informal to a formal arrangement however the conflict resolution mechanism between the two has always been a point of discussion with odds favoring the employer in general. However, with the increased participation and role of regulators, authorities and most notably through judicial remedial actions, this employer-employee relationship has been given a new horizon in the direction of relationship of mutual benefit & respect with a common goal to participate in commerce while reaping economic benefits. With the emergence of several employment-related concepts, the concept of requirement of disciplinary enquiry was introduced for ensuring adherence to essential legal principle Audi Alteram Partem which connotes that "no one should be condemned unheard". Discipline herein signifies compliance to the predefined code of conduct & rules and accordingly, obedience of same is envisaged in the contract of service. Accordingly, Disciplinary Enquiry herein means enquiry into the charges of indiscipline and misconduct by an employee.

Employment disputes stemming from disciplinary issues are usually subject to intense scrutiny by judicial authorities owing to the uniqueness of factual positions/circumstances involved therein. Accordingly, there can't be a "one size fits all" theory applicable for resolution of such employer-employee disputes. While a disciplinary enquiry is perceived as a preliminary document detailing contentions and counter-contentions of parties coupled with evaluation of the matter, thereby providing substantial insight into the dispute at hand, however, it may not be always practicable and/or necessary for conducting disciplinary enquiry before an employer makes any binding decision in respect of retaining or dismissing an errant employee in any given situation. The onus to prove the legitimacy - of disciplinary action shall be on both employer and employee through adducing sufficient evidence for the same.

DISCIPLINARY ENQUIRY – BEFORE & AFTER SECTION 11A OF INDUSTRIAL DISPUTES ACT:

Before the introduction of Section 11A of the Industrial Disputes Act, Tribunal/Labour Court would only interfere with a decision of management pursuant to an enquiry, if the same a) lacks good faith b) resultant of unfair labor practice c) violation of principles of natural justice d) findings not based on material evidence. However, post introduction of Section 11A in Industrial Disputes Act in 1971, the powers of the Tribunal/Labour Courts were extended to interfere with the decision of management even if the same was resultant of valid enquiry besides their power to interfere in case of no enquiry or an invalid enquiry. Hence, the significance of conducting a disciplinary enquiry by the management against an employee of interest eventually reduced.

HON'BLE SUPREME COURT JUDGMENT IN STATE OF UTTARAKHAND & ORS. VS SURESHWATI (CIVIL APPEAL NO. 142 OF 2021):

In the underlying case, owing to continued absence of an Assistant Teacher, its employer namely Jai Bharat Junior High School, Haridwar dismissed her services. The said decision was challenged by the employee alleging illegal retrenchment without being granted any hearing or payment of retrenchment compensation. The Labour Court while pronouncing its award held that the employee is not entitled to any relief as the School has adduced appropriate evidences to corroborate the employee's continued absence from duties. The employee challenged the said decision by way of writ petition filed before the Hon'ble High Court of Uttarakhand. The High Court set aside the award passed by the Labour Court on account of lack of appropriate enquiry or disciplinary proceedings regarding said abandonment of services by employee.

The Hon'ble Supreme Court in the appeal filed by the School against the order of High Court held that the Labour Court was correct in its order to not grant any relief to the employee as there was adequate evidence, both oral and documentary provided by the School against the employee. It was proved by the School that the employee had abandoned her service when she got married and moved to another district, which was not denied by her in her evidence. The school records revealed that the employee was not in employment of the School since then.

RATIO:

The three judge bench comprising of Hon'ble Justices L. Nageshwar Rao, Navin Sinha and Indu Malhotra observed that in order to dismiss an employee, it is not essential to hold a disciplinary enquiry against the employee, provided that the employer places proof by way of leading evidence before the Labour Court pertaining to the reasons for dismissal or discharge and is able to substantiate before the Labour Court why a Disciplinary Enquiry was not conducted for the same.

In the case of State Bank of India v. Shri N. Sundara Money (1976 SCR (3) 160), the meaning of the expression "for any reason whatsoever", was broadly interpreted by the Hon'ble Supreme Court. It had been held that the expression holds no exception to it and that retrenchment means termination of a worker's services for any reason whatsoever, apart from those laid out in section 2(oo) of the Industrial Disputes Act, 1947. In the present case, it was contended that the employee had abandoned her services when she got married and moved to another city. Therefore, due to this reason, the dismissal of the employee in the current scenario can fall under the scope of "for any reason whatsoever".

ANALYSIS:

The Hon'ble bench, while pronouncing its judgment primarily relied on three judgments as under:

a. Workmen of Motipur Sugar Factory Pvt. Ltd vs Motipur Sugar Factory (AIR 1965 SC 1803), wherein it was held that "where an employer has failed to make an enquiry before dismissal or discharge of a workman, it is open for him to justify the action before the Labour Court by leading evidence before it". The Hon'ble Supreme Court held that the act of justification was duly done by the Employer in the current case by adducing appropriate evidence.

b. Delhi Cloth and General Mills Co. v. Ludh Budh Singh (1972) 1 SCC 595, where it was held that if the management does not conduct a domestic enquiry or does not reckon with any held enquiry, then in that case, it can straightaway adduce evidence justifying its action. The Tribunal is confined to consider the evidence produced before it and provide its decision accordingly. If the employer himself does not count on the enquiry then in that case, it is not necessary for the Tribunal to consider the validity of the domestic enquiry.

c. Bhavnagar Municipal Corpn v. Jadega Govubha Chhanubha, (2014) 16 SCC 130, wherein "It is fairly well-settled that for an order of termination of the services of a workman to be held illegal on account of non-payment of retrenchment compensation, it is essential for the workman to establish that he was in continuous service of the employer within the meaning of Section 25-B of the Industrial Disputes Act, 1947." In contrast, the employee in the current case failed to establish the fact that she was in continuous employment, since he failed to produce salary slips as proof of the said fact.

d. Workmen of Firestone Tyre & Rubber Co. of India (P) Ltd. v. Management of Firestone Tyre & Rubber Co. of India (P) Ltd., (1973) 1 SCC 813, the Hon'ble Supreme Court placed great emphasis on the principles detailed in the said matter which stated that before imposing punishment, an employer is expected to conduct a proper enquiry. However, in cases wherein enquiry has not been conducted or has conducted a defective enquiry, an "Opportunity should be given to both employer and employee to adduce evidence before the Tribunal justifying their respective actions. The effect of an employer not holding an enquiry is that the Tribunal would not have to consider only whether there was a prima facie case. An employer who wants to present evidence first before the Tribunal to justify his action, should ask for it at the appropriate stage. The Tribunal has no power to refuse such request. The Tribunal should not direct reinstatement of a dismissed or discharged employee only on the basis of non-enquiry or a defective enquiry".

CONCLUSION:

The requirement of conducting disciplinary enquiry, as recognized by Hon'ble Apex Court in multiple judicial precedents, is an important aspect in the interest of justice and balance of convenience for both employer and employee before severance of relationship. However, the judgment in State of Uttarakhand & Ors. vs Sureshwati is seen as a welcome step by employers, since the Hon'ble Supreme Court acknowledged that there could be certain eventualities wherein conducting such disciplinary enquiries are either not practicable or not required considering the factual positions involved therein or the evidences manifesting retrenchment of employee. In other words, Employers may not have to go through the entire process of disciplinary enquiry if there is leading evidence against the dismissed employee warranting such action. The said dismissal will be justified provided the employer substantiates his action before the Labour Court. The judgment passed by the Hon'ble Supreme Court in the aforesaid matter has not just brought much-needed respite to employers but has also re-established the principle of balance of convenience for both employers & employees and ensured that absence of any step(s), though mandatory, cannot be perceived as a ground for challenging the disciplinary action and prematurely corroborating the demand for reinstatement and the matter should be seen in the light of evidence adduced by both employers as well as employees.

Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.