Citation: (1964) 3 SCR 652
The case arises out of the dismissal of 5 workmen namely Mehnga Ram, Janak Raj Soni, Vishwanath Bali, Daulat Singh and Malak Ram Khanna by Associated Cement Co. (“ACC”), the Appellant.
- 1 May 1952: Malak Ram allegedly created a ruckus during a Cinema Show organized by the company for its workman, owing to which the show had to be cancelled.
- 12 August 1952: Mehnga Ram, Janak Raj and Daulat Singh stopped workers from starting their work and shouted slogans causing cessation of work.
- 14 October 1952: Mehnga Ram and Janak Raj instigated workers to go on strike and cause violence leading to abuse of some officers of ACC and disturbance of office work.
- 20 October 1952: Mehnga Ram, Janak Raj, Vishwa Nath and Daulat Singh stopped workmen from going into the factory premises and shouted hostile slogans leading to disruption of work.
Three Boards of Enquiry were constituted to investigate the above-mentioned incidents, each of which amounted to misconduct and resulted in a charge-sheet and enquiry. Consequently, all 5 workmen were dismissed by the enquiry boards.
Dismissed Workmen contended unfair dismissal and hence the dispute was referred by the Government of Punjab to the Industrial Tribunal in Patiala, Punjab under Section 10(1)(d) of the Industrial Disputes Act, 1947.
Respondents challenged the dismissal on the ground of violation of Principles of Natural Justice in the enquiries conducted against them. In response, ACC produced evidence to indicate that enquiries were properly conducted. Further, they challenged the jurisdiction of the tribunal to review the findings recorded by the committees, and consequently, the order of dismissal.
The tribunal passed an award in favour of the workmen and held that the enquiries were not conducted in accordance with Principles of Natural Justice. As a result, they ordered the reinstatement of all five workmen along with full back wages as compensation for wrongful dismissal. ACC henceforth challenged the award granted by the tribunal through a Special Leave Petition to the Supreme Court.
Daulat Singh, Janak Raj and Mehnga Ram, all of whom had multiple cases of misconduct pending against them, entered into a settlement with ACC. These parties agreed to take an order of consent, wherein it was agreed to treat dismissal as discharge simpliciter and the tribunal’s order regarding them was set aside. Each of the workmen was paid a sum of Rs. 3,500/- and any gratuity payments and provident fund amount that they were entitled to. Hence, the Supreme Court set aside the tribunal’s order in this regard and directed the order of consent to be passed in accordance with the terms of the settlement .
Whether the enquiries conducted against Vishwa Nath and Malak Ram were in accordance with Principles of Natural Justice?
Principles of Natural Justice in Labour Law:
The concept of Natural Justice is an English Common Law Principle, frequently used in Administrative Proceedings. Disciplinary Proceedings and hiring or firing of workmen are clearly Administrative actions in nature. Consequently, PNJ are applicable to such decision-making by any organization to ensure justice, reasonableness and fairness for all stakeholders involved. Lack of statutory procedure does not do away with the obligation on an employer to follow the Principles of Natural Justice.  Such Principles are recognized as “Minimum Protection” of an individual citizen’s right from the arbitrary exercise of authority by Administrative, Judicial or Quasi-Judicial institutions.
Two widely recognized Principles of Natural Justice are that of ‘Nemo Judex in Causa Sua’ i.e. Rule against Bias and ‘Audi Alteram Partem’ i.e. Rule of Fair Hearing. Hence, these are not abstract Principles of Law and in fact, have been recognized under the Constitution in the form of fundamental rights guaranteed under Article 14 and 21. Therefore, if an employer violates PNJ in domestic enquiries, which results in the termination of an employee, it will be a violation of Article 21 of the constitution. In the context of this Jurisprudence, the decision of the court and the rationale behind it has been discussed below.
Decision and Rationale:
Malak Ram’s Enquiry: Malak Ram’s alleged behaviour amounted to misconduct under Standing Order No. 16(1). The court highlighted three infirmities that lead to unfairness against him.
- All the enquiry officers claimed to be an eye-witness of his misconduct.
The court emphasizes that domestic enquiries should not be “empty formalities”  and must be bonafide and honest. Hence, it is desirable that the enquiry officer is neutral and not an eye-witness to the incident.
The Appellants argued that merely because an officer is an eye-witness, it does not disqualify him from being the enquiry officer. The court rejects this argument and pointed out the instances, where Malak Ram’s written explanation was rejected by the manager because it was not in conformity with his own, his colleague’s and other independent witness versions. The court emphasizes that enquiry officers should not project their own personal knowledge in deciding the truthfulness of the explanation.
- Enquiry commenced with Malak Ram’s own extensive cross-examination.
The court held that domestic enquiries should commence with adducing evidence against the workman, then an opportunity to cross-examine should be granted to them and lastly, if they want to examine themselves in their defence, then they may be allowed to do so. This is because workers may be ignorant and should not be exposed to the risk of cross-examination, as in this case.
- One of the enquiry officers had allegedly been maltreated by Malak Ram.
In one of the communications, the manager refused to accept Malak ram’s version as it was contrary to the evidence of mistreatment of Mr. Mohan (Asst. Manager and enquiry officer) and eye-witness accounts of the enquiry officers themselves. Hence, the enquiry officers have entirely relied upon their own impression and knowledge of the incident. The court held the enquiry to be a sham and an empty formality and upheld the tribunal’s decision.
