Workmen of Messrs Firestone Tyre & Rubber Company of India (P.) Ltd. v. Management & Others

VAIDIALINGAM, J. In these appeals, by special leave, two a. common questions arise for consideration :- (1) proper interpretation of section llA of the Industrial Disputes Act; and (2) whether the above section applies to industrial dis­ putes which have already been referred to for adju­ dication and were 'pending as on 15-12-1971. Section I IA was incorporated in the Industrial Disputes Act 1947 (hereinafter referred to as the Act) by section 3 of the Industrial Disputes (Amendment) Act 1971 (hereinafter referred to as the Amendment Act). The Amendment Act passed by Parliament, received the assent of the President on December 8, 1971. Sub-section 2 of section I provided for its coming into force on such date as the Central Government by notification in the official gazette appoints. The Central Government by notifi­ cation No. F.S.-11013/1/71-LR.I dated 14-12-1971 appointed the 15th day of December, 1971, as the date on which the said Act would come into force. Accordingly, the Amendment Act came into force with effect from December 15, 1971. The Amendment Act introduced various amendments to the Act. In particular by section 3, it inserted the new section I IA in the Act. The new section I IA so inserted runs as follows :- Powers of Labour Courts, Tribunals and National Tribunals to give appropriate relief in case of discharge or dismissal of workmen "11 A. Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and, in the course of the adjudication pro­ ceedings, the Labour Court, Tribunal or National Tri- . bunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other re­ lief to the workmen including the award of any lesser punishment in lieu of discharge or dismiS!ial as the cir­ cumstances of the case may require; WORKMEN V. FIRESTONE TYRE & RUBBER CO. 5 9 t (Vaidialingam, J.) Provided that in any proceeding under this section the Labour Court, Tribunal or National Tn'bunal, as the case may be, shall rely only on the materials on re­ cord and shall not take any fresti evidence in relation to the matter". Regarding section 11 A; in the Statement of · objects and reasons it is stated as follows :- "In Indian Iron and Steel Company Limited and another v. their workmen (AIR 1958 S.C. 130 at 138), the Supreme Court, while considering the Tribunal's power to interfere with the managemenfs decision to dismiss, discharge or terminate the services of a work­ man, has observed that in case of dismissal on miscon­ duct, the Tribunal does not act as a court of appeal and substitute its own judgment for that of the management and that the Tribunal will interfere only when there is want of good faith, victimisation, unfair labour practice, etc. on the part of the management. The International Labour Organisation, in its re­ commendation (No.· 119) concerning termination of employment at .the initiative of the employer, adopted in June 1963, has recommended th!lt a worker aggriev­ ed by the termination of his employment should be en­ titled to appeal against the termination among ofhers; to a neutral body such as an arbitrator, a court, an arbi' tration committee or a similar body and that the neutral body concerned should be empowered to examine the reasons given in ·the termination of employment and the other circumstances refating to the case and to render a decision on the justification of the termination. The International Labour Organisation has further recom­ mended that the neutral body should be empowered (if it findg fhat the termination of employment was unjusti­ fied) to order that the worker concerned, unless reinstat­ ed with unpaid wages, should be paid adequate com­ pensation or afforded some other relief. In accordance with these recommendations, it is considered that the Tribunal's power in an adjudication proceeding <"elating to discharge or dismissal of a work­ man should not be limited and that the Tribunal should have the. power in cases "'.herever necessal!', to s~t aside the order of discharge or dismissal and d1rect remstate­ ment of the workman on such terms and conditions, if any, as it thinks fit or give such other relief t? the wor~­ men including the award of any lesser pumshment m lieu of discharge or dismissal as the circumstances of the S92 SUPREME COURT REPORTS (1973] 3 S.C.R, case may require. For this purpose, a new section l lA A is propOsed to be inserted in the Industrial Disputes Act, 1947 , ....... " There is no controversy that in all the four appeals, the re­ ference had been made long before the date of coming into force of section 1 IA and the industrial disputes were pending adjudica- B lion at the hands of the concerned authorities on 15-12-1971. In respect of such disputes the concerned labour court or Tribunal had· to consider the quesiion whether section 11 A applies to those proceedings and also the ftirther question as to the powers to be exercised by them in respect of such disputes. On behalf of the companies, it appears to have been urged that the section does not apply to the disputes which had already been referred to for adju- C dication and that the management had a right to adduce evi­ dence to justify the action taken against the workmen even though no enquiry had been held before the order of discharge or dis· missal had been passed and al'so in caSes where the enquiry held is found to be defective. This claim was resisted on hebalf of the labour on the ground that the section applies to all proceedings D which were pending as on 15-12-1971 and that the management, if it had not held any enquiry or if the enquiry conducted by it was found to be defective, has no right to adduce evidence before the authority· to justify its action. Different views have been ex­ pressed by the Tribunals concerned as will be seen from what is stated below:- E In Civil Appeal No. 1461 of 1972, the Reference (l.T.) No. 307 of 1968 related to the question of reinstatement of a number of workmen, who had been dismissed. The Industrial Tribunal, Maharashtra, Bombay, considered the question whether section llA applies to the reference, which had been made as early as 12th August, 1968. The Industrial Tribunal by its order dated April 21, 1972 has held that the restrictions imposed upon the powers of the Labour Court or Tribunal to interfere with orders of dismissal passed by the management, have been removed by section l lA, which has the effect of affecting tfie substantive part ·of the law of master and servant and, therefore, the said section has no retrospective effect. The Tribunal has held that the con­ cerned reference will have to be disposed of as though section 1 lA was not in the statute. The workmen have come up in appeal. . Civil Appeal No. 1995 of 1972 arises out of the order dated 28-6-1972 of the Fifth Labour Court at Bombay in Reference (l.D.A.) No. 268 of 1970. The Labour Court has held that sec­ tion 11A applies even to all proceedings pending adjudication as on 15-12-1971, as it only .deals with matters of procedure. The said Court has further held that the new section makes it clear that I WORKMEN V. FIRESTONE TYRE & RUBBER CO. ~93 (Vaidialingam, J.) there must be a proper enquiry by an employer before dismissing or discharging a workman and that if no enquiry' has been held or if the enquiiy held is found to be defective, there is no option but to reinstate the employee. In this view, the Labour Court has further held that an employer under those circumstances has no right to adduce evidence in the adjudication proceedings to justify his action. In civil Appeal No. 1996 of 1972 [arising out o( Reference (LO.A.) No. 207 of 1970] and in Civil Appeal No. 2386 of 1972 [arising out of Reference (LO.A.) No. 213 of 1970], the same Labour Court has expressed similar views in its orders dated June 27, 1972. Against all these three orders the company has filed appeals. The management and the workmen concerned in certain other · disputes have also intervened in these appeals and they have placed before us copies of the orders passed by other authorities. It will be useful to refer to the views expressed by some of those authorities. In Reference (LO.A.) No. 79 o( 1971, the Second Labour Court in its order dated April 13, 1972 has held as follows:- Section 11 A gives power to the Labour Court to scrutinise domestic enquiries similar to that of ..an appellate · court. The said section comes into play only after the court has come to a conclusion that the enquiry held by an employer was proper. Both parties have still a right to adduce evidence to prove the legality or otherwise of the domestic enquiry. Even if no enquiry has been held by an employer or if the enquiry is held to be defective, reinstatement cannot be ordered straightway as urged by th~ labour. On the other hand, an employer has got a right to adduce evidence to justify the action taken by· him. But section 1 lA deals only with procedural matters and, therefore, it operates re­ trospectively. Similarly in Reference (LO.A.) No. 41 of 1956, the First Labour Court Bombay in its order dated January 3, 1973, has held that the section is retrospective in its operation and that the employer has got a right to lead evidence before the Labour Court. if the domestic enquiry has not been held or is found to be defective. From what is stated above, it is clear that there is a very wide divergence of views expressed by the various authorities, both regarding the applicability of the section to pending proceedings as well as the interpretation to be placed on the said section. We will first take up the question regarding the proper inter­ pretation to be placed on section I IA. The contentions of Mr. Oeshmukh. learned counsel, who advanced the main arguments irr this regard on behalf of the workmen are as follows :-· . 