The Industrial Employment (Standing Orders) Act, 1946

Introduction

The Labour Investigation Committee (1946) observed as follows before

the enactment of the Industrial Employment (Standing Orders) Act, 1946.
“An Industrial worker has the right to know the terms and conditions under
which he is employed and the rules of discipline which he is employed and
the rules of discipline which he is expected to follow. Broadly speaking, in
Indian Industry the rules of service are not definitely set out, and like all
unwritten laws, where they exist the have been very elastic to suit the
convenience of employers. No doubt several large scale industrial

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establishments have adopted standing orders and rules to govern the day to
day relations between the employers and workers; but, such standing orders
or rules are merely one sided. Neither workers’ organisations nor
Government are consulted before these orders are drawn up and, more often
than not, they have given the employers the upper hand in respect of all
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disputable points”.
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Hence the Industrial Employment (Standing Orders) Act (IESO)

requires employers in industrial establishments to define with sufficient
precision the conditions of employment under them and to make the said
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conditions known to workmen employed by them.

The (IESO) Act applies to every Industrial establishment wherein one

hundred or more workmen are employed or were employed on any day of
preceding 12 months. The appropriate Government in case mine or oil field
is the Central Government.

The appropriate Government can through a notification in the Official

Gazette exempt any industrial establishment from the applicability of this
Act. This Act does not apply to the employees covered by the Civil Service
Rules.

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 Industrial establishment is defined in Section 2(e). According to the
definition, ONGC is an industrial establishment. The definition of industrial
establishment includes even a contractor employing 100 or more workmen
for fulfilling a contract with the owner of any Industrial establishments.
Section 3 of IESO Act requires the employer to submit to the Certifying
officer five copies of the draft standing orders proposed by him for adoption
in his industrial establishment. Certifying officer will be either Labour
Commissioner or Regional Labour Commissioner or any other officer notified
as Certifying Officer in the Official Gazette. Provision shall be made in the
proposed standing order for every matter set out in the schedule to the IESO
Act. The proposal shall be as far as practicable, in conformity with the

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model standing order framed under the IESO Act.

The draft standing orders so submitted shall be accompanied by a

statement giving prescribed particulars of the workmen employed in the
industrial establishment including the name of the trade union, if any, to
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which they belong. The prescribed particulars shall be:
i) total number employed
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ii) number of permanent workmen

iii) number of temporary workmen
iv) number of casual workmen
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v) number of Badlis
vi) number of Probationers
vii) number of apprentices
viii) name of the Trade Union to which workman belong

The following are the matters regarding which provisions have to be

made in the proposed standing orders:
1. Classification of workmen, eg. whether permanent, temporary,
apprentices, probationers or badlis
2. Manner of intimating to workmen periods and hours of work,
holidays, pay days and wage rates

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3. Shift working
4. Attendance and late coming
5. Conditions of, procedure in applying for, and the authority which may
grant leave and holidays
6. Requirement to enter premises by certain gates and liability to search
7. Closing and reopening of sections of industrial establishment and
temporary stoppage of work and the rights and liabilities of the
employer and workmen arising therefrom
8. Termination of employment and the notice thereof to be given by
employer and workmen
9. Suspension or dismissal for misconduct and act or omissions which
constitute misconduct

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10. Means of redress for workmen against unfair treatment or wrongful
exactions by the employer or his agents or servants

10-B: The following are the additional matters to be provided in the

Standing Orders relating to all industrial establishments:
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1. Service Record - matters relating to service card, token tickets,
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certification of service, change of residential address of workers and

record of age
2. Confirmation
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3. Age of retirement
4. Transfer
5. Medial aid in case of accident
6. Medical examination
7. Secrecy
8. Exclusive service

On receipt of the draft standing orders, the certifying officer shall

forward a copy thereof to the trade union if there is one in that industrial
establishment. Where there is no Trade Union, notice will have to be given
to the workmen by getting the draft standing orders displayed on the Notice

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Board near the main entrance. The notice served on the Trade Union or
workmen is to invite objections if any to the proposed standing orders. The
objections if any, will have to be submitted within 15 days of giving the
notice.

The Certifying Officer will have to give an opportunity of hearing to the

employer and the Trade Union or such other workers. After giving the
opportunity of hearing, he can decide whether or not any modifications or
additions are required to the proposed standing orders. In the process, the
certifying officer will have to make sure that the proposed standing order
makes provision for every matter set out in the Schedule to IESO Act. The
standing orders proposed will have to be in conformity with the IESO Act. It

