Delhi Cloth and General Mills Ltd. v. Kushal Bhan

FACTS

• The appellant, Delhi Cloth and General Mills Ltd., employed the respondent, Kushal Bhan, as a peon.

• A criminal case was filed against the respondent alleging the theft of a cycle.

• While the criminal case was pending, the company served a charge-sheet on the respondent and proceeded with a domestic inquiry.

• The employee refused to participate in the domestic inquiry, citing the pending criminal trial.

• The company completed the inquiry ex parte, found the charges proven, and dismissed the respondent.

• The company then applied to the Industrial Tribunal for approval of the dismissal under Section 33(2) of the Industrial Disputes Act, 1947.

• Crucially, the respondent was acquitted by the criminal court on 8-4-1958, shortly before the Tribunal heard the approval application. The Tribunal refused to approve the dismissal order.

ISSUES

1. Whether the principles of natural justice require that an employer must wait for the decision of the criminal trial court before taking disciplinary action.

2. Whether the Tribunal was justified in refusing to grant approval under Section 33(2) of the Industrial Disputes Act, 1947.

JUDGEMENT

• The apex court allowed the appeal filed by the Company and set aside the order of the Tribunal, thereby granting approval to the order dismissing the respondent.

OBSERVATION & MANAGERIAL PREROGATIVE

This judgment is a landmark ruling on Managerial Prerogative concerning the timing of disciplinary action, reinforcing the distinction between criminal and domestic proceedings.

1. No Legal Bar for Simultaneous Proceedings

• The Court delivered a foundational principle: "It cannot be said that principles of natural justice require that an employer must wait for the decision at least of the criminal trial court before taking action against an employee."

• This upheld the employer's prerogative to maintain discipline by allowing domestic and criminal proceedings to go on simultaneously.

2. Advisability of Deferment (The "Grave Nature" Test)

• While not mandatory, the Court stated that it would be advisable for the employer to await the decision of the trial court if the case is of a grave nature or involves questions of fact or law which are not simple. The purpose of this advice is to prevent the defence of the employee in the criminal case from being prejudiced.

3. Application to the Facts

• The Court found that the present case (theft of a bicycle) was one of a very simple nature.

• Therefore, the Company could not be blamed for holding the inquiry while the criminal case was pending, and since the employee chose not to participate, "no fault can be found with that enquiry."

• The Tribunal "patently erred" and lost sight of the limits of its jurisdiction under Section 33(2) by denying approval. Under Section 33(2), the Tribunal's jurisdiction is limited to checking:

  1. If a prima facie case for misconduct is established.

  2. If a proper domestic inquiry was held.

  3. If one month's wages were paid/tendered.