594 SUPREME COURT REPORTS (1973] 3 S.C.R • Originally limitations had been placed by judicial decisions in resp~ct of the jurisdiction of the Labour Tribunals when consider­ ing the action of an employer in the matter of discharge or dis­ missal of a workmen. lt a domestic enquiry had been held by an .employer on the basis of which a workman is dismissed or dis­ charged, the Labour Courts can interfere with the decision of the management only if the domestic enquiry is vitiated by the cir­ cumstances mentioned by this Court m Indian Iron & Steel Co. Ltd. & Another v. Their workmen(1). Once ·the Tribunals hold that the domestic enquiry has been conducted properly and the action of an employer is bona fide and the conclusions arrived at therein are plensible, they had no ju~isdiction to substitute their own judgment. In cases where the misconduct is founci to be proved by a valid and proper domestic enquiry, the Tribunal had no power to alter the punishment imposed by an employer. Even in cases where the domestic enquiry is held to be defective or even if no domestic enquiry had been conducted by an employer before passing an order of termination or discharge, the employer was given an opportunity to adduce evidence before the Tribunal to justify his action. Once the Tribunal accepts that evidence and holds that the misconduct is pro\\ed, it had no power to interfere with the discretion of the management regarding the quantum of punishment. The abo\>e position has been completely changed by section ! !A. It is now obligatory on an employer to' hold a proper domes­ tic enquiry in which all material e.vidence will have to be adduced. When a dispute is referred for adjudication and it is found that the domestic enquiry conducted by the management is defective or if it is found that no domestic enquiry at all had been conduct­ ed, the order of discharge or termination passed by the employer becomes, without anything more, unjustified and the Labour Tri­ bunals have no option but to direct the reinstatement of the work­ men concerned, as his discharge or dismissal is illegal. Even in cases where a domestic enquiry has been held and finding of mis­ conduct recorded, the Labour Tribunals have now full power and jurisdiction to reappraise the evidence and to satisfy themselves whether the evidence justifies the finding of misconduct. Even if the enquiry proceedings are held to be proper and the finding of misconduct is also accepted, the Tribunal has now power to consider whether the punishment of dismissal or discharge was necessary for the type of misconduct of which the workman is found guilty. In such circumstances, the Tribunal can also give any other relief to the workman, including the imposing of a lesser punishment. In cases where an employer had not conduct­ ed any enquiry or when the enquiry conducted by him is held to 'be defective, the employer wi11 not be given any opportunity to (I) [1958] S.C.R. 6€7, ,\ J! ff WORKMEN V • . FIRESTONE TYRE & RUBBER CO. 595 (Vaidialingam, J.) adduce evidence before the Labour Tribunal for justifying his action. Various decisions of this court have emphasised that there is an obligation on the part of an employer to hold a proper enquiry before dismissing or discharging a workman. And it has also been stated that the enquiry should conform to certain well defined principles and that it should not be an empty formality. 1f the management, being fully aware of this position in law, does not conduct an enquiry or conducts a defective enquiry, the order passed by it is illegal and it cannot take advantage of such illega­ lity or wrong committed by it and seek a further opportunity be­ fore the Tribunal of adducing evidence for the first time. Gene­ rally, the Standing Orders al,so provided for the conduct of an en­ quiry before imposing a punishment. The Standing Orders have been held to be statutory terms of conditions of service. If an employer does not conform to the provisions of the Standing Orders, he commits an illegality and an order passed, which is illegal, has only to be straightway set aside by the Tribunal. Deci­ sions of this Court, while recognising that an opportunity has to be given to an employer to adduce evidence before the Tribunal for the first time, have not 'given the importance to the effect of a breach of a statutory obligation committed by an employer in not conducting a proper and valid enquiry as per the Standing Orders. This anomaly has now been rem.oved by the legislature. The above is the line of argument adopted by Mr. Deshmukh. He referred us to certain decisions of this Court in support of his contentions that the opportunity that was so far directed to be given to an employer to adduce evidence for the first time before the Tribunal was not by way of recognising a right in an employer ?ut rea!IY for the benefit of the workman, who will otherwise be Jeopardi~ by a further enquiry being conducted by the employer after fi!ling up the lacunae that are found in the original enquiry. H~ pomted out that when the Tribunals have now been clothed with .full po~er to reappraise the evidence adduced in the domcitic enqmry, which an employer is under obligation to conduct and when they have ~1.1 clothed with powers to hold as un·u~tified ~nf or~er of termmation because of the enquiry oroc~,didg being ~e eb~;: 1~r on. f!le ground ~hat no enquiry at all was conducted, dence before g~~n~ ~~ e~p oye[ an opportunity to adduce evi­ was prepared to ac;p~~at ~~eno~~C:, ftuf:i~es. Mr. Des~ukh ~~u~~ ~~enc.e beffore the Tri?unal, strictl:~iiul~eJ11~0 pt:;:-~~a1~ oloyer. Tu!':~:i o a .domes!ic en~uiry conducted by an em- l !Ajn support 0/~L ~~~te~~~n h:~l~ ?n t~~ oroviso to section employer to conduct a ro :t 1. Is 0 1g_atory now for an an order of dismissal or ~is::r;d valid enquiry before passing The above contentions of Mr. Deshmukh have been adopted by Miss ~dira Jai Singh, Mr. Madan Mohan and Mr.13handare, counsel appearing for certain other workmen. Mr. Bhandare, however, was prepared to take a slightly different stand regarding; the proviso to section l!A. According to_ him only such evidence, which could and should have been produced by the parties in the domestic enquiry, is not allowed to be adduced before the Tri- bunal ' Mr. Damania, learned counsel, who advanced the leading arguments on behalf of the employers broadly contended as follows:- The restrictions imposed upon the jurisdiction exercised by the Labour Tribunals in respect of disputes arising out of orders passed by way of dismissal or discharge, as laid down by this Court in a number of decisions over a period of years, have not been altered by the new section. The right of an employer 'to manage his affairs in his own way, provided he does not act arbi­ trarily, is kept intact. The commo~ law relationship of master and servant was recognised, except to the extent that it was modi­ fied by the decision of this Court in lizdian Iron & Steel Co. Ltd. & Another v. Their workmen(1). All employer is expected to liold a domestic enquiry before an order of dismissal or termina­ tion is passed. He is also bound to ·follow, in such cases, the principles of natural justice and the procedure laid down by the relevant Standing Orders. The Tribunal will not interfere with the findin3 recorded by an employer in a proper enquiry merely on the ground that it would have come to a different conclusion. The punishment to be noted out was entirely within the powers and jurisdiction of an employer and it was no part of the jurisdic­ tion of a Tribunal to de<:ide whether the said punishment was justified except in very rare cases where the punishment imposed is grossly out of proportion, so as to suggest victimisation or unfair labour practices. This was the .position vis-a-vis the management as on 15-12-1971. But under section llA, after the Tribunal holds tha~ the enquiry has been conducted properly by an employer and that the finding about misconduct is correct, it has jurisdiction to consider whether the punishment requires modification. If it holds that the punishment has to be modified, it has power to do so and award a lesser punishment. Section 1 lA comes into effect only at the time when the Tribunali consi­ ders about the punishment to be imposed. While previously the Tribunal had no power to interfere with the punishment, it is now clother with such a power. This is the only modification re­ garding the powers of the management that has been introduced by section llA. Neither the fact that no enquiry at all .has been belil by an employer nor the circumstance that the enquiry, if any (ll [1958] S.C.R. 667. WORKMEN v. FIRESTONE TYRE & RUBBER CO. 597 (Vaidialingam, J,) \ held, is found to be defective, stands in the way of an employer adducing evidence before tiie Tribunal for the first time to jmtify his action taken agains~ a w01kman. Mr; Setalvad, learned counsel, appearing for Larsen & TOllbro Ltd, adopted these contentions of Mr. Damania. He, howner, referred us to the provisions of section 3 3 of the Act. According to him when tlie previous permission or an approval for disJni,s. ing discharging a w01kman has been obtained under section .33, the Tribunal concerned would have. applied its mind and safuficd itself at least prima facie that the proposed action of the employer was justified. Such satisfaction may _be airived at on perusal of the records of clomstic enquiry, if one had been conducted. or on tk basis of evidence placed bef01e the Tribunal by an employer f01 the first time. The said order of dismissal .or discharge can nevertheless be the subject of an industrial dispute. When such dispute is being adjudicated by the Tribunal, the records pertain- ing to the proceedings under section 33 will be relied on by an employer as material on record. It will lead to an anomaly it it is held that the Tribunal can straightaway order reinstatement ~ ly because no domestic enquiry has been held or the domestic.en­ quiry conduc:ed is defective fOI one reason or other. Therefore, he pointed out that the pr0per way of interpreting section UA would be to hold that it comes into play after a Tribunal has·.hcld the enquiry proceedings conducted by the management to. be 1'%0- per and the finding of guilt justified. It is then that the Trib?l!lal can consider whether the punishment imposed. is justified. If it is of the opinion that the punishment is not justified, it can aller the same. We have broadly indicated aboVe the stand taken on behalf •f the workmen and the employers· regarding the interpretation of section l lA. Bef01e we proceed to col)Sider the contents of the sectio•, having due regard to the arguments advanced before us, it ii! necessary to indicate the legru position as on 15-12-1971 regard­ ing the powers of a Labour Court or Tribunal when deciding a dispute arising out of dismissal or discharge of a workman. Thcrt are several decisions of this Court, ·as .also of the Labour Appel- late Tribunal laving down the principles in this regard, but we will refer only to a few of them. In its very early decision in Buckingham and· Cerna tic. Com· pany . Ltd, by its Managing A11ents Binny &: Co., Madras v. Workers of the Comvanv revresented by the"Madras Labour Union,and Madras Textile Workers Union(•), the Labour Appel­ (!} [19~2] Labour AJipeal Cases490. 6-L761SupCI73 ' 598 SUPREME COURT REPORTS (1973] 3 s.c.R. late Tribunal held that the decision of the Management in relation to i:he charges against the employee will not prevail-if (a) the~ is want of bana fide, ot ( b) it is a case of victimisation or unfair labour practice or violation of the principles of natural justice, or ( c) there is a basic errer of facts or, ( d) there has been ~ perverse finding on the materials. It was further laid down that an employer ought to have the right to decide what the appropriate punishment for a misconduct should be and its exercise of the discretion in this regard should not be interfered with by a Tribunal unless the punishment is unjust. In Shri Ram Swarath Sinha, Righa, Muzafjerpur v. The Management of the Belsund Sugar Company Limited, Righa Muzaffarpur(' ), the Labour Appellate Tribunal has recognised the right of a management to ask for permission to adduce evi­ dence for the first time before the Tribunal to justify its action though no domestic enquiry had been held by it. It has been emphasised that the permission asked for cannot be thrown out in limine on the ground that the management had not made any previous enquiry into the charge. We may say that this decision was in respect of a proceeding under section 33 of the Act, but, as held by this Court, there is no difference in such matters whether the Tribunal was deciding a dispute referred to it under section 10 or an application filed before it under section 33 of the Act. In discussing the nature of the jurisdiction exercised by an Industrial Tribunal when adjudicating a dispute relating to dis­ missal or discharge, it has been emphasised by this Court in hzdian Iron & Steel Co. Ltd.