[Cites 11, Cited by 0]
Madhya Pradesh High Court
Satin Finserv Ltd. Taraashana ... vs Sumit Kumar Yadav on 13 January, 2026
1 MP-7383-2025
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VIVEK JAIN
ON THE 13th OF JANUARY, 2026
MISC. PETITION No. 7383 of 2025
SATIN FINSERV LTD. TARAASHANA FINANCIAL SERVICES AND
OTHERS
Versus
SUMIT KUMAR YADAV
Appearance:
Shri Uttam Maheshwari - Advocate for the petitioners.
Shri Aditya Veer Singh - Advocate for the respondents.
ORDER
The present position has been filed by the Management Employer
challenging the award dated 31.01.2025 passed by the Labour Court,
Jabalpur, which was pronounced on 10.03.2025 after obtaining consent of the
appropriate Government. Further challenge is made to the order dated
11.12.2025, whereby the Labour Court has rejected application for review
against the said order.
2. Counsel for the petitioner while pressing the petition has criticized
the impugned award on the singular ground that while passing the award
dated 31.01.2025 the Labour Court has set aside the termination of services
of the respondent workman on the ground that the said termination was not
preceded by any departmental or domestic enquiry and therefore, on account
of failure of principles of natural justice, the termination order has been set
aside. It is also argued that the Labour Court has decided the case on the
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basis of various judgments passed by this Court in exercise of writ
jurisdiction under Article 226/227 of the Constitution of India, whereas the
jurisdiction conferred on the Labour Court is of different nature and the
Labour Court is required to decide the industrial dispute as such. It is argued
by learned counsel for the petitioner-employer that in the event the domestic
enquiry is defective or no domestic enquiry is conducted against the
workmen prior to termination of his services, then the Labour Court cannot
set aside the order simpliciter on that ground and it is obligatory for the
Labour Court to decide the industrial dispute once and for all and therefore,
it is settled in law that the Labour Court has to grant opportunity to the
employer to adduce evidence as to the alleged misconduct of the workman
before the Labour Court in case the domestic enquiry is either not held or if
held, is found to be defective.
3 . Per contra, learned counsel for the respondent workmen has
contended that in the present case since opportunity to lead evidence was
given by the Labour Court to the parties, therefore, it cannot be argued that
the petitioner-employer did not get opportunity to lead evidence on the
question of alleged misconduct committed by the respondent workmen and
therefore, the impugned award is fully legal and justified. It is argued that
since the termination was founded on misconduct and no domestic enquiry
was conducted, therefore, the Labour Court has rightly ordered reinstatement
of the respondent workman in service as there was failure of principles of
natural justice.
4. Heard.
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5. Upon hearing the rival parties, it is seen that as per the reply filed by
the petitioner-employer before the Labour Court, the respondent workman
was terminated on account of misconduct. He also allegedly committed
physical sabotage in the office when he was terminated from service. The
Labour Court did not frame issues, but framed a point of determination that
whether the termination of services of the respondent workman is proper and
valid and if not, then to what relief to which he is entitled.
6. If the domestic enquiry had been held, then the Labour Court was
required to frame a preliminary issue that whether the domestic enquiry is
legally valid or proper and if the Labour Court had come to the conclusion
that the domestic enquiry was not valid and proper, then it should have
granted opportunity to the employer to read evidence as to misconduct. As in
the present case, admittedly no enquiry was held, then the Labour Court was
not required to frame any preliminary issue, but after coming to the
conclusion that no enquiry was held, then instead of simply reinstating the
respondent workman in service, it was under obligation to grant opportunity
to the petitioner-employer to lead evidence as to misconduct and prove the
misconduct before the Labour Court. The law on this point is well-stated and
seems to have escaped the attention of the Labour Court altogether.
7. The opportunity to the management to lead evidence in support of
misconduct was considered by the Hon'ble Supreme Court in the case of
Workmen Vs. Firestone Tyre & Rubber Co. of India (P) Ltd. (1973)1 SCC
813 wherein the Hon'ble Supreme Court in para 32 has held as under:-
32. From those decisions, the following principles broadly emerge:
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"(1) The right to take disciplinary action and to decide upon the
quantum of punishment are mainly managerial functions, but if a
dispute is referred to a Tribunal, the latter has power to see if action
of the employer is justified.
(2) Before imposing the punishment, an employer is expected to
conduct a proper enquiry in accordance with the provisions of the
Standing Orders, if applicable, and principles of natural justice. The
enquiry should not be an empty formality.
