Dismissal without enquiry

Dismissal from services is the greatest punishment an employer can inflict on an employee. It is believed that such an ultimate weapon would be used by an employer only in case of gross violation of the rules and employment contract. It is cardinal to the natural justice principles that wherever the employee is dismissed, it is done after conducting a detailed enquiry and based on the findings thereon. Not only does this give the employee an opportunity to mount a defence, it is also good for the employer for better implementation of such a dismissal order. Let us examine whether a dismissal is possible without an enquiry.

STATUTORY PROVISIONS AND RULES OF THE COMPANY

Article 311 of the Constitution of India stipulates that without contemplating an enquiry proceeding, no employee of the Government shall be dismissed, except under certain exceptional circumstances as provided under the proviso of the said Article. However, the employees of a PSU cannot avail of Article 311 of the Constitution. Nevertheless, under Article 14, 16 and 21 of the Constitution, the employees of PSUs can claim the same kind of protection, claiming the right of equal treatment and safeguard against arbitrariness.

Labour legislations do not strictly prescribe any enquiry proceedings as a pre-requisite for the dismissal of an employee. However, these statutes state that without fair hearing and complying with the principles of natural justice, no employee shall be dismissed. Further, the Fifth Schedule to the Industrial Disputes Act, providing the details of practices covered under the definition of Unfair Labour Practices under s. 2 (ra), under item No. 5 include To discharge or dismiss workmen (a) by way of victimization; (b) not in good faith, but in the colourable exercise of the employers rights; (c) by falsely implicating a workman in a criminal case on false evidence or on concocted evidence; (d) for patently false reasons; (e) on untrue or trumped up allegations of absence without leave; (f) in utter disregard of the principles of natural justice in the conduct of domestic enquiry or with undue haste; (g) for misconduct of a minor or technical character, without having any regard to the nature of particular misconduct or the past record or service of the workman, thereby leading to a disproportionate punishment, also as an unfair labour practice.

If an employee is dismissed from service, that will become a cause of action for him to move the Labour Court having jurisdiction as per the Second Schedule to the Industrial Disputes Act, read with s. 7. The consequence of this provision is that in the event of dismissal of an employee, with or without an enquiry, he can seek reinstatement before the jurisdictional Labour Court and if reinstated, it will be deemed that dismissal never took place.

An employee is also under contract with the employer as per the Indian Contract Act, and his conditions of employment would be the terms of the contract between them. Accordingly, the Standing Orders or CDA Rules will operate as a contract between the employer and employee, the violation of which may lead to remedies contained therein. As the Standing Orders or CDA Rules prescribe and envisage certain circumstances under which the concerned employee can be dismissed without any enquiry proceedings, in such circumstances, the Disciplinary Authority would be entitled to take such an action.

RULES OF A COMPANY AND PRINCIPLES OF NATURAL JUSTICE

The purpose of enquiry proceedings is to comply with principles of natural justice, which include, the right to be heard and defend oneself against arbitrariness or colourable exercise of powers or discretion by an authority. Unless the enquiry is conducted, there is no occasion for the management to find the employee Guilty and hence any punishment without such enquiry, leading to a finding of guilt, would be bad in the eye of law in natural circumstances. However, there exist exceptions to this rule, under article 311 of the Constitution, preventing the Government from dismissing an Employee without an enquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges, provide that, such an enquiry is not necessary where the dismissal is on the ground of conduct which has led to his conviction or a criminal charge or where the authority empowered to dismiss or remove a person if satisfied, that for some reasons, to be recorded by that authority in writing, is not reasonably practicable to hold such enquiry; or where the President or Governor, as the case may be, is satisfied that in the interest of the security of the State, it is not expedient to hold such enquiry. It is also provided under the Article that it will be the decision of the Authority empowered to dismiss, to determine whether it was reasonably practicable to hold such enquiry.

As these detailed exemptions are provided, it is open to the employer to have the said exceptions incorporated in its Bye Laws or Rules stipulating the disciplinary rules for its employees.