( 2 ) as follows : "Undoubtedly, the management of a concern has power to direct its own internal administration and dis­ cipline; but the power is not unlimited and when a dis­ pute arises, Industrial Tribunals have been given the power to see whether the termination of service of a workman is justified to give appropriate relief. In cases of dismissal on misconduct, the Tribunal does not, how­ ever, act as a Court of appeal and substitute its own judgment for that of the management. It wiJl interfere (i) when there is want of good faith; (ii) when there is victimisation or unfair Labour practice, (iii) when the management has been gui!tv of a basic error or vio­ lation of a nrincinle of natural justice. and (iv) when on the materials the finding is completely baseless or perverse". ~ · rtf1~4J Labour APpeaJ Cases 697. (2) 1958 S.C.R. 667. Jl WORKMEN V. FIRESTONE TYRE & RUBBER CO, 599 ( Vaidialingam, J.) This is the decision which has been referred to in the Statement of objects and reasons alr7ady adverted t?. It may b~ ~ote~ that the four ·circumstances pomted out by this Court iustlfymg mter­ ference at the hands of the Tribunal are substantially the same as laid down by the Labour Appellate Tribunal in Buckingha1r11 and Carnatic Company ( 1). Following the decision in Indian Iron & Steel Co. Ltd.('), this Court in The Punjab National Bank Ltd. v. Its Workmen(') held: "In cases where an industrial dispute is raised on the ground of dismissal and it is referred to the tribunal for adjudication, the Tribunal naturally wants to know whether the impugned dismissal was preceded by a pro­ per enquiry or not. Where such a proper enquiry has been held in accordance with the provisions of the re­ levant standing orders and it does riot appear that the employer was guilty of victimisation or any unfair labour practice, that tribunal is generally reluctant to interfere with the. impugned orders". It was further emphasised that : 'There is another principle which has to be borne in mind when the tribunal deals with an industrial dispute arising from the dismissal of an employee. We have already pointed -0ut that before an ·einployer can dismiss his employee he has to hold a proper enquiry into the alleged misconduct of the employee and that such an enquiry must always begin with the supply of a specific charge-sheet to the employee". The effect of an employer not holding an enquiry has been stated as follows :- "But it follows that if no enquiry has in fact been held by the employer, the issue about the merits of the i111pugned order of dismissal is at large before the tri­ bunal and, on the evidence adduced before it, the tribu­ nal has to decide for itself whether the misconduct al­ leged is proved, and if yes, what would be proper order to. make. In such a case the point about the exercise of managerial functions does 11ot arise at alt". In Mis. Bharat Sugar Mills Ltd. v. Shri Jai Singh and o~hers('.), the question arose regarding the powers of an Indus­ trial Tnbunal to permit an employer to adduce evidence before it {I) [1952] Labour Appeal Cases 490. (2) [1958] S.C.R. 667. (3) [1960) (1) S.C.R. 806. (4) [1962] (3) S.C.R. 684. justifying its action after the domestic enquicy was held to be defective. It was contended on behalf of the workmen that when · once the domestic enqulry was found to be defective, the tribunal had no option but to dismiss the applicatiop. filed by an employer for approval and that it cannot allow an employer to adduce evi• dence before it justifying its action. This Court rejected this contention as follows : "When an appliyation for pennission for dismissal is made on the allegation that the workman has been guilty of some misconduct fo[ which the management considers dismissal the app_roppat~ punishment the Tri­ bunal has to satisfy itself that there is a prima facie case for such dismissal. Where there has been a proper enquicy by the management itself the Tribunal, it has been settled by a number of decisi~ns of this . Court, has to accept the finding .arrived at in that enquiry ullless it is perverse and should give the permission asked for unless it has reason to believe that. the management is guilty of . victimisation or has been guilty of unfair labour practice or is acting ma/a fide. But the mere fact that no enqulry has been held or that the enqulry has not been properly conducted cannot absolve the Tribu­ nal of its duty to decide whethe.r the case that lhe work­ man has been guilty of the alleged misconduct has been made out. The proper way Of performing this duty where there has not been a proper enquiry by the management is for the Tribunal to take evidence of both sides in respect of the alleged misconduct. When such evidence is adduced before the Tribunal the management is deprived of the ben~fit of · having the findings of the domestic tribunal being accepted as prima facie proof of the alleged misconduct unless the finding is perverse and to prove to the satisfaction o! the Tribunal itself that the workman was guilty of the alleged misconduct. We do not think it either just to the management or indeed even fair to the workman himself that in such a case the Industrial Tribunal should refuse to take> evidence and thereby drive the management to make a further application for permis­ sion after holding a proper enquiry and deprive the workman of the benefit of the Tribunal itself being satis­ fied on evidence adduced before it that he was 'guilty of the alleged misconduct''. In the above decision, this Court quoted with approval the decision of the Labour Appellate Tribunal in Buckingham and Q D. .A Jl WORKMEN V. FIRESTONE TYRE & RUDDER CO. 601 ( Vaidialingam, !. ) Carnatic Company Ltd. (supra) holding that the materials on which a Tribunal acts may consist of :- "( 1) entirely the evidence taken by the management at the enquiry and the proceedings of the en­ quiry, or (2) that evidence and in addition thereto further evi­ dence led before the Tribunal, or (3) evidence placed before the Tribunal for the first time in support of the charges". It was further emphasised tl)at : "for a long time now, it has been settlecl law that in the case of an adjudication of a dispute arising out of a dismissal of a workman by the management (as dis­ tinct from an application for permission to dismiss under s. 33), evidence can be adduced for the first time before the Industrial Tribunal. The important effect of the omission to hold an enquiry is merely this : that the tribunal would not have to consider only whether there was a prima facie case but would decide for itself on the evidence adduced whether the charges have really been made out". The observations made by this Court in The Punjab National Ba11k Ltd. (supra) were quoted with approval. It was further held that the reasons for which it is proper for a Tribunal to take evi­ dence itself as regards the alleged misconduct when adjudicating upon a dispute arising out of an order of dismissal are equally present in a case where the management makes an application for permission to dismiss an empl'oyee without holding a proper en­ quiry. Ultimately, this Court upheld the order of the Tribunal allowing the employer to adduce evidence before it in support of its application for permission to dismiss an employee even though the domestic enquiry held by it was held to be highly defective. The powers of a Tribunal when a proper enquiry has been held by an employer as well as the procedure to be adopted when no enquiry at all has been held or an enquiry held was found to be defective, again came up for consideration in Ma11ageme11t of Ritz Th~atre (P.) Ltd. v. Its Workmen(!). Regarding the powers of a TnbunaJ when there has been a proper and fair enquirv. it· was held : · "It is well-settled that if an employer serve the rele­ vant charge or charges on his employee and holds a proper and fair enquiry, it would be open to him to act (I) [1963] (3) S.C.R. 461. 602 SUPREME COURT REPORTS [1973) 3 S.C.lt. upon the report submitted to him by the Enquiry Officer and to dismiss the employee concerned. If the enquiry has been properly held, the order of dismissal passed against the emplor~ ~s a result of such an en­ quiry can be challenged 1f it IS .shown. that the conclu­ sions reached at the departmental enqwry were perverse or the impugned dismissal is vindictive or mala fide, and amounts to an WJfair labour practice. In such an enquiry before the Tribunal, it is not open to the Tri­ bunal to sit in appeal over the findings recorded at the domestic enquiry. This Court has h(!ld that when an proper enquiry has been held, it would be open to the Enquiry Officer holding the domestic enquiry to deal with the matter on the merits bona fide and come to his own conclusion". Again regarding the procedure to be adopted when there has been no enquiry or when there has been a defective enquiry, It was stated : "It has also been held that if it appears that the de­ partmental enquiry held by the employer is not fair in the sense that proper charge had not been served on the employee or proper or full opportunity' had not been given to the employee to meet the charge, or the en­ quiry has been affected by other grave irregularities vitiating it, then the position would be that the Tribunal would be entitled to deal with the merits of the dispute as to the dismissal of the employee for itself. The same result follows if no enquiry has been held at all. In other words, where the Tribunal is dealing with a dis- pute relating to the dismissal of an industrial employee, if it is satisfied that no enquiry has been held or the en­ quiry which has been held is not proper or fair or that the findings recorded by the Enquiry Officer are per­ verse, the whole issue is at large before the Tribunal. This position also is well-settled". lt was further held that it is only where a tribunal is satisfied that a proper enquiry has not been held or'that the enquiry having been held properly the finding recorded is perverse that the Tri­ bunal derives jurisdiction to deal with the merits of the dispute when permission has to be given to an employer to adduce addi'. tional evidence . Ii . The right of ari employer to lead evidence before the Tribunal to ·justify his action was again reiterated in Khardah Co. Ltd. v. H Their Workmen(') as follows : (1) '[1964] (3) S.C.R. 506~ J \1 WORKMEN V. FIRESTONE TYRE & RUBBER CO. 