(3) When a proper enquiry has been held by an employer, and the
finding of misconduct is a plausible conclusion flowing from the
evidence, adduced at the said enquiry, the Tribunal has no
jurisdiction to sit in judgment over the decision of the employer as
an appellate body. The interference with the decision of the
employer will be justified only when the findings arrived at in the
enquiry are perverse or the management is guilty of victimisation,
unfair labour practice or mala fide.
( 4 ) Even if no enquiry has been held by an employer or if the
enquiry held by him is found to be defective, the Tribunal in order
to satisfy itself about the legality and validity of the order, had to
give an opportunity to the employer and employee to adduce
evidence before it. It is open to the employer to adduce evidence for
the first time justifying his action, and it is open to the employee to
adduce evidence contra.
(5) The effect of an employer not holding an enquiry is that the
Tribunal would not have to consider only whether there was a
prima facie case. On the other hand, the issue about the merits of
the impugned order of dismissal or discharge is at large before the
Tribunal and the latter, on the evidence adduced before it, has to
decide for itself whether the misconduct alleged is proved. In such
cases, the point about the exercise of managerial functions does not
arise at all. A case of defective enquiry stands on the same footing
as no enquiry.
(6) The Tribunal gets jurisdiction to consider the evidence placed
before it for the first time in justification of the action taken only, if
no enquiry has been held or after the enquiry conducted by an
employer is found to be defective.
(7) It has never been recognised that the Tribunal should
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straightaway, without anything more, direct reinstatement of a
dismissed or discharged employee, once it is found that no
domestic enquiry has been held or the said enquiry is found to be
defective.
(8) An employer, who wants to avail himself of the opportunity of
adducing evidence for the first time before the Tribunal to justify
his action, should ask for it at the appropriate stage. If such an
opportunity is asked for, the Tribunal has no power to refuse. The
giving of an opportunity to an employer to adduce evidence for the
first time before the Tribunal is in the interest of both the
management and the employee and to enable the Tribunal itself to
be satisfied about the alleged misconduct.
(9) Once the misconduct is proved either in the enquiry conducted
by an employer or by the evidence placed before a Tribunal for the
first time, punishment imposed cannot be interfered with by the
Tribunal except in cases where the punishment is so harsh as to
suggest victimisation.
(10) In a particular case, after setting aside the order of dismissal,
whether a workman should be reinstated or paid compensation is,
as held by this Court in Management of Panitole Tea
Estate v. Workmens [(1971) 1 SCC 742] within the judicial
decision of a Labour Court or Tribunal."
(Emphasis supplied)
8. The Supreme Court in para 32 (4) held that even if no enquiry was
held by the employer or if the enquiry held by him is found to be defective,
the tribunal in order to satisfy itself of legality and validity of the order has
to give opportunity to the employer and employee to adduce evidence before
it. The basic objective is that the Labour court is called upon to decide upon
the industrial dispute and not merely to decide the validity of dismissal or
termination order or any action taken against the workman.
9. It was held by the Supreme Court as far back in the year 1965 in the
case of Workmen V. Motipur Sugar Factory, reported in AIR 1965 SC 1803
that once the dismissal is set-aside by the industrial tribunal only on the
ground of dismissal being without holding a valid enquiry and without
holding the enquiry then the employer will immediately thereafter proceed to
6 MP-7383-2025
hold the enquiry against the dismissal order against the employee which will
rise another industrial dispute and this will only delay the settlement of the
Industrial Dispute which has been raised before the Industrial Tribunal. In
the case of Firestone Tyre (supra) this issue was also dealt with in para 28. In
para 26 to 29 of the aforesaid judgement, it was held as under:-
26. The powers of a tribunal when a proper enquiry has been
held by an employer as well as the procedure to be adopted
when no enquiry at all has been held or an enquiry held was
found to be defective, again came up for consideration
in Management of Ritz Theatre (P) Ltd. v. Workmens [AIR
1963 SC 295 : (1963) 3 SCR 461 : (1962) 2 Lab LJ 498]
Regarding the powers of a Tribunal when there has been a
proper and fair enquiry, it was held:
"It is well settled that if an employer serves the relevant
charge or charges on his employee and holds a proper and
fair enquiry, it would be open to him to act upon the
report submitted to him by the enquiry officer and to
dismiss the employee concerned. If the enquiry has been
properly held, the order of dismissal passed against the
employee as a result of such an enquiry can be challenged
if it is shown that the conclusions reached at the
departmental enquiry were perverse or the impugned
dismissal is vindictive or mala fide, and amounts to an
unfair labour practice. In such an enquiry before the
Tribunal, it is not open to the Tribunal to sit in appeal
over the findings recorded at the domestic enquiry. This
Court has held that when a proper enquiry has been held,
it would be open to the enquiry officer holding the
domestic enquiry to deal with the matter on the merits
bona fide and come to his own conclusion."
