The Delhi Cloth and General Mills Ltd vs Kushal Bhan

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 88 of 1959

Decision Date: 10 March 1959

Coram: K.N. Wanchoo, P.B. Gajendragadkar

In this matter the appellant, The Delhi Cloth and General Mills Ltd, brought a petition against Kushal Bhan, who was then an employee of the company. The case was listed for judgment on 10 March 1959 before a bench comprising Justice K.N. Wanchoo, Justice P.B. Gajendragadkar and Justice K.N. Wanchoo. The reported citation of the decision is 1960 AIR 806 and 1960 SCR (3) 227, with later references in several law reports. The dispute arose under the Industrial Disputes Act 1947, specifically section 33(2) and its proviso, which deals with the dismissal of employees by an enquiry committee when a criminal trial is pending and the employee is later acquitted. The company had served a charge-sheet on the respondent alleging that he had stolen the bicycle belonging to the Head Clerk of the firm. At the time the charge-sheet was issued, a criminal case concerning the alleged theft was pending before a criminal court. The employee was required to show cause why he should not be dismissed for misconduct; he submitted an explanation that the company found unsatisfactory, and a date for an enquiry was fixed. The respondent appeared before the enquiry committee but declined to answer any questions, insisting that he would not mount a defence until the criminal matter was decided by the court. After completing the enquiry, the company dismissed the respondent on the ground that misconduct had been proved. The company then applied to the Industrial Tribunal under section 33(2) for approval of the dismissal. While the application was pending, the criminal court acquitted the respondent and produced its judgment before the tribunal. The tribunal refused to grant approval of the dismissal. The company appealed the tribunal’s order by special leave. The Court held that the principles of natural justice do not oblige an employer to wait for the conclusion of a criminal trial before taking disciplinary action against an employee. The Court relied on the earlier decision in Shri Bimal Kanta Mukherjee v. Messrs. Newsman’s Printing Works (1956 L.A.C. 188), approving its reasoning. The Court observed that in cases of a serious nature involving complex questions of fact and law, it may be advisable for an employer to await the criminal verdict, but in a simple case such as the present one, the tribunal erred by denying approval under section 33(2) of the Industrial Disputes Act.

The appeal was filed as Civil Appeal No. 88 of 1959, seeking special leave from the judgment and order dated 6 May 1958 of the Industrial Tribunal, Delhi, in O.P. No. 54 of 1958. The appellant was represented by counsel for the Attorney-General of India and other designated lawyers, while the respondent was represented by his own counsel. The judgment was delivered on 10 March 1960 by Justice Wanchoo, who outlined the factual background, the procedural steps taken by both parties, and the legal principles applicable to the dispute. The Court concluded that the tribunal’s refusal to approve the dismissal was not justified, and that the employer’s action did not violate the requirements of natural justice, given the straightforward nature of the allegations and the availability of an internal enquiry process. Consequently, the Court set aside the tribunal’s order and directed that the dismissal be approved under the provisions of the Industrial Disputes Act.

The appeal was filed by special leave in an industrial dispute. The appellant was a company engaged in the manufacture of textiles, and the respondent, Kushal Bhan, was employed by the company as a peon. On 24 August 1957 a cycle belonging to Ram Chandra, Head Clerk of the Folding Department, was reported stolen. The theft was reported to the police. Some time later the cycle was located at a railway-station cycle-stand, where it was found among fifty or sixty other cycles after the respondent directed the police to the specific stand and identified the stolen bicycle. The company learned of the recovery in October 1957 and consequently served a charge-sheet on the respondent. The charge-sheet alleged that he had stolen Ram Chandra’s cycle, that the cycle had been recovered at his direction, and that a criminal case was pending against him. The charge-sheet required the respondent to show cause why he should not be dismissed for misconduct.

The respondent submitted his explanation on 13 October 1957, but the company found the explanation unsatisfactory and fixed an enquiry for 14 November 1957. The respondent attended the enquiry but stated that, because a criminal case was pending against him, he did not wish to present any defence until the criminal court decided the matter. He further declared that he would not take part in the enquiry and was unwilling to answer any questions. When the enquiry panel posed questions, the respondent refused to answer and eventually left the venue. Despite his refusal, the company completed the enquiry and concluded that the misconduct was proved, thereafter dismissing the respondent.

Following the dismissal, the company filed an application under section 33(2) of the Industrial Disputes Act, 1947, seeking the tribunal’s approval of the dismissal. The matter was placed before the Industrial Tribunal on 6 May 1958. In the interval, the criminal court acquitted the respondent on 8 April 1958, holding that the case against him was not free from doubt. The tribunal received a copy of the criminal court’s judgment and consequently refused to sanction the dismissal. The company then applied for special leave to appeal to this Court, resulting in the present appeal.

The appellant contended that the company was not obligated to await the criminal trial’s outcome and that it could, and did, conduct a fair enquiry. It argued that when the respondent refused to cooperate and left the enquiry, the company could only proceed to complete the enquiry and reach a decision based on the evidence before it. Counsel for the respondent, on the other hand, maintained that principles of natural justice required the employer to wait for the criminal court’s decision before taking disciplinary action, and that the respondent’s refusal to participate was justified because the disciplinary proceedings dealt with the same matter that was under trial in the criminal court.

In this case, the argument presented by the respondent’s counsel was that the principles of natural justice require an employer to wait for the decision of the criminal trial court before taking any disciplinary action, and that because the employer did not wait, the employee was justified in refusing to take part in the disciplinary proceedings, which dealt with the very same subject matter that was being tried in the criminal court. The Court observed that it is common for employers to postpone internal enquiries until the criminal trial has concluded, and that such postponement is generally considered fair. However, the Court stated that the law of natural justice does not impose an absolute duty on an employer to wait for the criminal court’s decision before proceeding with disciplinary action.

The Court referred to the decision in Shri Bimal Kanta Mukherjee v. Messrs. Newsman's Printing Works (1956) L.A.C. 188, where the Labour Appellate Tribunal expressed the same view. The Court added that if a case involves serious allegations or raises complex questions of fact or law, it would be advisable for the employer to await the criminal court’s judgment so that the employee’s defence in the criminal case would not be prejudiced. In the present matter, the Court found that the issues were simple and straightforward, and therefore the employer could not be blamed for the course he adopted.

Consequently, the Court concluded that there was no failure of natural justice in the enquiry, and that the respondent’s decision not to participate could not be faulted. The Court further held that the tribunal below had clearly erred by refusing to grant approval under section 33(2) of the Industrial Disputes Act, and that the tribunal had exceeded the limits of its jurisdiction under that provision. Accordingly, the appeal was allowed, the tribunal’s order was set aside, and approval was granted to the appellant’s order dismissing the respondent. No order as to costs was made, and the appeal was allowed.