603 (Vaidialingam, l.) "It is well settled that if the enquiry is held to be unfair, the employer can lead evidence before the Tri­ bunal and justify his action, but in such a case, the question as to whether the dismissal of the employee is justified or not, would be open before the Tribunal and the Tribunal will consider the merits of the dispute and come to its own conclusion without having any regard for the view taken by the management in dismissing the employee". In Workmen of Motipur Sugar Factory (Private). Limited v. Motipur Sugar Factory('), the employer had charge-sheeted cer­ tain workmen and without conducting any enquiry, as required by the Standing Orders, passed orders discharging the workmen. Before the Tribunal, the employer adduced evidence justifying the action taken against the workmen. The workmen were also given an opportunity to adduce evidence in rebuttal. After a consi­ deration of such evidence, the Tribunal held that the workmen were guilty of misconduct alleged against them and that the orders of discharge passed by the employer were fully justified. ;Before this Court it was contended on behalf of the workmen that when no enquiry whatever had been conducted by the employer, as re­ quired by the Standing Orders, before passing an Order of dis­ missal or discharge, the Tribunal had no jurisdiction to hold an enquiry itself by permitting the employer to adduce evidence be­ fore it for the first time in rejecting this contention, it was held : "It is now well-settled by a number of decisions of this Court that where an employer has failed to make an enquiry before dismissing or discharging a workman it is open to him to justify the action before the tribunal by leading all relevant evidence before it. In such a case the employer would not have the benefit which· he has in cases where domestic inquiries have been held. The entire matter would be open before the tribunal which will have jurisdiction not only to go into the limited questions open to a tribunal where domestic in- quiry has been properly held ........ but also to satisfy itself on the facts adduced before it by the em­ ployer whet.her the dismissal or discharge was justified ...... If the enquiry is defective or if no enquiry has been held as required by Standing Orders, the entire case would be open before the tribunal and the em­ ployer would have to justify on facts as well that its order of dismissal or discharge was proper . . . . . . A defective enquiry to our opinion stands on the same (1) [1965] (3) S.C.R. 588. SUPREME COURT 11.EPO!lTS (1973) 3 S.C.R. footing as no enquiry and in either case the tribunal would have jurisdiction to go into the facts and the em­ ployer would have to satisfy the tribunal that on facts the order of dismissal or discharge was proper" Tbe reasons for allowing an employer to lead evidence before the Tribunal justifying his action have been stated thus : "If it is held that in cases where the employer dis­ misses his employee without holding an enquiry, the dismissal must be set aside by iho industrial tribunal only on that ground, it would inevitably mean that the employer will immediately proceed to hold the enquiry and pass an order dismissing the emplgyee once again. In that case, another industriaj diSpute would arise and 1he_ employer would be entitled to rely upon the enquiry which he had held in the meantime. This course would mean delay and on the second occasion it will entitle the employer to claim the benefit of the domestic en­ quiry. On the other hand. if in such cases the employer is given an opportunity to justify the impugned dismis­ sal on Lie merits of his case being considered by the tribunal for itself and that clearly would bo to the bene­ fi~ of the employee. That is why this Court has consis­ tently held that if the domestic enquiry is irregular, in­ valid or improper, the '.ribunal may give an opportunity to the employer to prove his case and in dealing so the tribunal tries the merits itself. This view is consistent with the approach which industrial adjudication gene­ rally adopts with a view to do justice between the parties without relying too much on technical considerations and with the object of avoiding delay in tho disposal of industrial disputes. Therefore, We are satisfied that no distinction ·can be made between cares where the do­ mestic enquiry is invalid and those where no enquiry has in fact been held". Tho rights of 11-11 employer to avail itself of an opportunity to satisfy the Tribunal by adducing evidence, when an enquiry held by it was found to bo defective or when no enquiry at all has been held, have been stated in State Bank of India v. R. K. Jain &: Ors.('), as follows:- "It should be remembered that when an order ot punishment by way of dismissal or termination of ser­ vice is effected by the management, the issue that is re­ ferred is whether the management was justified in dis- (1) [1972] (1) S.C.R. 755. 0 WORKMEN V. FIRES'WNE TYRE & RUBBER CO. 605 ( V aidialingam, J.) charging and tenninating the service of the workman concerned and whether the workman is entitled to any relief. In the present case, the actual issue that was re· ferred for adjudication to the Industrial Tribunal has already been quoted in the earlier part of the judgment. There may be cases where an inquiry has been held preceding the order Of tennination or there may have been no inquiry at all. But the dispute that will be re­ ferred is not whether the domestic inquiry has been conducted properly or· not by the management. but the larger question whether the order of termination, dis­ missal or the order imposing punishment on the work· mon concerned is justified. Under those circum.stances it is the right of the workman to plead all infirmities in the domestic inquiry, if one has been held and also to attack the order on all grounds available to him in faw and on facts. Similarly the management has also a right to defend the action taken by it on the ground that a ptoper domestic inquiry has been held by it on the basis of which the order impugned has been passed. It is also open to the management 10 justify. on facts that the order passed by it was proper. But the ooint to be noted is that the inquiry that is conduct~ by the Tri­ bunal is a composite inquiry regarding the order which is under challenge. If the management defends its action solely on the basis that the domestic inquiry held by it is proper and valid and if the Tribunal holds against the management on that point, the management will fail. On the other hand. if the management relies not only on the validity of the domestic inquiry, but also adduce evidence before the Tribunal justifying its action, it is open to the Tribunal to accept the evidence adduced by the management and hold in its favour even if its findin~ is against· the management regarding the validity of the domestic inquiry. It is essentially a matter for the management to decide about the stand that it pro"?Ses to ta~e. before. tlie Tribunal. It may be em­ P~as1~ed, that 1t 1s the n!!:ht of the management to sus­ tam its ord~ by adducing also indeoendent evidence before the. T~bunal. It is a right given to the manag-ec m~nt and 11 is. for the management to avail itself of the said opportunity". M.llTh~s C0t:? in its recent decision in Delhi Cloth and General 'r" o. Lt · v. Ludh B~dh Sinf!h(1). after a review of all the ear ter cases. has summansed the orincioles flowing out of those (I) (1972] (1) LU 180. decisions. It has been emphasised that when no enquiry has been held by an employer or when the enquiry held has been found to be defective, the employer has got a right to adduce evidence be­ fore the Tribunal justifying its action. The stage at which the employer should invoke the jurisdiction of the Tribunal to allow him to adduve evidence before it, has also been discussed in the said decision. We have exhaustively referred to the various decisions of this Court, as they give a clear picture of the principles governing the jurisdiction of the Tribunal when adjudicating disputes relating to dismissal or discharge. From those decisions, the following principles broadly C emerge:- (l) The right to take disciplinary action and to decide upon the quantum of punishment are mainly mana­ gerial functions, but if a dispute is referred to a Tri­ bunal, the latter has power to see if action of the employer is justified. D (2) Before imposing the punishment, an employer is expected to conduct a proper enquiry in accordance with the provisions of the Standing Orders, if appli­ cable, an4 principles of natural justice. The enquiry should nQJ: be an empty formality. · ( 3) When a proper enquiry has been held by an em­ ployer, and the finding pf misconduct · is plausible conclusion flowing from the evidence, adduced at the (4) (5) said enquiry, the Tribunal has no jurisdiction to sit in judgment over the decision of the employer as an appellate body. The interference with the decision of the employer will be justified only when the find­ ings arriv~d at in the enquiry are perverse or the management is guilty of victimisation, unfair labour practice or ma/a fide. Even if no enquiry has been held by an employer or if the enquiry held by him is found to be defective, the Tribunal in order to satisfy itself about the lega­ lity and validity of the order, has to give an oppor­ tunity to the employer and employee to adduce evi­ dence before it. It is open to the employer to adduce evidence for the first time justifying his action; and it is ooen to the emnloyee to adduce evidence contra. The effect of an emplover not holding an enouiry is that the Tribunal would not have to consider only whether there was a prima facie case. On the other I 11 WORKMEN v. FIRESTONE TYRE & RUBBER CO. 607 (6) (7) (8) (9) (10) (Vaidia!ingam, /.) hand the issue about the merits of the impugned: ordd of dismissal or discharge is at lafge before the Tribunal and the latter, on the evidence adduced be­ fore it, has to decide for itself whether the miscon­ duct alleged is proved. In such cases, the point about the exercise of managerial functions does not arise at all'. A case of defective enquiry stands on the same footing as no enquiry. The Tribunal gets jurisdiction to consider the evi­ dence placed before it for the first time in justification of the action taken only, if no enquiry has been held or after the enquiry conducted by an employer is· found to be defective. It has never been recognised that the Tribunal should· straightaway, without anything more, direct reinstate-· ment of a dismissed or discharged employee, once it is found that no domestic enquiry has been held or the said enquiry is found to be defective. An employer, who wants to avail himself of the· opportunity of adducing evidence for the first time before the Tribunal to justify his action, should ask for it at the appropriate stage. If such an opportu­ nity is asked for, the Tribunal has no power to refuse. The giving of an opportunity to an employer to adduce evidence for the first time before the Tribunal is in the· interest