Again regarding the procedure to be adopted when there has
been no enquiry or when there has been a defective enquiry, it
was stated:
"It has also been held that if it appears that the
departmental enquiry held by the employer is not fair in
the sense that proper charge had not been served on the
7 MP-7383-2025
employee or proper or full opportunity had not been given
to the employee to meet the charge, or the enquiry has
been affected by other grave irregularities vitiating it, then
the position would be that the Tribunal would be entitled
to deal with the merits of the dispute as to the dismissal of
the employee for itself. The same result follows if no
enquiry has been held at all. In other words, where the
Tribunal is dealing with a dispute relating to the dismissal
of an industrial employee, if it is satisfied that no enquiry
has been held or the enquiry which has been held is not
proper or fair or that the findings recorded by the enquiry
officer are perverse, the whole issue is at large before the
Tribunal. This position also is well-settled."
It was further held that it is only where a Tribunal is satisfied that a
proper enquiry has not been held or that the enquiry having been held
properly the finding recorded is perverse that the Tribunal derives
jurisdiction to deal with merits of the dispute, when permission has to
be given to an employer to adduce additional evidence.
27. The right of an employer to lead evidence before the Tribunal to
justify his action was again reiterated in Khardah Co.
Ltd. v. Workmen [AIR 1964 SC 719 : (1964) 3 SCR 506 : (1963) 2
Lab LJ 452] as follows:
"It is well-settled that if the enquiry is held to be unfair, the
employer can lead evidence before the Tribunal and justify his
action, but in such a case, the question as to whether the
dismissal of the employee is justified or not, would be open
before the Tribunal, and the Tribunal will consider the merits of
the dispute and come to its own conclusion without having any
regard for the view taken by the management in dismissing the
employee."
28. In Workmen of Motipur Sugar Factory (P) Ltd. v. Motipur Sugar
Factory [AIR 1956 SC 1803 : (1965) 3 SCR 588 : (1965) 2 Lab LJ
162] the employer had charge-sheeted certain workmen and without
conducting any enquiry, as required by the standing orders, passed
orders discharging the workmen. Before the Tribunal, the employer
adduced evidence justifying the action taken against the workmen. The
workmen were also given an opportunity to adduce evidence in
rebuttal. After a consideration of such evidence, the Tribunal held that
the workmen were guilty of misconduct alleged against them and that
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the orders of discharge paced by the employer were fully justified.
Before this Court it was contended on behalf of the workmen that
when no enquiry whatsoever had been conducted by the employer, as
required by the standing orders, before passing an order of dismissal or
discharge, the Tribunal had no jurisdiction to hold an enquiry itself by
permitting the employer to adduce evidence before it for the first time.
In rejecting this contention, it was held:
"It is now well-settled by a number of decisions of this Court
that where an employer has failed to make an enquiry before
dismissing or discharging a workman it is open to him to justify
the action before the tribunal by leading all relevant evidence
before it. In such a case the employer would not have the benefit
which he had in cases where domestic enquiries have been held.
The entire matter would be open before the tribunal which will
have jurisdiction not only to go into the limited question open to
a tribunal where domestic enquiry has been properly held ... but
also to satisfy itself on the facts adduced before it by the
employer whether the dismissal or discharge was justified.... If
the enquiry is defective or if no enquiry has been held as
required by standing orders, the entire case would be open
before the Tribunal and the employer would have to justify on
facts as well that its order of dismissal or discharge was
proper.... A defective enquiry in our opinion stands on the same
footing as no enquiry and in either case the tribunal would have
jurisdiction to go into the facts and the employer would have to
satisfy the tribunal that on facts the order of dismissal or
discharge was proper."
28-A. The reasons for allowing an employer to lead evidence before
the Tribunal justifying his action have been stated thus:
"If it is held that in cases where the employer dismisses his
employee without holding an enquiry, the dismissal must be
set aside by the Industrial Tribunal only on that ground, it
would inevitably mean that the employer will immediately
proceed to hold the enquiry and pass an order dismissing the
employee once again. In that case, another industrial dispute
would arise and the employer would be entitled to rely upon
the enquiry which he had held in the meantime. This course
would mean delay and on the second occasion it will entitle
the employer to claim the benefit of the domestic enquiry. On
the other hand, if in such cases the employer is given an
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opportunity to justify the impugned dismissal on the merits
of his case being considered by the tribunal for itself and that
clearly would be to the benefit of the employee. That is why
this Court has consistently held that if the domestic enquiry is
irregular, invalid or improper, the tribunal may give an
opportunity to the employer to prove his case and in doing so
the tribunal tries the merits itself. This view is consistent with
the approach which industrial adjudication generally adopts
with a view to do justice between the parties without relying
too much on technical considerations and with the object of
avoiding delay in the disposal of industrial disputes.