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shall be the function of the certifying officer to adjudicate upon the fairness
or reasonableness of the provisions of any standing orders. The certifying
officer should enquire whether the proposed standing orders are in
accordance with the model standing orders.
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In the process of so adjudicating, the certifying officer and when the
matter is before the appellate authority, both have the power to make
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additions or deletions in the proposed standing orders and then certify the
same.
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In Bagalkot Cement Co. Ltd., v. R.K. Pathan and Others, AIR 1963 SC
439, the appellate company submitted Draft Standing Orders to the
Certifying officer, the certifying officer made certain additions to the said
draft. The draft provided that holidays with pay will be allowed or provided
for in the Factories Act, 1948 and other holidays in accordance with the law
and contract. In the standing orders as they are finally certified, the
following addition was made by the Certifying Officer:

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“The workmen shall be allowed during the course of a year:

a) Ten festival holidays with pay for the celebration of important festivals
(which will be fixed before the commencement of every calendar year
in consultation with the workmen) including the Republic day and
Independence day (26th January and 15th August) and or any other
paid holidays as may be declared and notified by the Government
from time to time. Those workmen that are required to work on
festival and National Holidays shall be given an equal number of
compensatory holidays on the day convenient to the company.
b) 15 days casual leave with wages. This will include all kinds of leave
due to sickness or any other cause.

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c) Casual leave will not be allowed for more than 3 days at a time, except
in case of sickness and emergencies at the discretion of the company.
d) Wages shall be allowed for those days remaining unavailed by the
workers at the end of the year.
e) 14 days of annual leave to all classes of workers who have put in 265
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days attendance in a year as defined in the Mines Act. This includes
statutory leave.
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All leave should be applied for only in the prescribed form. The
workmen after filling the particulars of the leave required by them shall
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hand over the same to the head of the department in which they are
working”.

The appellant Bagalkot Cement Co. Ltd., preferred an appeal to the

appellate authority under the Act. The Chief Labour Commissioner (Central)
was the appellate authority. The appellant contended that it was outside
the jurisdiction of the certifying officer to make the above listed additions.

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 The appellate authority while agreed with the view taken by the
certifying officer with the following modifications. Ten festival holidays was
reduced to Seven; casual leave was reduced to Ten days; unavailed casual
leave shall lapse at the close of the Calendar Year; Casual leave will not be
allowed to be accumulated. The Bagalkot Cement Co. Ltd., preferred special
leave petition to the Supreme Court against the Order of the appellate
authority.

In this appeal, the Supreme Court held that the certifying as well as
the appellate authority has the power to make additions or deletions to the
Standing Orders before certifying or deciding the appeal.

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Any employer, workmen, trade union or other prescribed
representative of workmen aggrieved by the Order of the Certifying Officer
can prefer an appeal to the appellate authority under Section 6 of the IESO
Act. The appeal has to be preferred within 30 days from the date of copies
of the Certified Standing Orders are sent to the employer and Trade Union /
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Workmen under Section 5(3) of the IESO Act. The appellate authority can
make amendments, additions or modifications to the certified standing
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orders. The appellate authority after deciding on the appeal shall send
copies of the same to the employer, Trade Union / workmen within seven
days of its Order. According to Section 6 of the IESO, the decision of the
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appellate authority is final. The appellate authority has no power to set

aside the Order of the Certifying Officer. He can conform or amend or delete
something from the Standing Orders.

In India, judicial review is a basic structure of the Constitution.

Hence, review of decisions of the Constitutional courts cannot be taken
away by any legislation. Hence, from the decision of the appellate authority
either file a writ petition before the jurisdictional High court or a Special
leave petition can be filed before the Supreme Court. This is because the
appellate authority will be acting as a Tribunal.

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 The Certifying Officer as well as the appellate authority will have the
powers of a Civil Court with respect to the following matters: receiving
evidence, administering oaths, enforcing the attendance of witnesses and
compelling the discovery and production of documents. They will be deemed
as Civil courts for the purpose of Sections 345 and 346 of the Code of
Criminal Procedure.

Clerical or arithmetical mistakes in any order passed by a Certifying

Officer or appellate authority or errors arising therefrom or any accidental
slip or omission may at any time be corrected by that officer or authority or
the successor in the Office of such officer or authority as the case may be.

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Once finally certified, no oral evidence having the effect of or adding to
or otherwise varying or contradicting such standing orders be admitted in
any court.

Date of operation of Standing Orders :

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If no appeal is preferred from the decision of the Certifying officer, the
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certified standing orders will come into operation on the expiry of 30 days
from the date on which the certifying officer sent the authenticated copies.
In case an appeal is preferred, the certified standing orders will come into
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operation on the expiry of seven days after the appellate authority sends the
copies to the employer and Trade Union / Workmen.

A copy of the Standing Orders as finally certified under this Act shall
be filed by the Certifying Officer in a register in the prescribed manner
maintained for the purpose. The certifying officer shall furnish a copy
thereof to any person applying therefor on payment of the prescribed fee.

The text of the Standing Orders as finally Certified under this Act
shall be prominently posted by the employer in English and in the language
understood by the majority of his workmen on special boards to be

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maintained for the purpose at or near the entrance through which the
majority of the workmen enter the industrial establishment. The displaying
shall also be done in all departments where the workmen are employed.

