Labour Courts Cannot Overturn Management's Decision On Mere Hypothesis : Supreme Court

The Supreme Court observed that the Labour Court cannot overturn the decision of the management on "ipse dixit" and its decision should not be based on mere hypothesis. Observing that the Labour Court converted itself into a "Court of Appeal", the Supreme Court set aside the Labour Court's decision which overturned the management's decision to terminate the services of an employee.

A Division Bench comprising Justice Ajay Rastogi and Justice Abhay S Oka observed that a Labour Court's jurisdiction under Section 11­A of the Industrial Disputes Act 1947 must be judiciously exercised, and cannot be exercised either whimsically or capriciously. While the Tribunal may scrutinize or analyse the evidence, what is important is how is it done(Case: Standard Chartered Bank Vs RC Srivastava).

Section 11 A of the Industrial Disputes Act 1947 deals with the powers of Labour Courts, Tribunals and National Tribunals to give appropriate relief in in case of discharge or dismissal of workmen.

The observations have been made in the context of Tribunal's order reinstating a Bank employee while reversing the order of his termination passed after a disciplinary enquiry.

The Bench has observed that the Tribunal completely overlooked and exceeded its jurisdiction while interfering with the finding recorded during the course of disciplinary enquiry in furtherance of which, the respondent employee was dismissed from service.

Further, the High Court has also committed a manifest error while passing the impugned judgment and upholding the Tribunal's order of reinstatement.

The Bench has found that the Tribunal converted itself into a Court of Appeal as an appellate authority and exceeded its jurisdiction while appreciating the finding recorded in the course of domestic enquiry.

According to the Court, the Tribunal tested the domestic inquiry on the broad principles of charge to be proved beyond reasonable doubt which is a test in the criminal justice system, and completely forgot the fact that the domestic enquiry is to be tested on the principles of preponderance of probabilities.

" If a piece of evidence is on record which could support the charge which has been levelled against the delinquent unless it is per se unsustainable or perverse, ordinarily is not to be interfered by the Tribunal, more so when the domestic enquiry has been held to be fair and proper" the Bench said.

"The decision of the Labour Court should not be based on mere hypothesis. It cannot overturn the decision of the management on ipse dixit. Its jurisdiction under Section 11­A of the Act 1947 although is a wide one but it must be judiciously exercised. Judicial discretion, it is trite, cannot be exercised either whimsically or capriciously. It may scrutinize or analyse the evidence but what is important is how it does so", the Court observed.

The Bench has made the observations while delivering its judgement in an appeal filed against Allahabad High Court's order dated 21st November, 2014 whereby it upheld the reinstatement of an employee of Standard Chartered Bank with full back wages awarded by the Tribunal in 2006.

In the present case, a charge­sheet dated 27th January, 1988 was served upon the respondent­ employee for the alleged delinquency which he had committed on 12th January, 1988 in discharge of his duties, with the allegation of

• Drunkenness within the premises of the Bank
  
• Manhandling and assaulting the senior officers
• Hurling abuses at the management

A departmental enquiry was held in terms of the Bipartite Settlement and after due compliance of the principles of natural justice the Enquiry Officer had held the charges proved against the employee. The disciplinary authority also confirmed the Enquiry Officer's finding and punished him with the penalty of dismissal from service by an order dated 22nd August, 1991.

The Tribunal however reversed the order, directing reinstatement of the employee in service with full back wages, seniority and all the consequential benefits finding that the Bank's management had miserably failed to establish the charges levelled against him and held the charges not being proved

The Tribunal's order was challenged by the Bank before the High Court, but the same was dismissed.

Supreme Court through its order dated 29th September 2021 has held that the Award passed by the Tribunal and confirmed by the High Court under impugned judgment is not sustainable in law.

The Top Court has allowed the Bank's appeal against High Court's judgment affirming Tribunal's order of reinstatement of the employee, with the clarification that there will be no recovery in reference to the payment which has been made over to the respondent­ workman in the interregnum period.

Case Title: Standard Chartered Bank Vs RC Srivastava (Civil Appeal 6092 of 2021)

Citation : LL 2021 SC 525

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