of both the management and the employee and to enable the Tribunal itself to be satisfied about the alleged misconduct. Once the misconduct is proved either in the enquiry conducted by an employer or by the evidence placed before a Tril>unal for the fiist time, punishment im­ posed cannot be interfered with by the Tribunal ex­ cept in cases where the punishment is so harsh as to. suggest victimisation. In a particular case, after setting aside the order of dismissal, whether a workman should be reinstated or paid compensation is, as held by this Court in The Managemtnt of Panitole Tea Estate v. The Workmen( 1), within the judicial decision of a Labour Court or Tribunal. The above was the l!aw as laid down by this Court as on 15-12-1971 applicable to all industrial adjudication arising out of orders of dismissal or discharge. (I) _!1971] (I) S.C.R. 742. '608 SUPREME COURT REPORTS [1973] ) S.C.R. The question is whether section l lA has made any changes . in the legal position mentioned above and if so, to what extent 1 The Statement of objects and reasons cannot be taken into ac­ count for the purpose of interpreting the plain words of the sec­ tion. But it gives an indication as to what the Legislature wanted . to achieve. At th~ time of introducing section 11 A in !lie Act, the legislature must have been aware of the several principles laid down in the various decisions of this Court referred to above. The object is stated. to be that the Tribunal should have power in cases, where necessary, to set aside the order of discharge or dis­ missal and direct reinstatement or award any lesser punishment. The Statement of objects and reasons has specifically referred to the limitation on the powers of an Industrial Tribunal, as laid down by this Court in Indian Iron & Steel Co. Ltd.('). This will be a convenient stage to consider the contents of section llA To invoke seciion llA, it is necessary that an.in­ <lustrial dispute of the type mentioned therein should have been referred to an Industrial Tribunal for adjudication. In the course of such adjudication, the Tribunal has to be satisfied that the order of discharge or dismissal was not justified. If it .comes to such a conclusion, the Tribunal has to set aside the order arid direct reinstatement of the workman on such terms as it thinks fit. The Tribunal has ·aiso power to give any other relief to the work­ man including the imposing of a lesser punishment having due re­ gard to the circumst!lllces.. The proviso casts a duty on the Tri­ bunal to rely only on the materials on record and prohibits it from · E '1aldng any fresh evidence. Even a mere reading of the section. 1n our ·opinion, does indicate that a change in the law, as laid down by this Court, has. been effected. According to the work­ men the entire law has been completely altered; whereas aC'cordilig to · the employers, a very minor change has been effected givihg pbwer to the Tribunal only to alter the punishment; after having held that the misconduct is proved. That is, according · to the employers, the Tribunal has a mere ~er to alter the punishment after it holds that the misconduct is proved. The workmen, on the other hand, i;Jaim .that the law has been.re-wriften . . We cannot accept the . extreme cont.entions . advanced on be­ .half of the. workmen and the employers. We .are aware that the Act is a beneficial piece of legislation enacted in the interest of employees. It is well settled~ that.in construing the provision~ of a welfare l~gislation, courts should adopt, what is described as a beneficent rule of construction. If two constructions are reason­ ably possible to be placed on the section, it follows ihat the con~ 11truction which furthers the policy and object of the Act and is' more beneficial to the emoloyees, has to be preferred. Another urinciole to be borne in mind is that the Act in question which (J) {1958) S.C.R, 667. G> Jtl WORKMEN v. FIRESTONE TYRE & RUBBER CO. 60 9 ( Vaidia/ingam, J.) intends to improve and safeguard. the _service conditions . of an employee, demands an interpretatton liberal enou~ to achieve the legislative purpose. But we should not also lose sight of anotber canon of interpretation that a statute or for the matter of that even a particular section, has to be interpreted according to its plain words and without doing violence tO' ~ ~gua~ used by the legislature. Another aspect to be borne 10, mmd will be that there has been a long chain of decisions of this Court, referred to exhaustively earlier, iaying down various principles in relation to adjudication of disput~ bY. industrial courts arising out of orders of discharge or dismissal. Therefore it will have to be found from the words· of the section whether it has altered the en­ tire-law, as laid down by the decisions, and, if so, whether there is a clear expression of that intention in the language of the section. We will first consider cases where an employer _has held_ a proper and valid domestic enquiry before passing the order, of punishment. Previously the Tribunal had no power to interfere with its finding of misconduct recorded in the domestic enquiry unless one or other infirmities pointed out by this Court in Indian Iron & Steel Co. Ltd.( 1 ) existed. The conduct of dispiplioary proceeding and the punishment to be imposed were all considered to be a managerial function with ·which the Tribunal had !!O power to interfere unless the finding was perverse or the punisl\­ ment was so harsh as to lead to an inference of victimisation or UBfair labour practice. This position, in our view, _has now been. changed by section l lA. The words "in the cour_se of the adju­ dication proceeding, the Tribunal is satisfied that the order of dis­ charge or dismissal was not justified" clearly indicates that the Tribunal is now clothed with the power to reappraise the evi4ence in the domestic enquiry and satisfy itself whether the said evidence_ reli~d on by an employer, est~blishl{s the misconduct alleged aga10st a workman. What was originally a plausible conclusion t~at could be drawn by an employer from the evidence, has now given place to a satisfaction being arrived at by the Tribunal that the finding of misco~uct is correct. The limitations imposed on· the powers of the Tnbunar by the decision in Indian Iron & Steel C~. Ltd.(~). case can no longer be invoked by an employer. The Tnb~ IS now at liberty to consider not only whether the finding o~ rrusconduct recorded by an employer is correct· but also to - differ from _the s3;id finding if a proper case is mad~ out. · What was once -largely 10 the realm of the satisfaction of the employer has ceased to be so: and qow it is the satisfaction of the Tribunal that finally decides the ll}atter. ~ th~re has been no enquiry held by the employer or if the­ enqmry is held to be defective, it is open to the employer even• (ll [1958] S.C.R. 667. · ·610 SUPREME COURT REPORTS [1973] 3 S.C.R. now to adduce evidence for the first time before the Tribunal justifying the order of discharge or dismissal. We are not inclined to accept the contention on behalf of the workmen that the nght of the employer to adduce evidence before the Tribunal for the first time recognised by this Court in its various decisions, has been taken away. There is no indication in the section that the said right has been abrogated. If the intention of the legislature was to do away With such a right, which has been recognised over a long period of years, as will be noticed by. the decisions referred to earlier, the section would have been differently worded. Ad­ mittedly there are no express words to that effect; and there is no indication that the section has impliedly changed the law in that respect. Therefore, the position is that even now the employer is entitled to adduce evidence for the first time before the Tribunal even if he had held no enquiry or the enquiry held by him is found to be defective. Of course, an opportunity will have to be given to the workman to lead evidence contra. The stage at which the employer has to ask for such an opportunity, has been pointed out by this Court in Delhi and General Mills Co. Ltd('). No doubt, this !>rocedure may be time consuming, elaborate and cumbersome. As pointed out by this Court in the decision just referred to above, it is open to the Tribunal to deal with the vali­ dity of the domestic enquiry, if one has been held as a preliminary issue. If its finding on the subject is in favour of the manage­ ment, then there will be no occasion for additional evidence being cited by the management. But if the finding on this issue is against the management, the Tribunal will have to give the em­ ployer an opportunity to cite additional evidence justifying his action. This right in the management to sustain its order by adducing independent evidence before the Tribunal, if no enquiry has been hel'd or if the enquiry is held to be defective, has been given judicial recognition over a long period of years. All parties are agreed that even after section 1 !A, the em­ ployer and employee can adduce evidence regarding the legality or validity of the domestic enquiry, if one had been held by an ·employer. Having held that the right of the employer to adduce evidence continues even under the new section, it is needless to state that, when such evidence is adduced for the first time, it is the Tribunal which has to be satisfied on such evidence about the guilt or otherwise of the workman concerned. The law, as laid down by this Court that under such circumstances the issue about the merits of the imnugned order of dismissal or discharge is at lar~e before the Tribunal and that it has to decide for itself whether the misconduct alleired is proved, continues to have full effect. In {I) [1972] I.L.L.J. 180. 