The Imperial Tobacco Company Of India... vs Its Workmen on 16 March, 1961

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

Court: supreme-court

Case Number: Not extracted

Decision Date: Not extracted

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

The Supreme Court of India heard an appeal by special leave that arose out of a dispute between the Imperial Tobacco Company of India and its workmen concerning the dismissal of a clerk named Akhileshwar Prasad. The appeal was authored by Justice K.N. Wanchoo and the bench comprised Justices P.B. Gajendragadkar and K.N. Wanchoo. Akhileshwar Prasad had been tasked with maintaining the leave registers of the company. In December 1957 he faced several charges: first, that he had wilfully omitted entries for annual, sick and casual leave taken between 1 January 1957 and 28 September 1957; second, that he had altered and overwritten, without the employer’s knowledge, entries relating to the 1957 leave and to leave carried forward from the previous year of 1956 for certain other employees, thereby intentionally causing wrongful gain to himself and to other clerks; and third, that he had neglected the duty of keeping the 1956 leave register in safe custody, resulting in its disappearance. Akhileshwar Prasad denied responsibility for these allegations, prompting the company to institute an inquiry against him. Under the company’s Standing Orders, a detailed procedure governed inquiries into misconduct. The charge was required to be read aloud to the employee, and all witnesses supporting the charge were to be examined in his presence unless he deliberately absented himself, in which case a note would be recorded. The employee was entitled to cross‑examine each witness; if he declined, a note was to be made. He could also produce his own witnesses, and a refusal to do so was likewise to be noted. After the evidence was presented, the branch manager was mandated to make a concise appraisal of the evidence, record his conclusions and any intended punishment in writing, and to consider the employee’s service record and any statement the employee made against the proposed sanction. The manager then issued a written order of punishment, documenting the proved misconduct and the penalty in the employee’s service record. The respondents contended that the prescribed inquiry procedure had not been followed, rendering Akhileshwar Prasad’s dismissal invalid. The record of the inquiry showed that after two witnesses had been examined on behalf of the employer, a dispute arose concerning the cross‑examination of the second witness. Consequently, Akhileshwar Prasad declined to continue cross‑examining the second witness and withdrew from the inquiry. Following his withdrawal, the inquiry was subsequently concluded and the branch manager proceeded to pass an order of dismissal.

The branch manager terminated Akhileshwar Prasad’s employment by issuing an order that cited Branch Standing Order 17 (d) and gave the effective date of dismissal as 27 November 1957. The manager communicated this decision through a letter identified as No. P/64/33, which was dated 11 December 1957. Subsequently, on 25 February 1958, the Government of Bihar approached the labour court, requesting a determination of whether the dismissal was justified and, if it was not, whether the employee should be reinstated or granted any other form of relief. The labour court examined the factual record and observed that Mr Prasad had been responsible for maintaining the leave register. The court further concluded that the inquiry into his alleged misconduct had not been conducted in accordance with the applicable Rules, rendering the dismissal order invalid. In evaluating the substantive charge, the court held that although Mr Prasad had shown some negligence, the misconduct did not rise to the level prescribed by Standing Order 16 (d), (k) or (l), which formed the basis of his dismissal. Nevertheless, the court noted that the negligence extended to inaccuracies in his own leave account, a matter over which he should have exercised particular care. Accordingly, the court ordered his reinstatement but reduced his remuneration to fifty percent of his wages for the period during which he had been absent from service, deeming this partial reduction to be a just and appropriate penalty in the interests of justice.