Modification of Standing Orders :

Once finally certified, the Standing orders will come into operation as
mentioned earlier. Once in operation, it cannot be modified for a period of
six months. This is subject to the provision that by agreement between the
employer and the Trade Union / workmen, modifications can be made even
within the period of six months.

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The procedure for modification is similar to that of getting a certified
standing order, except that, in case of modification the proposal can come
either from the employer or from the Trade Union / workmen.

Interpretation of Standing Orders :

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If any question arises as to application or interpretation of certified
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standing orders, the employer or trade union / workmen may refer the
question to a labour court constituted under the Industrial Disputes Act and
a Gazette notified to have jurisdiction by the Central Government. The
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labour court after hearing the parties concerned will decide the question.
The decision is final as per the Act, but going by the Constitutional law, the
decisions of the labour court are subject to judicial review. If parties are not
satisfied with the decision of the labour court, they can go to the High court
under Arts. 26 & 227 of the Constitution.

Penalties:

An employer who fails to submit the draft standing orders as required

under Section 3 of this Act or modifies the Standing orders without following
the prescribed procedure under this Act will be punishable with a fine which

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may extend to Rupees five thousand. In case of continuing office with a
further fine which may extend to Rupees two hundred for every day during
which the offence continues. If violation continues even after imposing the
fine, then comes the imposing of further fine for continuing offence.

An employer who contravenes the Provisions of the Certified Standing

Orders shall be punishable with a fine of Rupees one hundred and in case of
a continuing offence, with a further fine of twenty five rupees for every day of
continuing the offence.

Payment of subsistence allowance:

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Where any workmen is suspended by the employer pending
investigation or inquiry into complaints or charges of misconduct against
him, the employer shall pay to such workman subsistence allowance:-

i) At the rate of 50% of the wages which the workman was entitled to
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immediately preceding the date of such suspension for the first ninety
days of suspension.
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ii) At the rate of 75% of such wages for the remaining period of
suspension if the delay in completion of disciplinary proceedings
against such workmen is not directly attributable to the conduct of
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such workman.

If a dispute arises regarding payment of subsistence allowance, it

shall be referred to the labour court like a reference made regarding
interpretation of standing orders. If the rules regarding payment of
subsistence allowance under any other law applicable to the workman is
more favourable to the workman, then the Provisions of such other law shall
be applicable to the workman and not the standing orders, the payment of
subsistence allowance as per the model standing orders shall be subject to
the workman not taking up any employment during the period of
suspension.

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Recovery of subsistence allowance:

According to the model standing orders, when an order of dismissal is

passed against the workman, the workman shall be deemed to have been
absent from duty during the period of suspension and shall not be entitled
to any remuneration for such period and the subsistence allowance already
paid to him shall be recovered.

Termination of employment:

According to Rule 13 of the model Standing orders for terminating a

permanent workman, notice in writing shall be given either by the employer

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or the workman - one month’s or two week’s pay as the case may be paid in
lieu of notice.

In Central Inland Water Transport Corporation Ltd., v. Brojo Nath

Ganguli, (1986)2 LLJ 171 SC, Rule 9(i) of the Service Discipline and Appeal
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Rules of the Corporation provided that the employment of a permanent
employee shall be subject to termination on giving three months’ notice, on
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either side, or payment of an amount equivalent to three months basic pay

and dearness allowance in lieu thereof. The Supreme Court struck down
the rule as violative of Article 14 of the Constitution and also being void
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under Section 23 of the Indian Contract Act, as opposed to public policy. In

view of the grossly unequal position of the employer and the employees, the
Court disagreed with the argument of the Corporation that the `maturity
clause’ was duly accepted by the employees.

In O.P. Bhandari v. Indian Tourism Development Corporation Ltd.,

(1986)2 LLJ 509 S.C., the Supreme Court struck down Rule 31(iv) of the
Indian Tourism Development Corporation Conduct, Discipline and Appeal
Rules, 1978, providing for the discharge of an employee from service by
giving notice for a specified period of time or salary in lieu thereof. The
Supreme Court said that this rule cannot co-exist with Article 14 of the

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Constitution of India. The said rule must die, so that the Fundamental
Right guaranteed by the aforesaid constitutional provisions remained alive.
If the rule is not struck down, then the Fundamental rights can be made
meaningless by framing rule by the employer.