In Workmen of Hindustan Steel Ltd. vs. Hindustan Steel Ltd., AIR 1985 SC 251, the Standing Order conferred powers on the General Manager that on his being satisfied that it is inexpedient or against the interest of security to continue to employ the Workman, then for reasons to be recorded in writing, the workman can be removed or dismissed from service without following the detailed procedure of enquiries for dealing with cases of misconduct.
The Supreme Court observed that the Standing Order that conferred such arbitrary, uncanalised and drastic powers to dismiss an employee was violative of the basic requirement of natural justice. The Court took the view that reasons for dispensing with a enquiry and reasons for not continuing to employ the workman, stand wholly apart from each other and the standing order did not obligate the General Manager to record reasons for dispensing with the Enquiry. However, the Honble Supreme Court also upheld the power of the employer to dispense with enquiry where the exercise of his power is held to be strict and in exceptional circumstances only.

In Workmen of Hindustan Steel Ltd, the Supreme Court laid down the test as follows:

.when the decision of the employer to dispense with enquiry is questioned, the employer must be in a position to satisfy the Court that holding of the enquiry will be either counter productive or may cause such irreparable and irreversible damage which in the facts and circumstances of the case cannot be suffered. This minimum requirement cannot and should not be dispensed with to control wide discretionary power and to guard against the drastic power to inflict such a heavy punishment as denial of livelihood and lasting stigma without giving the slightest opportunity to the employee to contravert the allegation and even without letting him know what is his misconduct.

In another case, Avinash Nagra vs. Navodaya Vidyalaya Samiti, 1997 (2) SCC 534, the Supreme Court held that in a case where it is deemed hazardous to have such Enquiry, considering the vulnerability of the witness, the same can be dispensed with and punishment of dismissal can be imposed. The High Court of Delhi further in Dayachand vs. National Thermal Power Station, 2004 (IV) LLJ (Suppl) 168, held that

where a disciplinary enquiry is dispensed with on the plea that it was not reasonably practicable to hold one, the Court must be satisfied that it was not a colourble exercise or malafide action of the Employer. The Employer was to satisfy the Court that good and objective reasons existed showing both proof of misconduct and the reasons for dispensing with the enquiry. This minimum requirement cannot and should not be made to suffer.

In this case, the Court upheld the action of the National Thermal Power Station dismissing an employee without holding enquiry, as it was not practicable to hold an enquiry and as a provision for such action existed under its Clause 23(ii)(c) of the Certified Standing Orders.
DISMISSAL WITHOUT ENQUIRY

It may be discerned from the above that:

1) An Enquiry can be dispensed with while dismissing an employee on the following circumstances:

a) An expressed provision exists in the Rules/Standing Orders of the Company.

b) The dismissal is in consequence of conviction of an Employee after due process before a Court.

c) The Disciplinary Authority is of the opinion that the conduct of such Enquiry will have hazardous effect or will be counter productive or will cause irreparable or irreversible damage.

d) Where the Disciplinary Authority opines that it will be expedient in the interest of security.

e) When in the circumstance Disciplinary Authority reasonably apprehends that the Enquiry is not practically possible.

2) However, the Enquiry cannot be dispensed with even under the above circumstances unless it is provided under the Rules/Standing Orders.

3) Further, the Disciplinary Authority has to record in writing under what circumstance the Enquiry was dispensed with before imposing the punishment of `Dismissal on the employee.

4) The act of dispensing with Enquiry before dismissal can be challenged before the appropriate Labour Court at the instance of the Employee.

5) As the action of dismissal without Enquiry will be subjected to judicial review the Disciplinary Authority shall be able to prove that it was not done on colourable exercise of his right or with malafides and that the action was with good and objective reasons under exceptional circumstances.

Accordingly, while it is most desirable/advisable that punishment of dismissal on some employee may be imposed only upon a properly conducted enquiry, it is concluded that by strictly following the above guidelines and if so provided as per CDA Rules, the Disciplinary Authority can dispense with the enquiry proceedings and dismiss an Employee for any of the reasons, as stated above. However, if the Standing Orders do not stipulate any reason to remove or dismiss an employee from service without following the procedure laid down, it is felt that the Disciplinary Authority may not be empowered to dispense with enquiry under any other circumstance. However, if it is most expedient, the enquiry can be dispensed with by complying to all other requirements of principles of natural justice enshrined by the various decisions of the Courts, provided with adequate precaution taking into consideration that the Court may struck down such a dismissal, unless the employer is capable of proving exceptional circumstances and due compliance to the various requirements, including that of natural justice.

Where the terms of the contract of service, i.e. the CDA Rules/Certified Standing Orders, does not provide for dismissal without enquiry, the action of an employer to dismiss so, would become a breach of the contract. However, as under the Law of Contract, a Service Contract cannot be specifically enforced and accordingly the claim of an employee for reinstatement may not sustain and at the most the employer may only be entitled for damages for the breach of contract committed by him.

Under s. 33 of the Industrial Disputes Act, no protected workmen can be dismissed without the approval of Competent Authority. However, the consequence stipulated only is a complaint against such an action by the employee.

However, s. 11A of the Industrial Disputes Act specifically stipulates that a Labour Court/Tribunal in an Industrial Dispute referred to it, relating to the dismissal of a workman, in the course of adjudication proceedings, if finds a dismissal unjustified, can through an award set aside such dismissal order and in the course of proceedings shall not take any fresh evidence in relation to the matter and shall rely only on the materials on record.

Sec. 11A of I.D. Act - Powers of Labour court, Tribunal, and National Tribunal to give appropriate relief in case of discharge or dismissal of workmen : 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 proceedings, the Labour Court, Tribunal or National Tribunal, 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 things fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require.

PROVIDED that in any proceeding under this section the Labour Court, Tribunal or National Tribunal, as the case may be, shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter.

The proviso here would mean that in a case where no enquiry has taken place before dismissal, the employer would be prevented from leading evidence for establishing the guilt of the employee, for which he was dismissed. However, the Supreme Court in the Management of Panitole Tea Estate vs. The Workmen (1971) 1 SCC 742, held that even if no enquiry is held by the employer, the Tribunal in order to satisfy itself about the legality and validity of the order, had to give an opportunity to the employer and employee to adduce evidence before it. It is open to the employer to adduce evidence for the first time justifying his action, and it is open to the employee to adduce evidence contra.

In The Workmen vs. Fire Stone Tyre and Rubber Company Ltd., 1973 (1) SCC 813, interpreting the materials on record in the proviso held that the same will take in the following:

1. The evidence taken by the Management at the enquiry and the proceedings of the Enquiry.

2. The above evidence and in addition any fresh evidence led before the Tribunal.

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 Workmen contra.

Delhi Cloth and General Mills Company Ltd., vs. Ludh Budh Singh, 1972 (1) LLJ 180 SC, the Apex Court emphasized that when no enquiry has been held by the employer or when the enquiry has been found to be defective, the employer has got the right to adduce evidence before the tribunal justifying his action.

In another case of Bharat Forge Company Ltd., vs. Zodge, 1996 (2) LLJ 643 SC, where the Tribunal rejected the employers request for permission to lead evidence before the closure of the proceedings, although the High Court of Bombay upheld the decision of the Tribunal, the Supreme Court setting aside the order of the Tribunal as well as the High Court, upheld the right of the employer to lead evidence.

In the latest judgment of Amrit Vanaspati Co. Ltd. vs. Khem Chand and Another, 2006 SCC (6) 325, going through various earlier decisions, broad principles with regard to the subject was summarized and it was inter-alia held that 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. On the other hand, the issue about the merits of the impugned order of dismissal is at large before the Tribunal and the latter, on the evidence adduced before it, has to decide for itself whether the misconduct 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. Further, it was also enshrined in the said decision that it has never been recognized that the Tribunal should straightaway, without anything more, direct reinstatement of a dismissed or discharged employee, once it is found that no domestic enquiry has been held

The said ruling of the Supreme Court also enables the employer to furnish fresh/further/additional evidence. It is also laid down by the Supreme Court that where an enquiry is conducted and it is vitiated, it will be as good as no enquiry was conducted. The decision in the above case, lays down also that the Labour Court has to consider the entire evidence before it, before arriving at a decision. Practically, this would mean that in a case where no enquiry has been conducted before dismissal, the Labour Court has to look into the entire set of facts and circumstances and evidence led by both the parties before arriving at its conclusion. In short, it could be deemed that, where Enquiry is not conducted, and if the employee challenges such action before the Labour Court, the Labour Court has to enquire into the entire affair, whereby it would conduct an enquiry proceeding as such, in substitution of the employer who was supposed to have conducted such enquiry before imposing any punishment and only the distinction is perhaps that where the enquiry has been conducted before dismissal, the Court has to be satisfied that it is vitiated before arriving at a decision regarding its admissibility. Whereas, in a case where no enquiry was conducted, the admissibility of the matter may be established for the simple reason of non-existence of domestic enquiry proceedings without going to the merits of the case.