The court emphasized that there was no doubt the inquiry had not been carried out in the manner required by the appellant’s Standing Orders. Even though Akhileshwar Prasad withdrew from the inquiry—whether his withdrawal was proper or not—the procedural rules mandated that the inquiry be completed, with any remaining evidence taken ex parte. After the evidence was gathered, the branch manager was obliged to assess the material, record his findings on the misconduct proved, decide upon the appropriate punishment, and then invite the employee to present any explanation against the intended sanction. Only after receiving the employee’s response could the manager lawfully issue a punitive order. The premature withdrawal of the employee did not relieve the inquiry officer of the duty to finish the inquiry on an ex parte basis, nor did it excuse the branch manager from complying with Clause 18 (b) (10) of the Standing Orders. The manager should have evaluated the evidence, documented his conclusions, determined the punishment he intended to impose, and then called upon Mr Prasad to state his case against that punishment before finalizing any disciplinary action. In the present case, however, the manager immediately closed the inquiry upon Mr Prasad’s withdrawal and issued the dismissal order without completing the procedural steps required under the Standing Orders, thereby violating the mandated process.

The Court observed that the dismissal order, which had already been detailed earlier, had been issued without the inquiry being completed in accordance with Clause 18(b)(10) of the Standing Orders. The branch manager had closed the inquiry as soon as Akhileshwar Prasad withdrew, and then proceeded to pass the dismissal order without ensuring that all procedural steps required by the Standing Orders were satisfied. In view of this procedural defect, the Court agreed with the labour court’s determination that the inquiry which led to Akhileshwar Prasad’s dismissal was not a valid inquiry as mandated by the appellant’s Standing Orders. Consequently, the matter was left before the labour court to decide independently whether the charges on which the dismissal was based had been proven.

The Court noted that, before the labour court, no oral evidence had been adduced; the only material presented consisted of the written record of the inquiry proceedings together with certain documentary evidence. Upon reviewing this limited evidentiary material, the labour court concluded that two of the three charges framed against Akhileshwar Prasad were not proved. The first charge concerned alleged alteration and overwriting of entries in the leave register for other employees, and the second charge related to alleged neglect in keeping the 1956 leave register in safe custody. The labour court found that the evidence presented was insufficient to substantiate either of these allegations. Regarding the third charge, which alleged that Akhileshwar Prasad had omitted entries concerning his own annual, sick, and casual leave, the labour court held that although there was negligence on his part, the conduct did not fall within the scope of Clause 16(d), Clause 16(k) or Clause 16(l) of the Standing Orders.

The Court further examined the labour court’s handling of the charge under Clause 16(l), which addresses habitual negligence or neglect of work of a serious nature. The Court acknowledged that a question of doubt remained because the omitted entries spanned a period of nine months and pertained to Akhileshwar Prasad’s own leave. However, the Court stated that it would not be appropriate to intervene under Article 136 of the Constitution to overturn the labour court’s view unless that view could be characterized as perverse or patently erroneous based on the material before the court. The Court found no basis to declare the labour court’s conclusion perverse or plainly wrong; the view taken was regarded as a possible interpretation of the evidence. Accordingly, the Court concluded that there was no ground for interfering with the labour court’s order.

Finally, the Court considered the appellant’s contention that the labour court should not have ordered reinstatement of Akhileshwar Prasad and that justice would be better served by granting compensation instead. In addressing this argument, the Court examined the entries in Akhileshwar Prasad’s service record and observed that the negligence in question was an isolated incident that had occurred for the first time. The Court held that, given these circumstances, there was no justification for overturning the reinstatement order. Accordingly, the appeal was dismissed with costs, and the order of reinstatement remained in effect.

The Court noted that the negligent act complained of by the employer had taken place only once and therefore represented a first‑time occurrence. Because the misconduct was isolated, the Court examined whether any legal rule or evidential material required it to set aside the labour court’s decision ordering the employee’s reinstatement. After a careful review of the testimony and the documentary record, the Court found that the lower tribunal had acted within its jurisdiction and that its order was supported by the facts before it. The Court further observed that the existence of a single negligent episode did not, by itself, create a sufficient ground to disturb the reinstatement decree. Consequently, the Court concluded that there was no valid justification for interfering with the reinstatement and that the appellant’s request for relief could not be sustained. For that reason, the appeal was dismissed and the appellant was ordered to pay the costs incurred by the other side in these proceedings. The decision thereby affirmed the principle that a labour court’s findings, when based on a reasonable appreciation of the evidence, are not to be disturbed absent a clear error or absurdity.