The Supreme Court further observed in the above case that employees
can be categorised into three categories:- `Blue Collar or Workmen, `White
Collar’ or Clerical Staff and `Gold Collar’ or the managerial cadres. With
respect to the `blue collar’ and `white collar’ employees, the Court
unreservedly applied the rule laid down in the Central Inland Water
Transport Corporation case, as discussed earlier. With respect to the `gold
collar’ the managerial cadres, the court made a distinction between the

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private sector and public sector employees. It noticed that the managerial
cadres of the private sector undertakings were not governed either by the
Provisions of the Industrial Disputes Act or the Constitutional or Statutory
Provisions. Hence such employees are free to cut the dead wood and can
get rid of managerial cadre employee in case he is considered to be wanting
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in performance or in integrity. But with respect to the managerial cadre,
employees employed by the public sector undertakings, the court noticed
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the impediments of Arts. 14 and 16 of the Constitution.

The law stated in the above cases has been affirmed by the
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Constitutional bench consisting of five judges in Delhi Transport Corporation

v. DTC Mazdoor Congress (1991)1 LLJ 395 SC. In this case, the Supreme
Court struck down Rule 9(b) of the Delhi Transport Corporation, which
provided for termination of employment by giving one months’ notice or pay
in lieu thereof.

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Whether an employee can be suspended pending criminal investigation
or criminal trial :

Yes, according to the model Standing orders. The model standing

order can be incorporated into the Certified Standing Order. A workman
may by order in writing suspended with effect from such date as may be
specified in the Order. A statement setting out in detail the reasons for such
suspension shall be supplied to the workmen within a week from the date of
suspension. A workman who is placed under suspension shall be paid
subsistence allowance in accordance with the Provisions of Section 10A of
the IESO Act.

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If on completion of the criminal proceedings, the workman has been
found to be not guilty of any of the charges framed against him, he shall be
deemed to have been on duty during the period of suspension and shall be
entitled to the same wages as he would have received if he had not been
placed under suspension after deducting the subsistence allowance paid to
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him for such period.
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Can the departmental proceedings and criminal proceedings go on

simultaneously ?
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The answer is probably no. While making a decision to stay the

departmental proceedings and pending criminal proceedings the facts and
circumstances of the case must be assessed.

In Cap. M. Paul Anthony v. Bharath Gold Mines Ltd., AIR 1999 SC

1416, the appellant was a Security officer. A raid was conducted by the
Superintendent of Police at the house of the appellant from where a mining
sponge gold ball weighing 4.5 grams and 1276 grams of “gold bearing sand”
were recovered. The same day, First Information Report was lodged at the
Police Station and a criminal case registered. The appellant was placed
under suspension by the respondent. The respondent issued a charge sheet

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proposing a regular departmental enquiry. The appellant made a
representation to the Disciplinary authority denying the allegations made
against him. He prayed for dropping the departmental proceedings initiated
against him or in the above alternative, postpone the departmental
proceedings till the conclusion of criminal proceedings launched against
him. The representation of the appellant was rejected and he was ordered to
appear in the departmental proceedings as already intimated to him.

The petitioner did not attend the enquiry. He sent letters saying that
he could not attend the enquiry because of ill health and financial
difficulties. The Management placed him ex-parte, continued the
departmental proceedings and the appellant was dismissed from service on

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7th June, 1986. Subsequently on 3rd February 1987 the Criminal Court
acquitted the appellant with the categorical finding that the prosecution had
failed to establish its case.

The appellant wrote to the respondent Management with a copy of the

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Criminal Court judgment and requested the management to reinstate him.
The Management rejected the request. At this stage, the appellant
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approached the High court. The writ petition was allowed by a single judge
of the High court with the finding that the departmental proceedings and the
criminal case being based on the same set of facts, the departmental
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proceedings should have been stayed till the result of the criminal case and
since in the criminal case the appellant has already been acquitted, the
respondents could not legally refuse reinstatement or the consequent back
wages to the appellant while directing reinstatement of the appellant, the
High court gave liberty to respondents to initiate fresh proceedings against
the appellant after perusing the judgement passed in the criminal case.

Against the above judgement, the respondents preferred an appeal to

the division bench and the division bench of the High court set aside the
judgment of the single judge. Hence this appeal before the Supreme Court.
Before the Supreme Court, the following arguments were submitted. The

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Counsel for the appellant contended that the basis of action in both cases
namely, departmental proceedings and criminal case was the same. Hence,
the departmental proceedings were liable to be stayed as the facts and
evidence in both the proceedings were common. It may be noted here that
the appellant was also not paid subsistence allowance during the period of
his suspension.

The Counsel for the respondents contended that the respondents were
under no obligation to stay the departmental proceedings, as the level of
proof in both the proceedings is different. The purpose with which the
departmental proceedings are conducted is not identical with the purpose of
the criminal case.

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After hearing both Counsels, the Supreme Court made the following
observations: “There is consensus among the various decisions of the High
Courts and the Supreme Court, on the basic principle that proceedings in a
criminal case and the departmental proceedings can be proceeded
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simultaneously with a little exception. As we understand, the basis for this
proposition is that proceedings in a criminal case and the departmental
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proceedings operate in distinct and different jurisdictional areas. The little

exception may be where the departmental proceedings and the criminal case
are based on the same set of facts and the evidence in both the proceedings
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is common without there being a variance. We add that if the case is of a

grave nature or involves questions of fact or law, which are not simple, it
would be advisable for the employer to avail the decision of the Trial court,
so that the defence of the employee in the criminal case may not be
prejudiced.

