Management of Bangalore Woollen vs B. Dasappa

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

Court: Supreme Court of India

Case Number: Appeal No. 211 of 1958

Decision Date: 3 February, 1960

Coram: K. Subba Rao, K.C. Das Gupta

In this matter, the Supreme Court recorded that the dispute concerned the Management of the Bangalore Woollen Cotton and Silk Mills Company Limited and a workman named B. Dasappa. The case was heard on 3 February 1960, and the judgment was authored by Justice K. C. Das Gupta, who sat on a bench that also included Justice K. Subba Rao. In January 1956, while a reference was pending before an Industrial Tribunal regarding a conflict between the Management and its workmen, the Management filed an application under Section 33 of the Industrial Disputes Act seeking permission to dismiss Dasappa. The application asserted that information had been received indicating that Dasppa had dishonestly removed property belonging to the company, that a charge‑sheet had consequently been framed, and that an enquiry had been conducted. After examining all the evidence, the Manager concluded that Dasappa was guilty of the alleged misconduct and that his dismissal was justified. The Workers’ Union opposed the application on behalf of Dasappa, contending that the theft allegation was false, that the Manager’s finding was arbitrary, and that it violated the principles of natural justice. The Industrial Tribunal, after considering the testimony of witnesses examined by the Manager as well as two additional witnesses it heard, formally recorded its conclusion stating that, having regard to all material placed before it, it could not accept the Manager’s conclusion, that no prima facie case of theft had been established against the respondent, and consequently that it could not grant permission for his discharge. Dissatisfied with the Tribunal’s order, the appellant filed a petition under Articles 226 and 227 of the Constitution seeking an appropriate writ or direction to set aside that order. The Mysore High Court dismissed the petition on 27 September 1957. The appellant subsequently obtained special leave to appeal to this Court under Article 136 on 13 January 1958, filing Appeal No. 211 of 1958 against the High Court’s decision, and on the same day also obtained leave to appeal the Tribunal’s order, filing Appeal No. 212 of 1958. Before addressing the merits of either appeal, the Court noted that the appellant, through its counsel, had undertaken that whatever decision the Court might reach, the appellant would not enforce the proposed order of discharge for which the original application had been made.

In refusing the application for discharge, the Tribunal argued that although a formal finding indicated that no prima facie case of theft had been established against Dasappa, it had nevertheless ignored several pronouncements of this Court that prescribe the principles to be applied by Tribunals in similar matters. The Tribunal’s contention was that, despite the absence of a prima facie case, the higher judicial guidance on procedural fairness and evidentiary standards had been set aside, thereby calling into question the validity of the Tribunal’s decision to deny the discharge.

The factual matrix presented to the Manager concerned an incident that occurred on 23 December 1955 when Dasappa was on duty on the Company’s motor van. According to the testimony of a watchman named Syed Ameer, Dasappa was observed emerging from the second main gate of the Hebbal Mills carrying a piece of rug belonging to the Company and attempting to hide it beneath the van’s cushion. Ameer recounted that Dasappa’s demeanor was suspicious, noting that he glanced furtively to either side as he exited the Spinning gate and that the striped edge of a rug piece was visible in his hand. When Dasappa approached the lorry, opened its door and lifted the cushion, Ameer claimed that his hand was empty, prompting Ameer to rush to the second main gate. At his request, the lorry was stopped, and the rug piece was found concealed under the cushion. Subedar Athilingam corroborated Ameer’s account, stating that Ameer had reported the incident to him immediately. Additional statements recorded before the Manager indicated that Dasappa admitted his guilt and pleaded for leniency. The driver of the lorry also testified that, after Dasappa removed the cushion at Ameer’s urging, the rug piece was discovered and Dasappa allegedly remarked, “I did a mistake.” The existence of the rug beneath the cushion was not contested, and it was undisputed that the rug was Company property. Dasappa, however, maintained that he was unaware of how the rug came to be under the cushion, asserting that he had just returned from the dispensary when the item was discovered and suggesting that it had been planted by an adversary. The central issue before the Manager was whether the watchman’s testimony could be trusted. The Manager accepted the watchman’s version and concluded that Dasappa was guilty of theft. In deciding whether to grant the proposed punishment of discharge, the Tribunal was required to examine whether the Management had engaged in any unfair labour practice or victimisation, whether the principles of natural justice had been observed, whether a prima facie case had been established on the evidence produced, and whether the Management had acted bona fide, as reiterated in the decision of Lakshmi Devi Sugar Mills Ltd. v. Ram.

In this case, the Court examined the extent of the inquiry that could be conducted by a Tribunal under Section 22 of the Industrial Disputes Act. The Court explained that a Tribunal which receives an application for permission under that provision does not have the authority to pass judgment on the employer’s action once it determines that a prima facie case exists for imposing a penalty on the workman. The Tribunal’s role is not to evaluate how severe the penalty should be, nor to assess whether the proposed action is harsh, except to the limited extent that such considerations might reflect on whether the Management acted in good faith or was motivated by a desire to victimise the employee. The Court further stated that if, after reviewing the material before it, the Tribunal finds that the Management conducted a fair enquiry under the circumstances and that the Management honestly concluded that the workman was guilty of the alleged misconduct, then a prima facie case would be established by the employer. In such circumstances the Tribunal would be required to grant the employer the permission sought to impose the punishment on the workman.