0 WORKMEN V, FIRESTONE TYRE & RUBBER CO. 61 l (Vaidialingam, J.) such a case, as laid down by this Court, the exercise of manage­ rial functions does not arise at all. Therefore, it will be seen that both in respect of cases where a domestic enquiry has been held as also in cases where the Tribu­ nal considers the matter on the evidence adduced before it for the first time, the satisfaction under section 11 A, about the guilt or otherwise of the workman concerned, is that of the Tribunal. It has to consider the evidence and come to a conclusion one way or other. .Even in cases where an enquiry has been held by an employer and a finding of misconduct arrived at, the Tribunal can now differ from that finding in a proper case and hold that no mis­ conduct is proved. We are not inclined to accept the contentions advanced on behalf of the employers that the stage for interference under sec­ tion llA by the Tribunal is reached only when it has to consider the punishment after having,accepted the finding of guilt recorded by an employer. It has to be remembered that a Tribunal may hold that the punishment is not justified because the misconduct alleged and foum' proved is such that it does not warrant dismissal or discharge. The Tribunal may also hold that the order of dis­ charge or dismissal is not justified because the alleged misconduct itself is not established by the evidence. To come to a conclusion either way, the Tribunal will have to reappraise the evidence for itself, Ultimately it may hold that the misconduct itself is not" proved or that the misconduct proved does not warrant the punishment of dismissal or discharge. That is why, according to· us, section HA now gives full power to the Tribunal to go into the evidence and satisfy itself on both these points, Now the jurisdiction of the Tribunal to reappraise ·the evidence and come to its conclusion enures to it when it has to adjudicate upon the dispute referred to it in which an employer relies' on the findings recorded by him in a domestic enquiry. Such a power to appre­ ciate the evidence and come to jts own conclusioo about the guilt or otherwise was always recognised in a Tribunal when it was deciding a dispute on the basis of evidence adduced before it for the first time. Both categories are now put on a par by section 11~ ' Another change that has been effected by section 11 A is the power conferred on a Tribunal to alter 1he punishment imoosed by an emP!oyer. If the.Tribunal comes to the conclusion that the rnisc;onduct is esta~lished, either bv the domestic enauiry accepted bv 1t or by the evtdence adduced before it for the first time the !ribunal ori~inallv had no oower to interfere with the punish~ent 1mnosed bv the mana~ement. Once the mi•conduct is Proved, the Tnbunal had to sustain the order of punishment unless it was 612 SUPREME COURT REPORTS [1973) 3 S.C.R. harsh indicating victimisation. Under section 1 lA, though the Tribunal may hold that the misconduct is proved, nevertheless it may be of the opinion that the order of discharge or dismissal for the sai(j misconduct is not justified. In other words, the Tribunal m~ hold that the proved misconduct does not merit punishment by way of discharge or dismissal. It can, under such circumstan­ ces, award to the workman any lesser punishment instead. The power to interfere with the punishment and alter the same has been now conferred on the Tribunal by section 11 A. Mr. Dc:shmukh rather strenuously urged that in all its pre­ vious decisions, this Court had not considered . a breach-or an illegality, as he calls it-{;ommitted by an employer in not h1>ld­ ing a domestic enquiry. The learned counsel urged that this Court has consistently held in several decisions that there is an obligation on the part of an employer to conduct a proper domes­ tic enquiry in accordance with the Standing Orders before passing an order of discharge or dismissal. Hence an order passed with­ out such an enquiry is, on !he face of it, illegal. The effect of such an illegal order deprives the employer of an oppo!iunity be­ ing given to him to adduce evidence for the first time before the Tribunal to justify his action. These aspects, according to the learned counsel, have not been considered by this Court when it recognised an opportunity to be given· to an employer to adduce evidence before the Tribunal. The above aspect was stressed before us by Mr. Deshmukll ia support of the contention that section 11 A has taken not of. such an illegality committed by employers arid has now made it obligatory to conduct a domestic enquiry. According to him, if no such proper and valid domestic enquiry precedes the order imposing punishment, the Tribunal now has no alternative but to erder roinstamment on that ground alone .. We have already indicated our views regarding the scope <K section 1 lA and held that the riglit Of an employer to adduce 8uch evidence before the Tribunal has not been taken away. Mr. Deshmukh referred us to section 23 of the Act prohibiting a · workman from going on strike in the circumstances mentioned therein and further pointed out that if a strike is illegal, i.t cannot be 1aWfW. Similarly, an illegal act of an employer in not holding a domestic enquiry cannot be made legal. · Iii our opinion, the analogy placed before· us by the coumel cannot stand scrutiny. It is no doubt true that Standing Orders, which have been certified . under the Industrial Employment (Standing Orders) Act 1946, become part of the statutory terms and conditions of service between the employer and his employee WORKMEN V, FIRESTONE TYRE & RUBBER CO. 613 (Vaidialingam, /.) and th~t they govern the relationship between the parties. But there is no provision either in this statute or in the Act which states that an order of dismissal or discharge is illegal if it is not pre­ ceded by a proper and valid domestic enquiry. No doubt it has been emphasised in the various decisions of this Court that an employer is expected to hold a proper enquiry before dismissing or discharging a workman. If that requirement is satisfied, an employer will by and large escape the attack that he has acted arbitrarily or ma/a fide or by way of victimisation. If he has held a proper enquiry, normally his bona fides will be established. But it is not correct to say that this Court, when it laid down that an employer has a right to adduce evidence for the first time before the Tribunal, was not aware of a breach committed by an em­ ployer of the provisions of the Standing Orders. A similar con­ tention, though in a different form, advanced on behalf of the workmen was rejected by this Court in Workmen of Motipur Sugar Factory (Private) Limited( 1 ). It was specifically contend­ ed before this Court by the workmen therein that when an em­ ployer had held no enquiry, as required by the Standing Orders, it was not oren to him to adduce evidence before the Tribunal for the first time and justify the order of discharge. This contention was rejected by this Co_urt and it was held that if the enquiry _was defective or no enquiry had 1x:en held, as required by the Standing Orders, the entire case would be open before the Tribunal and the employer would have to justify, on evidence as well that its order of dismissal or discharge was proper. Therefore, this con­ tention cannot be accepted. We may also state that the industrial Employment (Standing Orders) Act 1946 applies only to those industrial establishments which are covered by section 1 (3). But the field of operation of the Act is much wider and it applies to employers who may have no standing orders at all. If the conten­ tion of Mr. Des'1mukh regarding Standing Orders is accepted, then the Act will have to be applied in a different manner to em­ ployers. who have no Standing Orders. and employers, who are obliged to have Standing Orders. That is certainly not the scheme of the Act. We will now pass on to consider the proviso to Section 11 A. Mr. Deshmukh relied on the terms of the proviso in support of his contention that it is now obligatory to hold a proper domestic en­ quiry and the Tribunal can only take into account the materials placed at that enquiry. The counsel emphasised that the proviso places an obligation on the Tribunal 'to rely only on the materials on record' and it also prohibits the Tribunal from taking 'any fresh evidence in relation to the matter'. Accordi!lg to him. the exDression 'materials on record' refers to the materials available ltlii965J- J s.c.R:58s. 7-L761Sup.C.l./73 before the management at the domestic enquiry and the expres­ sion 'fresh evidence' refers to the eviaence that was being adduced by an employer for the first time before the Tribunal. From the wording of the Proviso, he wants us to infer that the right of an employer to adduce evidence for the first time has been taken away, as the Tribunal is obliged to confine its scrutiny only to the materials available at the domestic enquiry. . We are not incline9 to accept the above contention of Mr. Deshmukh. The Proviso specifies matters which the Tribunal shall take into account as also m1;1tters which it shall not. The expression 'materials on record, occurring in the Proviso, in our opinion, cannot be confined only to tbe materials which v,ere available at the domestic enquiry. On the other hand, the 'mate­ . trials on record' in the Proviso must be held to refer to materials on record before the Tribunal. They take in- ( 1) the evidence taken by the management at the enquiry and the proceedings of the enquiry, or ( 2) the above evidence and in addition, any further evi­ dence led before the Tribunal, or ( 3) evidence placed before the Tribunal for the first time in support of the action taken by an employer as well as the evidence adduced by the workman contra. The above items by and large should be considei:ed to be the 'materials on record' as specified in the Proviso. We are not in­ clined to limit that expression as meaning only that material that has been placed in a domestic enquiry. The Proviso only confines the Tribunal to the materials on record before it as specified above, when considering the justification or otherwise of the order of discharge or dismissal. It is only on the basis of those mate­ rials that the Tribunal is obliged to consider whether the miscon­ duct is proved and the further question whether the proved mis­ conduct justifies the punishment of dismissal or discharge. It also prohibits the Tribunal from taking any fresh evidence either for satisfying itself regarding the misconduct or for altering the punishment from the Proviso it is not certainly possible to come to the conclusion that when once it is held that an enquiry has not been held or is found to be defective. an order reinstating the workman will have to be made by the Tribunal. Nor does it follow that the Proviso deprives an employer of his right to adduce evidence for the first time before the Tribunal. The exnression 'fresh evidence' has to be read in the context in which it annears, namely, as distinguished from the exnression 'materials on record'. If so read, the Proviso does not prevent any difficulty at all. • • ' .. WORKMEN V. FIRESTONE TYRE.& RUBBER CO. 615 (Vaidialingam, J.) The legislature in section I IA has made a departure in certain respects in the law as laid down by this Court, for the first tiine, p<>wer has been given to a Tribunal tci satisfy itself whether :mis­ oonduct is proved. 