In this case, the Supreme Court referred to many of its earlier decision
relating to the facts of this case. The following were the conclusions
deduced from those cases:

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i) Departmental proceedings and proceedings in a criminal case can
proceed simultaneously as there is no bar in their being conducted
simultaneously, though separately;
ii) If the departmental proceedings and the criminal case are based on
identical and similar set of facts and the charge in the criminal case
against the delinquent employee is of grave nature which involves
complicated questions of law and fact, it would be desirable to stay
the departmental proceedings till the conclusion of criminal case;
iii) Whether the nature of charge in a criminal case is grave and whether
complicated questions of fact and law are involved in that case, will
depend upon the nature of offence, the nature of the case launched
against the employee on the basis of evidence and material collected

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against him during investigation or as reflected in the charge sheet;
iv) The facts mentioned at (ii) and (iii) above cannot be considered in
isolation to stay the departmental proceedings, but due regard has to
be given to the fact that the departmental proceedings cannot be
unduly delayed;
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v) If the criminal case does not proceed or its disposal is being unduly
delayed, the departmental proceedings even if they were stayed on
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account of the pendency of the criminal case, can be resumed and

proceeded with so as to conclude them at an early date, so that if the
employee is found not guilty, his honour may be vindicated and in
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case he is found guilty, administration may get rid of him at the

earliest.

In the present case, since the facts and evidence in both the
proceedings, namely, the departmental proceedings and the criminal case
were the same, without there being any iota of difference, the distinction
which is usually drawn as between the departmental proceedings and the
criminal case on the basis of approach and burden of proof, would not be
applicable to the instant case.

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 In this case, the Supreme Court upholding the single judge’s order,
also held that in the peculiar circumstances of the case that the appellant
underwent the agony since 1985, we would not direct any fresh
departmental inquiry to be instituted against the appellant on the same set
of facts.

Procedure for disciplinary action

The model standing orders under the IESO Act provides for
disciplinary action for misconduct. The employer will have to list the
misconducts in the proposed Standing Orders, which will eventually be
certified by the Certifying Officer subject to the procedure for certification.

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The model standing orders mentions some of the misconducts. What is the
procedure to be followed is not elaborated in the model standing orders. It
is not found in any legislation, but developed by the judiciary over a period
of time. Not following the procedure as developed by the judiciary will
amount to be violation of the Principles of Natural Justice. Such an enquiry
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will be set aside by the labour court or any other body having powers to
review the validity of the domestic enquiry procedure. In a number of cases,
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the Supreme Court has said that domestic enquiry is not an empty
formality, but an essential condition to the legality of disciplinary action.
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In Sur Enamel and Stamping Works Ltd., v. Their Workmen (1963) 2

LLJ 367 SC, the Supreme Court has held that an inquiry cannot be said to
have been properly held unless
i) the employee proceeded against has been informed clearly of the
charges levelled against him;
ii) the witnesses are examined in the presence of the employee in respect
of the charge;
iii) the employee is given a fair opportunity to cross examine witnesses;
iv) the workman is given a fair opportunity to examine witnesses
including himself in his defence if he so wishes on any relevant
matter; and

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v) the inquiry officer records his findings with reasons for the same in
his report.
The following fare the steps that we came across in a domestic inquiry:

Preliminary inquiry :
This is an investigation conducted by the employer to satisfy himself
about the genuineness of the complaint against any employee. This is
optional. This does not form part of the procedure of domestic inquiry. The
depositions of the witnesses in this investigation, if any or the reports of the
investigators are meant merely for ascertaining whether there is any prima
facie case justifying initiating of disciplinary proceedings. Generally this is
carried on without involving the delinquent employee. If reports of the

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preliminary are used against the delinquent employee, the employee must
be given copies of the preliminary report and he must have an opportunity
of defending himself against such reports. In Tata Engineering and
Locomotive Co. Ltd. v. S.C. Prasad (1969)2 LLJ 799, it was held that if the
preliminary reports on the strength of which the charge against the
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workman are founded, do not form part of the evidence before the inquiry
officer and are not relied on for arriving at the findings of the domestic
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enquiry officer, it is not obligatory on the employer to disclose them and the
omission to disclose them would not be a non-observance of the rules of
natural justice in the course of domestic inquiry.
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Charge sheet :
The domestic enquiry commences with the service of charge sheet.
The delinquent employee must be clearly, precisely and accurately informed
of all charges levelled against him. It is the duty of employer to indicate to
the delinquent employee not only the precise nature of the charges, but also
the documents, if any upon which the charges are based. Copies of all such
documents must be furnished to the delinquent employee. If the documents
are bulky, the delinquent employee must be given the opportunity of going
through the documents and making notes or copies of the relevant parts.
The employer cannot justify his action on any ground other than those

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contained in the charge sheet. Vague charge sheet will not be in conformity
with the Principles of Natural Justice.

Service of notice :
Normally the standing orders of the Industrial establishment provide
for mode of service of notice of disciplinary proceedings in addition to postal
communication. There are generally rules providing for service of charge
sheet by affixing the same on the company’s notice board. In G. Mekenzie
and Co. Ltd. v. Workmen (1959)1 LLJ 285 SC, the employer affixed the notice
of inquiry against the concerned workman both inside and outside the
company’s premises and also sent registered notices to the concerned
workmen, out of which some came unserved. The employees request for

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supplying the address of the concerned was also did not elicit any reply. In
these circumstances, the Supreme Court held that the resulting inquiry was
valid and proper. But in Bata Shoe Co. Pvt. Ltd. v. D.N. Ganguly (1961)1 LLJ
303 SC, the standing orders did not provide for affixing the charge sheet on
the notice boards of the company. In the absence of this, when the
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registered notices came back unserved and the inquiry was held ex-parte,
the Supreme Court held that there was no proper service of notice. In the
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given circumstances, the proper course could have been publishing the
notices in the individual names of the concerned workmen in same
newspapers in the regional language with wide circulation in the area.
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Suspension pending inquiry

The employer may suspend the employee pending the inquiry.

However, there is no hard and fast rules regarding this. It is a managerial
prerogative. If suspended, during the period of suspension, subsistence
allowance will have to be paid as it has already been discussed in the earlier
pages.

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Inquiry Officer

It is for the employer to appoint the inquiry officer. He may be an

insider or outsider. If the certified standing orders provide the mode of
appointment, then the inquiry officer will have to be appointed accordingly,
otherwise it will be a managerial function. The management can appoint
anybody as inquiry officer. In Capstan Meters (India) Ltd. v. Judge, Labour
Court, (1991) 2 LLJ 290 Raj, the relevant standing orders provided that in
case of a major misconduct the inquiry against the delinquent workman will
be held by `an officer’ of the company appointed for the purpose. But the
impugned enquiry was held by an advocate instead of an officer of the
company. A single judge of the Registrar High court held that the inquiry is

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invalid, because the certified Standing Orders were binding on the employer
as well as the employee.

In Associated Cement Co. Ltd. v. Their Workmen (1963)2 LLJ 396 SC, it
was held that though domestic inquiries need not be conducted in
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accordance with the technical requirements of criminal trials, they must be
fairly conducted and in holding them considerations of fair play and natural
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justice must govern the conduct of the inquiry officer. The principle that
justice must not only be done, but must manifestly and undoubtedly be
done applies with equal force to domestic inquiries just as it applies to the
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quasi-judicial, administrative and judicial tribunals.

The prevalent view in that the mere fact that the inquiry officer is an
employee of the management cannot lead to an assumption that he was
bound to decide the case in favour of the management - held in Delhi Cloth
and General Mills Co. Ltd. v. Labour Court, (1970)1 LLJ 23 SC. Likewise the
fact that the inquiry officer was subordinate to the disciplinary authority
would be no ground for holding that he acted malafide - held in Ajit Singh v.
Kirpal Singh, 1973 Lab. IC 376 Dec. The mere fact that the inquiry officer
happened to be a shareholder of the company will not lead to the inference
of bias - held in Shanker Savalaram Ambedkar v. Shakthi Insulated Wires

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Pvt. Ltd. (1988)2 LLJ 416 (Bom). The fact that employers lawyer conducted
the inquiry would not vitiate the inquiry. But it is different if the lawyer
giving opinion in the matter relating to an inquiry also conducts the inquiry.
In this situation, the inquiry will be vitiated. In Workman of Lambabri Tea
Estate v. Lambabri Tea Estate, (1966)2 LLJ 315 SC, it was held that an
inquiry cannot be said to be properly held when the person holding it begins
to rely on his own knowledge or statements. In a case, where the inquiry
officer claims to have seen the misconduct having been committed by the
workman, in all fairness, the inquiry should be entrusted to other person.

Procedure of Domestic inquiry

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The basic postulate of a domestic inquiry is that it must be fair in all
respects and should not be conducted with `evil eye’ and `uneven hand’.
The guiding principle is that the inquiry should be conducted with
scrupulous regard for the requirements of the rules of natural justice that is
without bias and by giving the delinquent employee adequate opportunity of
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representing his case.
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Steps generally taken in holding domestic inquiry by the domestic

enquiry officer
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Notice of inquiry:
In order to facilitate the workman to take part in the inquiry, the
charged workman must have notice of the day, time and place of inquiry.
Even if the workman fails to submit his reply to the charge sheet, the
inquiry officer is not absolved from his duty to send the notice to the
delinquent employee informing him about the date, time and place of
inquiry. It is to enable the workman to attend the inquiry and also to bring
the witnesses in his support if any. Non-compliance of this requirement,
would be violative of rules of natural justice. This notice should be given in
advance, so that it gives him time to prepare himself for defending him in
the inquiry. The mode of giving notice as mentioned earlier will be in the
certified Standing Orders.