The Court then referred to a later decision in Martin Burn Ltd. v. R. N. Banerjee to illustrate how the principle should be applied. In that case the Court set out the record and observed that the Labour Appellate Tribunal had to decide, on the basis of the material before it, whether the applicant had made out a prima facie case for terminating the respondent’s service. The Court clarified that a prima facie case does not mean that the case is proved beyond doubt; rather, it means that the case would be considered established if the evidence presented in its support were believed. While assessing whether a prima facie case existed, the relevant inquiry is whether, on the evidence, it is possible to reach the conclusion in question, not whether that conclusion is the only one that could be drawn from the evidence.

From these authorities the settled legal position emerges that permission must be refused whenever the Tribunal is satisfied that the Management’s action was not undertaken in good faith, that the principles of natural justice were breached, or that the material on which the Management based its adverse conclusion would not allow a reasonable person to reach the same conclusion. In most situations this occurs when the material is such that no reasonable person could have concluded that the workman was guilty of misconduct, indicating that the Management did not act in good faith. Conversely, a finding that the Management acted in good faith will ordinarily not be made where the material would not permit a reasonable person to arrive at the conclusion that the Management reached. Accordingly, in every case the Tribunal should first confirm that natural justice has been observed and then determine whether a reasonable person, having regard to the material, could have reached the same conclusion as the Management.

According to the Court, once the Tribunal had determined that the principles of natural justice had not been breached, it was required to consider whether a reasonable person, viewing the material on which the Management had based its adverse finding against the workman, could have reached the same conclusion. The Court observed that in the present matter the Tribunal had failed to apply the legal principles articulated in the earlier authorities. Although some of the Tribunal’s remarks suggested that it might have been thinking of the necessity for a finding to be perverse before refusing permission, the Tribunal, in fact, did not examine whether the Management’s conclusion was one that a reasonable person could have reached on the basis of the evidence. Instead, the Tribunal asked whether the conclusion itself was correct. After noting that the issue of whether the respondent had visited the dispensary was of little relevance to the merits, the Tribunal framed the pivotal question as follows: “The main point for consideration is whether from the material placed before us by the Association it could be concluded that it was the respondent who kept the article underneath the cleaner’s seat.” The Court pointed out that the proper inquiry should have been whether any reasonable person, looking at the record, could have inferred that the respondent had done so, rather than simply asking whether such an inference could be drawn. The Tribunal then proceeded, after a detailed discussion of the evidence, to acknowledge a break in the evidential chain because the Management had not shown where articles of that type had been stored. Nevertheless, the Tribunal concluded: “We are prepared to observe that the Manager has acted bona fide in the conduct of the enquiry but we are of opinion that having regard to all the circumstances he might not have accepted the version of M. W. 2.”

The Court noted that the Tribunal itself had recorded an undisputed finding that the article discovered under the cushion belonged to Hebbal Mills. The Tribunal appeared highly preoccupied with determining the precise location where such articles had been kept on the specific day in question. The Court disagreed with the view that the lack of proof regarding the article’s placement on that day would be of considerable assistance. The central issue, the Court reasoned, was whether the testimony of Syed Ameer, excluding the confession that had been promptly withdrawn, could be regarded as credible. The Tribunal correctly held that whether Dasappa had actually gone to the dispensary was of little importance, because even if he had, it would not have been impossible for him to have removed the rug piece from within the mill. Moreover, the Tribunal was not required to decide whether, in its opinion, the evidence presented by the witnesses was true; rather, it needed to determine whether the Manager, in concluding that the evidence was credible, had acted as a reasonable person would have acted.

The Court observed that the issue was not whether the evidence presented was true, but rather whether the Manager, when he stated that he considered the evidence credible, had acted as a reasonable person would have done. The Court clarified that it was not required to decide whether the Tribunal’s view was superior to the view of the Manager. It was evident, the Court said, that the Tribunal had applied an incorrect standard when it examined for itself whether the evidence conclusively proved Dasappa’s guilt. According to the Court, if the proper approach—referring to the guiding decisions of this Court—had been applied, the Tribunal would have been obligated to reach, based on the materials recorded, a conclusion that a reasonable man could infer Dasappa’s guilt in the theft and that the Management had acted in good faith.

The Court noted that the Tribunal had not made any finding that the principles of natural justice had been breached. It recorded that counsel for the respondent had merely suggested, in a faint manner, that the Management should have asked Dasappa whether he wished to adduce any evidence, and that the failure to do so might constitute a violation of natural justice. However, the Court found no indication that any complaint had ever been made that Dasappa had been denied the opportunity to present evidence. A review of the proceedings before the Manager demonstrated that the Manager was genuinely interested in uncovering the truth; he had given Dasappa every opportunity to cross‑examine the witnesses, had arranged for the evidence to be interpreted in Dasappa’s own language, and after each cross‑examination had asked Dasappa whether he believed the witness harboured any ill‑will or grudges toward him. Consequently, the Court concluded that it could not be fairly asserted that the principles of natural justice had been ignored, nor was there any basis to infer that the Management intended to victimise Dasappa.

Finally, the Court concluded that the Tribunal had erred in refusing the permission that had been sought. Nonetheless, because an undertaking had been received from the appellant that the proposed order of discharge would not be enforced, the Court found it unnecessary to issue any order granting permission. Accordingly, the Court dismissed both appeals, ordering that they be dismissed without costs.