'Illis is particularly so, as already point~ ~ut. by us, regarding even findings arrived at by an employer, Ill :. a_n · enquiry properly held. The Tribunal has also been giyen power, also for the first time, to interfere with the punishment imposed by an employer. When such wide powers have been now conferred on Tribunals, the legislature obviously felt that some restrictions have ·to be imposed regarding what matters could be taken into account. Such restrictions are found in the Proviso. The Proviso only emphasises that the Tribunal has to satisfy itself one way or · C . ·other regarding misconduct, the punishment and the relief to be granted to workmen· only on the basis of the 'materials on record'. before it. What those materials comprise of have been mentioned earlier. The Tribunal, for the purposes referred to above. cannot call for further or fresh evidence, as an; appellate authority may normally do under a particular sta!Ute; . ..y_hen · considering . the II correctness or otherwise of an order passed by a subordinate body. The 'matter' in the Proviso refers t_o the order of discharge or dismissal that is being considered by, the Tribunal. It is to be noted that_ an applicatiC!fl made, by an · employer under section 33(1)· for permission or 33(2) for approval has still to be dealt with according to the principles laid down by this Court in its various decisions. No change has been effected in that section by the Amendment· Act: · ·It has been held by tliis Court that even iri cases where nci ·enquiry IJas been held by an employer before passing an order of dismissal cir discharge, it is -open to him to adduce evidence for the first time before the Tribu­ nal. Though the. Tribunal is"_ exercising only a very limited juris­ diction under this section, nevertheless, it would have applied its mind before giving permission .or approval. Section 33 only im­ poses a ban. An order of dismissal or discharge passed even with the permission or approval of the Tribunal can form the subject of a dispute and as such referred for adjudication. Quite naturally, when the dispute is being 'adjudicated. the employer will rely upon the proceedings tha:t were already held before a Tribunal under section 33. They will form part of the materials on record be­ fore the Tribunal. The contention of Mr. Deshmukh that if no. enquiry is held. the order of dismissal will have to be set aside, if aceented. will lead to very incongruous results. The· Tribunal would have allowed .ari em~lover to adduce evidence before it in proceedings under section 33 for the first time. even though no domestic: enauirv" had been held. If if is held .that another Tri-. bunal. which adjudicates the main di~ute. has to ignore those proceedings and straightaway order reinstatement on the ground that no domestic enquiry had been held by an employer, it will lead to very start1ing results. Therefore, an attempt must be made to construe section l lA in a reasonable manner. This is :mother reason for holding that the right to adduce eviclCnce for the first time recognised in an employer, has not been disturbed by section llA.. There may be other instances where an employer with limited number of workman may himself be a witness to a misconduct committed by a W<1!'kman. He will be disabled from conducting an enquiry against the workman because he cannot both be an enquiry officer and also a witness in the proceedings. Any enquiry held by him will not be in keeping with the principles of natural justice. But he will certainly be entitled to take disciplinary action for which purpose he can serve a charge-sheet and, after calling for explanation, impose the necessary punishment without holding any enquiry. This will be a case where no enquiry at all has been held by an employer. But the employer will have suffi­ cient material available with him which could be produced before any Tribunal to satisfy it about the justification for the action taken. Quite naturally, the employer will place before the Tribunal, for the first time, in the adjudication proceedings mate­ rial to support his action. Tlµlt material will have to be consider­ ed by the Tribunal. But if the rontention of Mr. Deshmukh is accepted, then the mere fact t]J.at no enquiry has been held, will be .sufficient to order reinstatement. Such reinstatement, under the circumstances mentioned above, will not be doing justice either to the employer or to the workman and will not be con­ ducive to preserving industrial peace. We have indicated the changes effected in the law by section 1 lA. We should not be understood as laying down that there is no obligation whatsoever on the part of an employer to hold an enquiry before passing an order of discharge or dismissal. This Court has consistently been holding that an employer is expected to hold a proper enquiry according to the Standing Orders and principles of natural justice. It has aISo been emphasised that such. au. enquiry should not be aii empty formality. ~f a proper enquiry IS conducted _by an employer and a correct finding arrived at regarding the misconduct, the Tribunal, even though it haS now· power to differ from the conclusions arrived at by the manage­ ment, will have to give very cogent reasons for n.:>t accepting the view of the employer. Further by holding a proper enquiry, the employer will also escape, the charge of having acted arbitrarily H or ma/a fide. It ·cannot be over-emphasised that conducting of a proper and valid enquiry bv an employer will conduce to harmo­ nious and healthy relationship between him and the workman and 11 ={ WORKMEN J), FIRESTONE TYRE & RUBBElt CO. .17 ( V aidialingam, J.) it will serve the cause of industrial peace. Further it will also en· able an employer to Fuade the Tribunal to accept the enquiry as proper and the finding also as correct. Having dealt with the proper interpretation to be placed on section l lA, we will now proceed to conside~ the second point regarding the applicability of the section to industrial disputes which had already been referred for adjudication and were pend­ ing with the Tnbunals on 15-12-1971 We have earlier referred to the fact that the Amendment Act received the assent of the President on 8th December, 1971. But the Amendment Act did not come into force immediately. It came into force only with effect from Deceinber 15, 1971, as per the Notification issued by the Central Government on 14-12-1971 under section l, sub­ section 2. Miss Indira Jai Singh, learned counsel for the appellant­ workmen, in Civil Appeal No. 1461 of 1972, advanced the main arguments in this regard. Mr. Deshmukh appearing for the work­ man in the other Appeals, adopted her arguments. According to the learned counsel, section llA applies not only to references, which are made on oi: after 15-12-f 971, but also to all references already made and which were pending adjudication on that date. It is pointed out that sect_io'n 11 A has been incorporated in . Chapter IV of the Act dealing with procedure, powering_ and duties of authorities. According to lhem, section 11 A deals with. matters of procedure. Applying the well known canon of inter­ pretation, procedural laws apply to pending proceedings also. No right, much less any vested right, of the employers has been taken away or affected by section l lA. Considerable stress has been · laid on the use of the expressions 'hl!S been referred' occurring in section 11A, as conclusively indicating the applicability of the section even to disputes already referred. It was stressed that even assuming that an employer has a right to adduce evidence for the first time before the Tribunal, that right enures to him only after the Tribunal had adjudicated upon the validity of the domestic enquiry. It cannot be characterised even as a right, much less a vested right; because it is contingent or dependent upon the Tribunal's adjudication on the domestic enqniry. The Tribunal, when it adjudicates a dispute on or after 15-12-1971, has to exercise the powers conferred on it by section 1 lA, even though the dispute may have been referred prior to that date. Hence it is clear that the section apP!ies even to all proceedings pending adjudication on 15-12-1971. Mr. Damania, learned counsel for the employers, contended that retrospective operation should not be given unless it appears very clearly by the terms of the section or arise by necessary and 6i8 SUPREME COURT REPORTS [1973] 3 S.C.R. distinct intt1rpretation. The counsel pointed out thjit the employers would have moulded their behaviour according· to the principles laid down by a series of decisions and if the rights recognised in 2.n employer are to be taken away, that can be done so only by a clear expression to that effect; or such intention to take away or interfere with those rights must appear by necessary intend· ment. The words of the section cl'early show that it applies only to disputes in respect of which a reference is made after the section has come into force 1.e. 15-12-1971. The expressions 'has been referred' in the section only signify that on the happening of a particular event, namely, a reference made in future, the powers given to the Tribunal, whatever they may be, can be exercised. !'fr. M. C. Setalvad and Mr. Tarkunde, learned counsel, appear­ mg for other employers, adopted the contentions of Mr. Darnania. A faint argument was also advanced that for section 11 A to apply, even the order of discharge or dismissal should be one -- passed on or after 15-12-1971. But this was not pursued, quite rightly in our opinion, in view of the wording of the section. But the main contention on the side of the employers is that the section D applies .only to disputes which are referred for adjudication on or after 15-12-1971. The learned counsel on both sides have referred us to several decisions where a statute or a section thereof, bas been held to be either retrospective or not. They have al.so referred 'us to certam passages in text books on interpretation thereof. It is needless to state that a decision has to be given one way or other having re- gard to the scheme of the statute and the language used therein. Hence we do not propose to refer to those decisions, nor to the passages in the text books, as the principle is well established that a retrospective operation -is not to be given to a statute so as to impair an existing right. This is the general rule. But the legis· lature is competent to pass a statute so as to have retrospective operation, either by clearly expressing such intention or by neces- sary and distinct intenchnent. The principles regarding tlie retros­ pectivity or otherwise of a seetion or a statute have been laid down by this Court. in Garikapatti Ve"aya v. N. Subbiah Choudhury(') and Kesshavlal lethalal Shah v. Mohanlal Bhag- G wandas & Anr.