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Pleadings:
The pleadings of the parties before an inquiry officer must state their
respective cases, though they may not be strictly in conformity with the
technical procedural requirements.

Representation of parties
According to the model standing orders in the inquiry, the workman
shall be entitled to appear in person and defend or be represented by an
office bearer of a trade union of which he is a member. In Dunlop Rubber Co.
(India). Pvt. Ltd., v. Their Workmen, (1965)1 LLJ 426 SC, the Standing orders
of the company provided that only a representative of the Union which was

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registered under the Trade Union Act, 1926 could represent a workman in
the domestic enquiry. The Supreme Court held that the refusal by the
inquiry officer to allow the workman to be assisted by the workmen’s own
union which was not registered did not vitiate the inquiry.
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In G.R. Venkateswara Reddy v. Karnataka State Road Transport
Corporation (1995)1 LLJ 1011 Kant), the Karnataka High court reviewed the
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earlier decisions regarding the representation of a delinquent workman

before the inquiry officer by a legal practitioner and stated the following
principles :
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a) the right to be represented by a legal practitioner is not an element of

the Principles of Natural Justice;
b) A delinquent employee will have the right to claim to be defended by a
legal practitioner, where the rules or regulations permit the employee
to be represented by a legal practitioner;
c) Where the rules or regulations are silent about representation by a
lawyer or vest discretion in the disciplinary authority or the inquiry
officer to permit the employee to be represented by a legal practitioner
or other agent of his choice, denial of such permission on a request
made by the employee, would violate the principles of natural justice -

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 i) if the presenting officer is a legal practitioner or a person legally
trained or experienced ; or
ii) if the charges are of serious and complex nature

d) Where the rules or regulations specifically prohibit the employee from

engaging the service of a legal practitioner, such rules or regulations
will be read down as vesting a discretion in the disciplinary authority
to permit the employee to engage a legal practitioner, where

i) the presenting officer is a legal practitioner or legally trained

person, or

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ii) the charges are of a serious and complex nature. If it is not so
read down, the rule itself may have to be held to be invalid as
violative of Art. 14 of the Constitution (wherever Constitution is
not applicable, that is in private sector, it will be held as
violative of Section 23 of the Contract Act, being violative of
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public policy).
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a) Where the employer granted the request of the delinquent to be

represented by a legal practitioner in the domestic inquiry, the
employer can also avail the services of a legally trained person to be
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the presenting officer.

Evidence : Rules of Natural Justice

The strict and technical rules of the Indian Evidence Act do not apply
to the domestic inquiry. The essence of a judicial approach is objectivity,
exclusion of extraneous materials. In Saxby and Famrer Co. Ltd., v. I.T.,
(1962)2 LLJ 52, the Calcutta High Court has summarised the principles of
natural justice as follows:

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i) opportunity for both the contesting parties to be heard;
ii) hearing before an impartial tribunal, so that no man can be a judge of
his own cause;
iii) decision made in good faith;
iv) an order of course of procedure

Before commencing the record, the evidence of the parties it would be fair
that the inquiry officer should explain to the delinquent employee the
charges levelled against him.

Legal evidence may be direct, that is oral evidence. As against direct

evidence, there is another type of evidence which is known as circumstantial

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evidence. In addition to these, there is documentary evidence or evidence of
material object which will form part of the direct evidence. Hearsay evidence
has no validity.

In situations where standing orders of the organization or the rules of

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the organization provide the procedure for conducting inquiry, the domestic
inquiry will have to be conducted accordingly. In cases where the Standing
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Orders or the service rules do not prescribe any procedure, the domestic
inquiries must satisfy the essential requirements of natural justice.
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In G.R. Venkateswara Reddy v. Karnataka State Road Transport

Corporation, (1995)1 LLJ 1011 Kant, the Karnataka High court after
reviewing all the earlier decisions has laid down the following requirements
of reasonable procedure subject to any special provisions contained in the
relevant rules, regulations, standing orders or a statute governing the
organization.

a) The employer shall be informed of the exact charges which he is called

upon to meet;

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b) he should be given an opportunity to explain any material relied on by
the management to prove the charges;
c) the evidence of the management witnesses should be recorded in the
presence of the delinquent employee and he should be given an
opportunity to cross-examine such witnesses;
d) the delinquent employee shall either be furnished with copies of the
documents relied on by the management or be permitted to have
adequate inspection of the documents relied on by the management;
e) the delinquent employee should be given the opportunity to produce
relevant evidence - both documentary and oral which include the right
to examine self and other witnesses; and to call for relevant and
material documents in the custody of the employer;