Vishwa Nath’s Enquiry: His alleged behaviour amounted to misconduct under Standing Order 16 (ix). The court termed all the reasons given by the enquiry committee for disbelieving Vishwa Nath’s account as infirmities in the process leading to unfairness.
- The first reason given by the committee was that some of the witnesses from Vishwa Nath’s witness list were absent on the day of the incident. The court held that enquiry officers relied on the attendance register to reach this decision. Vishwa Nath or the witnesses were not given a chance to explain themselves and lastly, workmen may still be able to adduce evidence regarding the happenings at the gate without reporting to duty.
- The second reason was because one of the witnesses examined by him was present at a different time according to company reports from what he said in his statement. The court held that witness testimony cannot be disbelieved only on the ground of an infirmity between his statement and another document that he wasn’t given a chance to explain. This is not a technical rule of evidence but a principle of natural justice.
- The third reason was that the enquiry committee relied on the evidence adduced in the enquiry against Daulat Ram. The court held that evidence adduced in a separate enquiry altogether cannot be relied upon because it was not adduced in Vishwa Nath’s presence and he did not have a chance to cross-examine.
Therefore, the court held the process to be unfair and upheld the tribunal’s award. Both enquiries were held to be against the Principles of Natural Justice and the Supreme Court upheld the award granted by the Tribunal with respect to Malak Ram and Vishwa Nath.
This case is a timeless judgement, which continues to guide various stakeholders as to the validity of domestic enquiries and whether they are being conducted in accordance with principles of natural justice. The courts have time and again reiterated the importance of fairness and principles of natural justice in multiple cases such as State of Uttaranchal v. Kharak Singh, and more recently in Chamoli District Co-operative Bank Ltd. v. Raghunath Singh  etc. and the case is good law.
The decision is well reasoned. However, the court failed to bring attention to the principle of ‘No man should be judge in their own case’, as Mr. Mohan was allegedly abused by Malak Ram and yet he was one of the enquiry officers. Lastly, even though IESO specifies inclusion of procedure for suspension and dismissal of workmen , Principles of Natural Justice should be incorporated in more specific and clear terms because the management is likely to have a greater influence over the enquiry committee and in a way acts both as a prosecutor and the judge.
Relevance of this Judgement in Present Times
Domestic enquiries are the first point of investigation into an alleged breach or misconduct by a workman. They are also the ones where a workman is most directly involved and are informal in nature. Hence, they are not bound by the rules of procedure and evidence as in the case of a court or tribunal. This makes them the most important form of enquiry for the workman because all workers may not be equipped to pursue a case in the formal adjudication system.
Especially during the current pandemic, where the efficiency of the formal justice system has reached an abysmal low and only the most important cases are being heard, it is important to ensure that these domestic enquiries are conducted as fairly as possible and do not prejudice the innocent and ignorant worker. This will help in maintaining peaceful relations and trust amongst the employer and workers by establishing good-faith. Further, generally and more specifically in the present circumstances, security of tenure is necessary to ensure economic progress of the country and the well-being of workers. As a result, no worker should be arbitrarily dismissed at the whims and fancies of the management.
Fairness or Interference?
At the first instance, it appears that the court is placing an extensive burden on an organization to follow stringent rules of procedure, but a closer reading of the facts suggest, that the proceedings have been unfair to the workmen. Although an industrial establishment has a right to conduct its internal matters, this right comes with an obligation to treat workmen fairly, which has been statutorily recognized under various labour legislations in the country. In the present case, the organization clearly had the means to conduct enquiries in accordance with the Principles of Natural Justice, but they were flouted. The judgement offers a clear and detailed analysis demonstrating this violation by the organization. It is true that the long legal battles take up much time and energy of the workman, who is no match to the organization in terms of resources and bargaining power, but such judgements set a good precedent and provide hope for justice and at the same time, serve as a lesson for the organization. Hence it is a step in the correct direction in terms of labour jurisprudence.
 Associated Cement Co. Ltd. vs The Workmen and Ors. (1964) 3 SCR 652 Para 1.
 ibid Para 2.
 ibid Para 3.
 ibid Para 4.
 ibid Para 5.
 ibid Para 6.
 ibid Para 1.
Section 10(1)(d) [Where the appropriate Government is of opinion that any industrial dispute exists or is apprehended, it may at any time], by order in writing, refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, whether it relates to any matter specified, in the Second Schedule or the Third Schedule, to a Tribunal for adjudication.
Provided that where the dispute relates to any matter specified in the Third Schedule and is not likely to affect more than one hundred workmen, the appropriate Government may, if it so thinks fit, make the reference to a Labour Court under clause (c).
 ibid Para 7.
 ibid Para 8.
 Lord Esher MR in Vionet VS Barrat, (1885 ) 55 LJQB 39.
 Mohinder Singh Gill v. Chief Election Commissioner (1978) AIR 851 (SC).
 Canara Bank v. V K Awasthi (2005) 6 SCC 321.
 A.K.Kraipak V. Union of India AIR 1970 SC 150
Cooper v. Sandworth Board of Works (1863) 14 GB (NS) 4 180
 D K Yadav v. JMA Industries Ltd (1993) 3 SCC 259.
 Ibid Para 12
 ibid Para 13.
 ibid Para 15
 ibid Para 16
 ibid Para 18
 ibid Para 19
 ibid Para 20
 State of Uttaranchal and Ors. v. Kharak Singh (2008) 8 SCC 236.
 Chamoli District Co-operative Bank Ltd. v. Raghunath Singh (2016) 12 SCC 204.
 Industrial Employment Standing Orders Act, The Schedule, Item 9:
Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct: