Domestic Inquiry in Industrial Employment: Procedural Fairness and Disciplinary Action

Introduction

In the realm of industrial employment, a domestic inquiry refers to an internal investigation conducted by an employer into allegations of misconduct against an employee. Such inquiries are crucial for employers to address actions that have caused harm to the organization and to take appropriate disciplinary action. While not explicitly mandated by substantive labour laws, the requirement for a domestic inquiry is firmly established through certified Standing Orders framed under the Industrial Employment (Standing Orders) Act, 1946, which are recognized as having statutory force.

Understanding Domestic Inquiry

A. Definition

A domestic inquiry is a proceeding conducted by the employer, often through their officers, to investigate alleged misconduct by an employee. Its primary purpose is to ascertain the truth of the allegations and determine if disciplinary action is warranted.

B. Legal Basis and Distinction from Court Trials:

While employers generally possess the inherent right to initiate disciplinary action against an employee for misconduct, there is no inherent legal duty for an employer to conduct a domestic inquiry unless specifically required by the Standing Orders applicable to that industry. However, once provided for in Standing Orders, these terms become statutory conditions of employment, creating a de facto legal requirement.

It is important to distinguish a domestic inquiry from a court trial. A court trial addresses crimes against society under codified procedural laws (e.g., BNSS, C.P.C., or BSA), whereas a domestic inquiry addresses offenses against the establishment punishable under its Standing Orders or internal rules. Domestic inquiries are quasi-judicial proceedings governed by uncodified principles of natural justice, rather than strict technical legal procedures.

Furthermore, unlike a court, the inquiry officer in a domestic inquiry is not authorized to impose a penalty or punishment. That authority rests solely with the employer or the designated disciplinary authority.

C. Domestic vs. Departmental Inquiry:

The term ‘domestic inquiry’ specifically applies to inquiries against industrial or commercial workers. In contrast, inquiries against Government servants are termed ‘departmental inquiries’. A key difference lies in the constitutional safeguards; public servants benefit from protections under Article 311 of the Constitution, which are not available to industrial workers.

Object and Necessity of Domestic Enquiry

The object of the domestic enquiry is five-fold:

Domestic enquiry is one of the modes to settle disputes amicably and to establish peace in the industry, which in turn develops production.
The domestic enquiry has quasi-judicial characteristics. Therefore, the principles of natural justice apply to the domestic enquiry. It gives a fair opportunity to the employee to answer the allegations.
It saves the time and expenses of the regular courts.
The employer is also put in a safe position from the criticism of the employees, if the domestic enquiry is conducted properly.
It also works as a threat to other employees. It is a ‘safety valve’ for the employees, so that they will not do any misdeeds against the industry.

The purpose of a domestic enquiry is to find out the truth of the allegations made against the workman.

Although an improper or defective enquiry, or even no enquiry into the alleged misconduct of the employee, does not per se render the adverse action against the employee illegal, a valid domestic enquiry goes a long way in justifying the action against the employee. Thus, an employer is expected to conduct a proper enquiry by the Standing Orders and the principles of natural justice, which would, to a large extent, thwart the charge of arbitrary or mala fide action by the employer.

Concept of Misconduct

The term ‘Misconduct’ has not been defined either in the I.D. Act or the Industrial Employment (Standing Orders) Act. The Supreme Court has characterized it as “improper or wrong behavior, unlawful behaviour or transgression of a definite rule of action or code of conduct.” It may involve moral turpitude but does not include mere error of judgment, carelessness, or negligence in duty performance.

Misconduct can be broadly categorized into:

Work-related: E.g., non-performance of duty, unauthorized absence, disregard of safety procedures.
Discipline-related: E.g., disobedience of lawful orders, striking work or inciting strikes, go-slow tactics, gherao.
Integrity-related: E.g., theft, fraud, dishonesty, providing false information.

Procedure for Conduct of Domestic Enquiry & Applicability of Natural Justice Principles

A proper domestic inquiry, preceding any termination of service, must strictly adhere to the rules of natural justice (State Bank of India v R.K. Jain AIR 1972 SC 136). Natural justice encompasses principles designed to ensure fairness in adjudicatory processes, including:

Rule Against Bias (Nemo debet esse judex in propria causa): No one should be a judge in their cause. This requires impartiality from the inquiry officer, who must not have any personal interest or be a complainant, witness, or investigator in the case. The decision-maker should not be influenced by ulterior motives. (Meenglas Tea Estate v Its Workmen, 1963; Associated Cement Co. Ltd. v Their Workmen, 1963).
Right to Fair Hearing (Audi alteram partem): No one should be condemned unheard. This principle ensures the employee has notice of the charges, an opportunity to present their case, correct or contradict prejudicial statements, and for relevant documents to be disclosed.
Reasoned Decisions/Speaking Orders: Parties are entitled to know the reasons for decisions.
Availability of Documents: Relevant documents must be disclosed to the parties.

By applying these principles to the domestic enquiries in disciplinary proceedings, it becomes clear that a domestic enquiry must not be a mere formality, which means that the employee must not be pre-judged and the sentence pre-determined, with the enquiry just validating the action of the employer on the alleged misconduct of the employee in question. It may be noted that the application of the principles of natural justice has no straitjacket. The application of these principles in a domestic enquiry depends upon the facts and circumstances of each case.

For a valid inquiry, the following procedural steps are well-established:

Preliminary Enquiry: It is a ‘fact-finding enquiry’, the object of which is to find out the cause of misconduct and whether there is sufficient justification for embarking on a full-fledged enquiry against a particular employee. Being informal, it does not call for the observance of any specific rules of natural justice.
Charge-sheet: Framing of charges is the most crucial stage in the entire proceedings because the success of any disciplinary case depends primarily on the soundness of the charges. Charges should be specific and precise based upon the statement of allegations and ought to be related to the misconduct specified under the service rules or the certified standing orders applicable to the establishment. The idea is that a workman to be proceeded against must know exactly what allegation and what charges he is required to meet.
In dealing with the merits of a case, the employer should confine himself to the charge-sheet served by him to the employee. If the alleged misconduct of the employee has no relation to the charge framed against him, the enquiry in respect of such charge is nothing more than a pretext to punish him for something else and therefore it would amount to victimization, as held in the case of Mackenzie & Co. Ltd. v Its Workmen (1959) I LLJ 285 (SC).
Appointment of Un-biased Enquiry Officer: While the rule against the same person being prosecutor and judge is not strictly applied as in criminal jurisprudence, the inquiry officer must conduct a fair inquiry. They must be impartial, unbiased, and not personally involved as a party or witness to the dispute. Witnesses to the incident should not act as inquiry officers, and the inquiry officer cannot rely on their knowledge or evidence as held in the case of Associated Cement Co. Ltd. v Their Workmen, 1963 II LLJ 396 (SC).
Notice: It is a principle of natural justice that ‘no one should be condemned behind his back.’ Thus, the charge-sheeted employee should know what is alleged against him. And he should have a reasonable opportunity and time to defend himself. Therefore, a notice of enquiry must be served on the workmen, giving the time, date of the enquiry together with the name of the enquiry officer. A notice of enquiry must be given to the workman with sufficient time so that he can prepare the answer and arrange evidence, if any.
In the case of D.C. & Gen. Mills v Theyivir, AIR 1972 SC 2128, it was held that where a workman was served with hardly 24 hours notice, before conducting enquiry against him and he was refused a reasonable time required for preparation of his defence and effective cross-examination, the resulting enquiry suffers from gross violation of the principles of natural justice.
Presence of Workman (Audi alteram partem): It is proper to conduct the domestic inquiry in the presence of the affected workman. All documents and evidence against the employee should be recorded in their presence, and they must have an opportunity to explain them. If the workman intentionally avoids the inquiry despite due notice, an ex parte inquiry may be conducted. Evidence taken in one inquiry against one workman generally cannot be relied upon in a separate inquiry against another without allowing the latter to test it through cross-examination, as held in the Associated Cement Co. Case. While workmen are not entitled to unlimited adjournments, refusal to grant a reasonable adjournment to lead evidence may vitiate the inquiry (Tata Oil Mills Co. Ltd. v Workmen (AIR 1965 SC 155)).
Documents and Disclosure of Materials: It is the duty of the management to submit all copies of necessary documents concerning the allegation. Before reliance can be placed on any document, it must be supplied to the person charged for his information, comments, and criticism, and also for rebuttal by him, if at all. Therefore, the workman should be given a reasonable opportunity to inspect the documents and, thus, to put forth his case. Thus, these should be supplied in advance with a list of further primary evidence to be used against him.

However, non-furnishing of a copy of the enquiry report by the disciplinary authority does not per se vitiate the punishment of dismissal and would not affect the dismissal order, as held in the case of Debotosh Pal Choudhary v Punjab National Bank, 2002 8 SCC 68.