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f) whenever the inquiring authority is different from disciplinary
authority, the delinquent employee shall be furnished with a copy of
the inquiry report and be permitted to make a presentation to the
disciplinary authority against the findings recorded in the inquiry
report.
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Report of the inquiry officer
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The inquiry officer after taking the evidence adduced by the parties
and hearing the arguments has to record his findings and conclusions as to
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whether the misconduct is proved or not. Since the inquiry officer’s findings
are likely to lead to the punishment of the employee, it is the duty of the
inquiry officer to record clearly and precisely his conclusions and indicate
briefly his reasons for reaching the conclusion. The failure of the inquiry
officer to record his findings and conclusions at the end of the inquiry would
render the inquiry invalid and the tribunal will be justified in ignoring the
inquiry. The findings of an inquiry officer must be supported by legal
evidence. If the findings are based on irrelevant or extraneous matters, the
inquiry will be set aside.

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Show cause notice before imposing punishment
This is not a requirement of Industrial law. It arises with respect to
those cases covered under Art. 311 of the Constitution. In Associated
Cement Companies Ltd., v. T.C. Srivastava (1984)2 LLJ 105 SC, the Supreme
Court pointed out that no doubt in Industrial law, it is not necessary to give
second opportunity, to show cause to the workman against the proposed
punishment, but this does not mean that the requirement of such
opportunity cannot be provided in the service rules, regulations or standing
orders of an undertaking.

If a provision for a show cause notice is made in the Standing orders

which have been certified under the Industrial Employment (Standing

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Orders) Act, 1946, the requirement of show cause notice against the
punishment would be statutory and would not be a `mere idle formality’. In
cases, where a standing order, service rules provides for a show cause
notice, apart from the show cause notice, the rules of natural justice require
that the report of the inquiry officer along with the record of the inquiry
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proceedings and any other relevant material must be furnished to the
workman. In the absence of such material, it may not be possible for the
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workman to show cause that the inquiry was not fair or valid. It will also
help him in requesting for lesser punishment keeping in mind his past track
record.
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The model Standing Orders made under the Employment Standing

Orders Act, 1946, requires a second notice. Rule 4(c) of the IESO Module
Standing Orders requires issuing of the second notice proposing the
punishment to the workman. “If on the conclusion of the inquiry or, as the
case may be, of the criminal proceedings, the workman has been proved
guilty of the charges framed against him and it is considered, after giving
the workman concerned, a reasonable opportunity of making representation
on the penalty proposed, that an order of dismissal or suspension or fine or
stoppage of increments or reduction in rank would meet the ends of justice,
the employer shall pass an order accordingly.

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 In awarding the punishment, according to the model standing orders,
the authority imposing the punishment shall take into account the gravity of
misconduct, the previous record, if any, of the workman and any other
extenuating or aggravating circumstances, that may exist. A copy of the
order passed by the authority imposing the punishment shall be supplied to
the workman concerned.

A workman aggrieved by an order of imposing punishment may within

21 days from the date of receipt of the order, appeal to the appellate
authority.

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The employer shall, for the purpose of above clause, that is preferring
appeal, specify the appellate authority. The appellate authority after giving
an opportunity to the workman of being heard shall pass such orders as he
thinks proper on appeal within 15 days of its receipt and communicate the
same to the workman in writing.
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The Order of dismissal or discharge as punishment finally imposed by
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the employer on the workman may be questioned before the Labour court.
In the Labour court, the concerned workman may challenge the domestic
enquiry as biased and improperly conducted. In such a situation, the
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labour court will have to decide the validity of the domestic enquiry as
preliminary issue. If the domestic enquiry is held to be valid, then the
Labour court will proceed to adjudicate on the quantum of punishment
imposed and whether the punishment is reasonable /proportionate under
the given facts and circumstances. The labour court will exercise the hours
as mentioned in Sec. 11-A of the Industrial Dispute Acts, 1947.

If the labour court finds that the domestic enquiry is conducted is not fair
and proper or biased, will set aside the enquiry. If the employer requests to
lead fresh enquiry before the labour court against the allegation of
misconduct made against the workman, it will be allowed as per the

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decisions of the Supreme Court. In such situation, the workman also will be
given an opportunity to lead his version of the evidence.

There may also be situations where an employer may have dismissal or

discharged a workman without conducting departmental / domestic
enquiry. In such situations also, if the workman in question challenges
such dismissal or discharge before a labour court, the employer can ask the
labour court for giving permission to lead evidence in support of the
punishment. Imposing punishment without conducting an enquiry may
amount to an unfair labour practice which is an offence under the Industrial
Disputes Act, 1947.

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