Therefore, we are satisfied that no distinction can be made
between cases where the domestic enquiry is invalid and
those where the enquiry has in fact been held."
29. The rights of an employer to avail itself of an opportunity to
satisfy the Tribunal by adducing evidence, when an enquiry held by
it was found to be defective or when no enquiry at all has been
held, have been stated in State Bank of India v. R.K. Jain [(1972) 1
SCR 755] as follows:
"It should be remembered that when an order of punishment
by way of dismissal or termination of service is effected by
the management, the issue that is referred is whether the
management was justified in discharging and terminating the
service of the workman concerned and whether the workman
is entitled to any relief. In the present case, the actual issue
that was referred for adjudication to the Industrial Tribunal
has already been quoted in the earlier part of the judgment.
There may be cases where an inquiry has been held preceding
the order of termination or there may have been no inquiry at
all. But the dispute that will be referred is not whether the
domestic inquiry has been conducted properly or not by the
management, but the larger question whether the order of
termination, dismissal or the order imposing punishment on
the workman concerned is justified. Under those
circumstances it is the right of the workman to plead all
infirmities in the domestic inquiry, if one has been held and
also to attack the order on all grounds available to him in law
and on facts. Similarly the management has also a right to
defend the action taken by it on the ground that a proper
domestic inquiry has been held by it on the basis of which the
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order impugned has been passed. It is also open to the
management to justify on facts that the order passed by it was
proper. But the point to be noted is that the inquiry that is
conducted by the Tribunal is a composite inquiry regarding
the order which is under challenge. If the management
defends its action solely on the basis that the domestic inquiry
held by it is proper and valid and if the Tribunal holds against
the management on that point, the management will fail. On
the other hand, if the management relies not only on the
validity of the domestic inquiry, but also adduce evidence
before the Tribunal justifying its action, it is open to the
Tribunal to accept the evidence adduced by the management
and hold in its favour even if its finding is against the
management regarding the validity of the domestic inquiry. It
is essentially a matter for the management to decide about the
stand that it proposes to take before the Tribunal. It may be
emphasised, that it is the right of the management to sustain
its order by adducing also independent evidence before the
Tribunal. It is a right given to the management and it is for the
management to avail itself of the said opportunity."
(Emphasis supplied)
10. The entire law was again considered by a 3-judge Bench of the
Supreme Court in the case of Engineering Laghu Udyog Employees Union
Vs. Judge, Labour Court and Another, reported in 2003 (12) SCC 1 and it
was held as under :-
"10. In Workmen v. Motipur Sugar Factory (P)
Ltd. [Workmen v. Motipur Sugar Factory (P) Ltd., AIR 1965 SC
1803 : (1965) 3 SCR 588] this Court held: (AIR p. 1808, para 11).
11. It is now well settled by a number of decisions of this
Court that where an employer has failed to make an enquiry
before dismissing or discharging a workman it is open to him
to justify the action before the Tribunal by leading all
relevant evidence before it. In such a case the employer
would not have the benefit which he had in cases where
domestic inquiries have been held. The entire matter would
be open before the Tribunal which will have jurisdiction not
only to go into the limited questions open to a Tribunal
11 MP-7383-2025
where domestic inquiry has been properly held (see Indian
Iron & Steel Co. Ltd. v. Workmen [AIR 1958 SC 130 : 1958
SCR 667] ) but also to satisfy itself on the facts adduced
before it by the employer whether the dismissal or discharge
was justified. We may in this connection refer to Sasa Musa
Sugar Works (P) Ltd. v. Shobrati Khan [AIR 1959 SC 923 :
1959 Supp (2) SCR 836] , Phulbari Tea
Estate v. Workmen [AIR 1959 SC 1111 : (1960) 1 SCR 32]
and Punjab National Bank Ltd. v. All India Punjab National
Bank Employees' Federation [AIR 1960 SC 160 : (1960) 1
SCR 806] . These three cases were further considered by this
Court in Bharat Sugar Mills Ltd. v. Jai Singh [(1962) 3 SCR
684 : (1961) 2 LLJ 644] and reference was also made to the
decision of the Labour Appellate Tribunal in Ram Swarath
Sinha v. Belsund Sugar Co. [1954 LAC 697] It was pointed
out that 'the important effect of omission to hold an enquiry
was merely this: that the Tribunal would not have to consider
only whether there was a prima facie case but would decide
for itself on the evidence adduced whether the charges have
really been made out'. It is true that three of these cases,
except Phulbari Tea Estate case [AIR 1959 SC 1111 : (1960)
1 SCR 32] , were on applications under Section 33 of the
Industrial Disputes Act, 1947. But in principle we see no
difference whether the matter comes before the Tribunal for
approval under Section 33 or on a reference under Section 10
of the Industrial Disputes Act, 1947. In either case if the
enquiry is defective or if no enquiry has been held as
required by Standing Orders, the entire case would be open
before the Tribunal and the employer would have to justify
on facts as well that its order of dismissal or discharge was
proper. Phulbari Tea Estate case [AIR 1959 SC 1111 : (1960)
1 SCR 32] , was on a reference under Section 10, and the
same principle was applied there also, the only difference
being that in that case there was an enquiry though it was
defective. A defective enquiry in our opinion stands on the
same footing as no enquiry and in either case the Tribunal
would have jurisdiction to go into the facts and the employer
would have to satisfy the Tribunal that on facts the order of
dismissal or discharge was proper."