('). Miss Indira J ai Sing4, learned counsel, placed considerable re­ liance on the use of the expressions 'has been referred' in section 1 lA as indicating that the section .!IPPlies even to all references made before 15-12-1971. In our opinion, those words cannot be isolated from the context. The said expressions may have different connotations when they are used in atfferent context. A (I) [1957] S.C.R. 488. (2) [1968] (3) S.C.R. 623; 8 1 G. WORKMEN V, FIRESTONE TYRE & RUBBER CO. 619 (Vaidialingam, !.) reference may he made to section 7 (3) and section 7 A(3) of the Act, laying down qualifications for being appointed as a pre­ siding officer of a LaboUJ: Court or a Tribunal respectively. Sub­ section 3 of section 7 enumerates the qualifications which a person should possess for appointment as Presiding Officer of a Labour Court. Section 7(3)(a) & (e) is as follows:-- "A person shall not be quaiified for appointment as the presiding officer of a Labour Court, unless- (a) he is, or has been, a Judge of a High Sourt; or x x x x ( e) he has been the presiding officer of a Labour Court constituted under any Provincial Act or State Act for not less than five years. The words 'has been a judge of a High Court' denote a past event, on the date cif his appointment, he must have been a judge of a High Court. Same is the position under clause ( e) regarding the office mentioned therein. A similar interpretation will have to be placed on the expressions 'has been' occurring in sum-section 3 of section 7 A regarding the qualifications to be possessed by a person for appointment as presiding officer of a Tribun_al. The words 'has been' occurring in these sub-sections, immediately after the word 'is' or even separately clearly shows that they refer to a past event. The words 'has been referred' in section llA are no doubt capable of being interpreted as making the section applicable to references made even prior to 15-12-1971. But is the section so expressed as to plainly make it applicable to such references ? In our opinion, there is no such indication in the section. In the first place, as we have lj!ready pointed out, the section itself has been brought in!o effect only some time after the Act had been passed. The Proviso to section 1 lA which is as much part of the section, refers to "in any proceeding under this section". Those words are very significant. There cannot be a "proceeding unde1 this section", before the section itself ha8. come into force. A proceeding under that.section can only be on or after 15-12-1971. That also gives an indication that section I IA applies only to dis­ putes which are referred for adjudication after the section has come into force. Reliance has been placed by the learned counsel for the work­ men on the decision of this Court in The State of Maharashtra v. Vishnu Ramachandra(1 ): Section 57 of the Bombay Police Act dealt with the removal of persons convicted of certain offences. (l) (19 611 (2) S.C.R. 26. The opening words of the section were "if ·a person has. been con- victed ........ "; then followed the various types of offences Qf which that person ~y )lave been. com:ict1l4. '[he Deputy Com­ missioner of Police, Bombay, acting under section 57 ( 1) passed an order externing the respon_dent from the Jimfts of Greater Bombay. It was contended before the BoJ!lbay High Court that section 57 was prospective al)d could. !].Ot be made applicable un­ less the conviction on which the action of extemment was based, took place after the coming in!Q force of that Act. The High Court upheld this contention and acquitted the accused. The High Coun had held that as the legislature had used the present parti­ ciple 'has been'. and not the past participle in the opening part of the section, it should be understood that the section was inteQlied to be used only where a person was convicted of the offences re­ ferred to in section 57, subsequent to the coming into force of the Act. This Cou_rt differed 'from the interpretation placed by the lligh Court on section 57 of the Bombay Police Act and held that the secton enabled the authorities to take note of the convic­ tions of the accused prior to the Act. It was observed : "An offender. who has been punished may be res­ trained in his acts and conduct · by some legislation, which takes note of bis antacedents; J:>ut so long as the action taken against him is after the Act comes into force, the statute cannot be said to be applied retrospec­ tively. The Act in question was thus not applied retros­ pectively but. prospectively. . . . . . . . The verb 'has heen' is in the present perfect tense, and may n:iean either 'shall have been' or 'shall be'. Looking, hoW­ ever, to the scheme of the enactment as a whole and particularly the other portions of it, it is manifest that the former meaning is intended ... , .... " It is clear from the above observations that the expression 'has been' was interpreted having regard to the scber!J.es of the enact­ ment and it was not construed in isolation. That decision makes it clear that the question whet®r those expressions relate to past or future events, have to be gathered from the context in which they· appear as well as the scheme of the particular legislation. · The decision of the Court of Appeal in Barber v. Pigdm( 1} is also not of any material assistance to the workmen. Ha'lling due regard to the scheme of the "Law Reform (Mlirried Women and Tortfeasors) Act, 1935", it was held therein t1111t ~ said statute did away with a host of legal fictions, which in origin wm inextricably mixed up with the old procedural law. It was.further held that the canon against retrospective interpretlition dOes not (I) (1973] I All B.R. US. Ii WOUMJ!N V,. PllJ!STONE TYRE & RUBBER CO. 621 (Vaidialingam, J.) apply to a statute dealing with the adjective law i.e. procedure . . Similarly the decision of the Calcutta High Court in Birla Brothers; Ltd. v. Modak( 1) [whiCh has been approved in Jahiruddin v. K. D. Rathi, Factory Manager. T.he Model Mills Nagpur Ltd.(')] and the decision of this Court in Shah Bhojraj Kuverji Oil Mills And Ginning Factory v. Subbash Chandra Yograj Sinha(') do not advance the case of the workmen. The decision in Keshavla/ Jetha/a[ Shah v. Mohan/a/ Bhagwandas & Anr. (supra) relied on by the employers deals with a different problem. It must be stated at this stage that procedural law has always been held to operate even retrospectively, as no party has a vested right in procedure. In our opinion, the principles stated in In re Atlumhney v. Ex-parte Wilson(') are more apposite to the case on hand. The question arose regarding the construction to be placed upon section 23 of the Bankruptcy Act 1890. 'The said section was as follows : "Where a debt has been proved upon a debtor's estate under the principal Act, and such debt includes interest, or any pecuniary consideration in lieu of in­ terest, such interest or consideration shall, for the pur­ poses of dividend, be calculated at a rate not exceeding five per centum per annum, without prejudice to the right of a creditor to receive out of the estate any higher rate of interest to .which he may be entitled after all the debts proved in the estate have been paid in fulf'. The point that arose for consideration was whether the above section operates so as to govern ·the distribution of dividend under a contract made under a scheme which had taken effect before the Act was passed or came into operation. · In holding that the section was not retrospective, it was observed : ''Then is the section so expressed as to be plainly retrospective ? No doubt the words 'where a debt has been proved under the principal Act' are capable ot . such a meaning. But. this fortn of words is often used to refer, not to a past time which preceded the enact­ ment, but. to a time which is made past by anticipation a time which will have become a past time only when the event occurs on which the statute is to operate. In fOi'lller times draftsmen would have used the words 'where a debt shall have been proved' but in modern Acts the past tense is frequently used where no retros­ pective operation can be intended". (I) I.L.R. 19-48 (ll) Cal. 209. (2) 11966) (2) S.C.R. 660. (3) [1962) (l) S.C.R: 159. (4) [1898j t·Q.B. 547. 622 8UPREME COURT REPORTS [1973] 3 s.c.R. We have already eii:pressed our view regarding t~e interpreta­ tion of section llA. We have held that the previous law, ac­ cordinz to· the decisions of this Court, in cases v.:here a proper domestic enquiry had been held, was that the Tnbunal had no jurisdiction to interfere with the findin!l. of misconduct except under certain circumstances. The position further was that the Tribunal had no jurisdiction to interfere with the punishment im­ posed by an· employer both .in ca~ where the ~conduct is esta­ blished in a proper domestic enqwry as also m cases where the Tribunal fiD.ds such misconduct proved on the basis of evidence adduced before it These limitations on the powers of the Tribu­ nals were recognised by this Court mainly ·on the basis that the power to take disciplinary action and impose punishment was part of the managerial functions. ~at means that the law, as laid down by this Court over a period of years,_ had recognised certain managerial rights in an employer. We have pointed out that this position has now been changed by section llA. The section has the effect of altering the law by abridging the rights of the em· ployer inasmuch as it gives power to the Tribunal for the .first time to differ both on a finding of misconduct arrived at by an employer as well as the ·punishment imposed by him. Hence in order to make. the secti()n applicable even to disputes, which had been re­ ferred prior to the coming into force of the section, there should be such a clear, express and manifest indication in the section. There is no such express indication. An inference that the section applies to proceedings, which are already pendinz, can also be gathered by necessary. intendment. In the case on hand, no such inference can be drawn as the indications are to the contrary. We have already referred to th~ proviSo to section 11 A which states 'in any proceeding un.der this section'. A proceeding"under the section can only be after the section has come into force. Further the section itself was brought into force some time after the Amendment Act was passed. These circumstances as well as the scheme of the section and particularly the wording of the Proviso ' indicate that section 1 lA does not apply to disputes which had been referred prior to 15-12-1971. The section applies only to disputes which are referred for adjudication on or after 15-12-· 1971. To conclude, in. our opinion, seetion llA has·no applica­ tion to disputes referred prior to 15-12-1971. Such disputes have to be dealt. with according to the decisions of this Court already referred to. Jn Civil Appeal No. 1461 of 1972, the Industrial Tribunal had considered only the question regarding the applicability of the section to disputes which had been referred before the section came into force. The Tribunal has held that the section does not J) WORKMEN V. FIRESTONE TYRE & RUBBER CO. 623· (Vaidialingam, J.) apply to such disputes. This view is in accordance with our deci­ sion and as such ~ correct. This appeal is hence dismissed. In the three other orders, which are the subject of considera-­ tion in Civil Appeals Nos. 1995 of 1972, 1996 of 1972 and 2386 of 1972, the Labour Court, Bol);lbay has held that section 11A applies even to disputes which had been referred prior to 15-12- 1971. This view, accoJding to our judgment, is erroneous. The Labour Court has also expressed some views on the construction to be placed on section llA. Part of the views expressed therein is correct; but the rest are wrong. To the extent that the decision­ of the Labour Coun in the three orders are contrary to our deci­ sion on both the points, they are set aside ana the appeals allowed to that extent. The Tribunal and the Labour Courts concerned in all these appeals, will proceed with the adjudication of the disputes in accordance with the views expressed in this judgment. There will be no order as to costs 'in these appeals. G. C. C.A. No. 1461/72 dismissed. C.As. Nos. 1995-96 & 2386/72 allowed in part. .·.