Attendance of Witnesses: Parties are responsible for arranging the attendance of their witnesses. The inquiry officer cannot compel witness attendance (Tata Oil Mills Co. Ltd. v Workmen, AIR 1965 SC 155). However, the workman must be given a reasonable opportunity to produce their witnesses. An inquiry is vitiated if the workman is denied this opportunity or if evidence collected without their input is used against them (Associated Cement Co. v Workmen (1964); D.C. & Gen. Mills v Thejvir (AIR 1972 SC 2128)).
Right of Cross-Examination/Opportunity to Adduce Materials and Evidence: The workman shall have a right to examine and cross-examine the witnesses. In Sharda Prasad Viswakarma v State of U.P. (1968), the Apex Court held: “Examination and cross-examination of witnesses in the presence of each other strikes at the very root of procedure if it were to be governed by fair play and natural justice. Refusal to permit cross-examination is a violation of the principles of natural justice”. While an admission of guilt by the workman may obviate the need for management to lead evidence, if management still produces witnesses or evidence, the employee must be allowed to cross-examine and rebut it. If the workman explicitly declines to cross-examine despite being offered the opportunity, then a claim of denial of opportunity may not stand (Central Bank of India Ltd. v Karunamoy Banerjee (AIR 1968 SC 266)).
Representation by Lawyer/Union: The right to legal representation in a domestic inquiry is generally not recognized as an absolute legal right. However, if the employer allows it, there is no bar. In practice, trade union leaders may represent workers.

Judicial pronouncements indicate that while there’s no inherent right to a lawyer, fairness dictates consideration of the circumstances:

If the employer is represented by legally trained personnel (e.g., labour officers, legal advisers acting as presenting officers), denying the delinquent employee’s request for legal representation might violate natural justice principles, especially for serious charges (Board of Trustees, Port of Bombay v Dilip Kumar (AIR 1983 SC 109)).
Rules of a particular service may grant discretion to the inquiry authority to permit legal representation, especially for serious charges that could lead to dismissal (J.K. Aggarwal v. Haryana Seeds Dev. Corpn. Ltd. (AIR 1991 SC 1221)). In such cases, an injudicious exercise of discretion leading to failure of natural justice can be challenged.
Enquiry Report: Upon completion, the inquiry officer must submit their findings (report) to the disciplinary authority. The report should be clear, precise, and contain conclusions on all facts, circumstances, and evidence, along with brief reasons for those conclusions. The failure to record findings constitutes a serious infirmity, as it hinders proper appreciation of evidence (M/s. Kharadah & Co. Ltd. v The Workmen AIR 1964 SC 719).

Crucially, the inquiry officer should not recommend any punishment in the report. The higher management (e.g., General Manager, Director) must independently consider the findings and, if guilt is established, award appropriate and proportionate punishment according to the standing orders. If the punishment is disproportionate to the proved misconduct, it could give rise to a charge of mala fide action.

Essential Elements for a Valid Domestic Inquiry

A domestic enquiry cannot be said to have been properly held unless:

The enquiry officer should not have any personal interest in the case. He should not be related to the case either as a complainant, witness, or investigating officer.
The employee proceeded against has been informed clearly in advance of the charges levelled against him. He should be supplied in advance with a list of documentary evidence to be used against him so that he can examine it.
The charge-sheeted employee should be informed about his right to have a defence representative, i.e., a lawyer or another employee (if service rules allow so).
The witnesses are examined ordinarily in the presence of the employee in respect of the charges.
The employee is given a fair opportunity to cross-examine the witnesses.
The employee is given a fair opportunity to examine the witnesses, including himself, in defence if he so wishes on any relevant matter. A reasonable opportunity is given to the employee to lead evidence in support of his defence.
The entire enquiry proceedings should be conducted by the provisions of service rules or standing orders.
The enquiry officer records his findings with reasons for the same in his report. It must at least show that there was a proper appreciation of evidence and application of mind before passing it.
On completion of the enquiry, the enquiry officer must submit his findings (report) to the authority authorised to take disciplinary action. He should not recommend any punishment.
The higher management, such as the general manager or director, shall consider the findings, and if they find the workman guilty, award appropriate punishment according to the standing orders.
Employee should be allowed to be heard in the matter by the disciplinary authority on the quantum of punishment to be imposed.
The quantum of punishment should be commensurate with the nature of the misconduct.

Conclusion

A domestic inquiry forms an integral part of the employee misconduct investigation in India, providing a structured mechanism for employers to address employee misconduct while upholding the principles of natural justice. While its primary enforceability often stems from certified Standing Orders, the judiciary has consistently reinforced the imperative of procedural fairness and impartiality.

A properly conducted domestic inquiry, marked by clear charges, an unbiased inquiry officer, adequate notice, the right to be heard, and opportunities for defence and cross-examination, protects both the employer from allegations of arbitrary action and the employee from unfair disciplinary measures. Adherence to these well-established principles is not merely a legal formality but a fundamental requirement for maintaining industrial harmony and ensuring just and equitable outcomes in disciplinary proceedings.

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