The employer, thus, has got a right to adduce evidence before the
Tribunal justifying its action, even where no domestic inquiry
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whatsoever has been held.
11. Yet again in Workmen v. Firestone Tyre & Rubber Co. of India
(P) Ltd. [(1973) 1 SCC 813 : 1973 SCC (L&S) 341 : (1973) 3 SCR
587] this Court while interpreting the provision of Section 11-A of
the Act held that in terms thereof, the management need not
necessarily rely on the materials on record as while introducing
Section 11-A of the Act, the legislature must have been aware of
the decisions of this Court which are operating in the field for a
long time. This Court enunciated several principles bearing on the
subject and, therefore, it held that it was difficult to accept that the
expression "materials on record", used in the proviso to Section 11-
A was set at naught. The Court formulated the propositions of law
emerging from the decisions rendered by this Court, the relevant
portions whereof are as under: (SCC pp. 827-28, para 32)
"32. From those decisions, the following principles broadly
emerge:
(1)-(3)***
(4) Even if no enquiry has been held by an employer or if the
enquiry held by him is found to be defective, the Tribunal in
order to satisfy itself about the legality and validity of the
order, has to give an opportunity to the employer and
employee to adduce evidence before it. It is open to the
employer to adduce evidence for the first time justifying his
action, and it is open to the employee to adduce evidence
contra.
(5)***
(6) The Tribunal gets jurisdiction to consider the evidence
placed before it for the first time in justification of the action
taken only if no enquiry has been held or after the enquiry
conducted by an employer is found to be defective.
(7) It has never been recognised that the Tribunal should
straight away, without anything more, direct reinstatement of
a dismissed or discharged employee, once it is found that no
domestic enquiry has been held or the said enquiry is found
to be defective.
(8)***"
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Even in Firestone case [(1973) 1 SCC 813 : 1973 SCC (L&S) 341 :
(1973) 3 SCR 587] no distinction, thus, has been made between a
defective inquiry and no inquiry.
(emphasis
supplied)
11. Therefore in view of the above, even if the very charge-sheet was
held to be incompetent by CGIT, the CGIT was not required to mechanically
set-aside the order of termination and on account of absence from duties, a
Industrial Dispute had obviously arisen and the CGIT was required to decide
the industrial dispute and therefore, no fault can be found in the CGIT
granting opportunity to the respondents to prove misconduct by adducing
evidence before CGIT.
12. So far as the contention made by the respondent-workman that
the petitioner-employer was granted opportunity to lead evidence before the
Labour Court, it is seen that the Labour Court had framed point of
determination that whether the termination of service is legal and valid and to
what relief the workman is entitled. The Labour Court did not frame any
issue that as to whether there has been any domestic enquiry or whether the
domestic enquiry has been lawful. Once it was clear to the Labour Court that
no domestic enquiry had been conducted, then the issue was required to be
framed that whether the workmen has committed a misconduct and the
employer had to be given opportunity to lead evidence as to the factum of
misconduct like the employer would have led in the domestic enquiry. This
important procedural step, which is required in cases of industrial disputes,
has been skipped by the Labour Court.
13. Consequently, the impugned award passed by the Labour Court
cannot be upheld. The case is remanded back to the Labour Court to take
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evidence as to the allegation of misconduct against the respondent workmen
and then to decide the matter afresh expeditiously.
14. In the above terms, the impugned award dated 31.01.2025 is set
aside and the petition is allowed.
(VIVEK JAIN)
JUDGE
rj
