Employer employee relationships are considered one of the most sacrilegious bonds which hang on the delicate balance of trust. Actions of an employee can have far reaching implications on the functioning, reputation and future of an employer, therefore, the agreed contracts of service, codes of discipline, agreements, standing orders and other applicable legal codes must be adhered to. Keeping a check on actions of its employees is at the core of an employer’s functioning. To avoid conflicts of interest and realize maximum productivity, an employer must imbibe the necessary qualities of a ‘disciplinarian’. The Hon’ble Supreme Court of India (“SCI”) has unequivocally recognized the importance of giving suitable powers to managers to punish a workman in accordance with law, even if the punishment may causesome temporary hardships.
Thus, in case of non-compliance with applicable rules, an employee would be liable to face disciplinary actions initiated by the management.
Private vs Public Employment – Domestic Inquiry and Departmental Inquiry
The management/ disciplinary authority usually appoints an inquiry committee which undertakes a ‘domestic inquiry’ for fact-finding and discovery of circumstances leading to the charge against an employee. The term ‘domestic inquiry’ is commonly used in connection with an inquiry against industrial or commercial workers. On the other hand, an inquiry against government servants is referred to as a ‘departmental inquiry’. There is no hard and fast rule for use of these terms and domestic inquiry in general is considered referencing both public and private employment, however, rights of public servants are carefully safeguarded and emanate from Article 311 of the Constitution of India. Article 311 of the Constitution of India provides that member of civil service shall be dismissed or removed or reduced in rank by an authority subordinate to that by which he is appointed. Further, Article 311(2) mandates that such members of civil services shall not be dismissed, removed or reduced in rank unless: (i) An inquiry is held; (ii) Such civil servant is informed of the charges against him; (iii) He is provided with an opportunity to defend himself. The requirement of providing a reasonable opportunity of hearing in such inquiries incorporates the principles of natural justice – an inclusive concept that encompasses various rights of fair hearing. Violation of principles of natural justice thus enable the Courts to set aside the disciplinary proceedings on grounds of bias and procedural defects. Simply put, the rule of ‘hire and fire’ does not hold for government servants.
However, no such provision under the Constitution of India is available for industrial or commercial workers in the private sector. The requirement of holding of a domestic inquiry in the private sector is laid down by respective standing orders framed under the Industrial Employment (Standing Orders) Act, 1946 (“IESO”). 
The Model Standing Orders of respective states under the aegis of IESO requires termination of service of workmen on grounds of misconduct to be preceded by a properly constituted inquiry. These Model Standing Orders provide detailed procedures for disciplinary proceedings and action in case of misconduct by a workman. The provisions of Model Standing Orders along with applicable company policies are required to be adhered to before taking action against the erring employee.
Further, the Shops and Establishment Acts (applicable to both workmen and non-workmen) of various states also lay down the requirement of a notice or payment in lieu thereof, before termination of an employee. This requirement to provide notice may be avoided only if the services of the concerned employee are dispensed with on a charge of misconduct supported by satisfactory evidence recorded at an inquiry held for the same. Therefore, under law, it is imperative that adequate inquiry involving fair opportunity to the employee to defend the charges against him, must be conducted prior to dismissal.
Nature and Importance of Domestic Inquiry
Domestic enquiries are quasi-judicial in nature. A domestic inquiry is not a judicial proceeding and the law and procedure applicable to judicial proceedings are not strictly applicable. The Inquiry Officer(s) in a domestic hearing need not strictly follow the rules of procedure of a court or apply the provisions of the (Indian) Evidence Act, 1972 (“Evidence Act”) or the Code of Civil Procedure, 1908 as such and his/her report is not binding on the punishing authority. While a court trial is for crimes against the society, a domestic inquiry is conducted for offences committed against the employer/ establishment on account of misconduct, breach of employment agreement, etc., punishable in terms of rules and regulations of the organization, contract of the employment and/ or under the statutory provisions.
Thus, domestic inquiry has obtained a considerable significance in industrial adjudication. The SCI has also stressed upon the importance of holding an inquiry before an employee, against whom such action is initiated, before an order of dismissal is passed, otherwise it may run a risk of seeming a mere formality. In D.K. Yadav v. J.M.A. Industries, the SCI linked the significance of domestic inquiry to the right to livelihood, which is a part of the right to life enshrined under Article 21 of the Constitution. The Court, therefore, observed that there is a requirement that a reasonable opportunity is provided to an employee before putting an end to his or her tenure.
Principles of Natural Justice
The growing importance of human rights and equality has mandated the employer to operate in a just and fair manner with his employees, given the tilt of balance in favour of the former in employer-employee relationship. Therefore, it is a matter of paramount importance for employers to undertake domestic enquiries in consonance with the principles of natural justice.
The aim of the rules of natural justice is to secure justice and “minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial or quasi-judicial authority” while making an order affecting those rights. The basic tenets of principles of natural justice relevant for domestic enquiries, include:
Nemo debet esse judex in propria causa – No man shall be judge in his own cause and the case must be heard by an impartial tribunal.
Audi alteram partem – Every person must have a reasonable notice of the case he has to meet if his civil rights are affected, and should get the opportunity to be heard to defend himself.
The authority must act fairly and reasonably and not arbitrarily.
These rules operate only in areas not covered by any law validly made. Thus, principles of natural justice do not supplant the law but supplement it. In the landmark case of Meenglas Tea Estate v. The Workmen, the SCI dealt with a case of dismissal of workmen by a private company, and laid down the following principles before dismissal of an employee for cause:
“(a) A person who is required to answer a charge must know not only the accusation but also the testimony by which the accusation is supported.
(b) He must be given a fair chance to hear the evidence in support of the charge and put such relevant questions by way of cross-examinations as he desires;
(c)He must be given a chance to rebut the evidence led against him. Therefore, this is a bare requirement of a fair inquiry;”
If this procedure is not meticulously followed, the punishment imposed, if challenged, could be quashed by the courts.
Other Salient Features of Domestic Inquiry
Function of the Inquiry Officer: The Inquiry Officer is a quasi-judicial authority appointed by the company, as part of the machinery for collecting facts and materials, for basing its conclusions. The Inquiry Officer should:
try to comply with all rules and regulations very meticulously and give enough opportunities to the delinquent employee, to ensure that the principles of natural justice are not contravened;
be sensitive and should extend a helping hand to the delinquent employee in explaining the procedure and giving him/her due facilities and assistance to participate in the inquiry, consistent with his/her understanding and ability;
not have any bias or prejudice and has to be objective as far as possible and receptive to the ideas and arguments put forward by the defence.
Time, Date and Place of Inquiry Should be Informed: Venue and mode of the domestic inquiry may ordinarily be determined by the company or the Inquiry Officer. However, if the venue fixed is such that it may cause hardship to the delinquent employee, adequate support in the form of inter alia an allowance should be given to the concerned employee. Further, the venue should be determined in a manner such that the principles of natural justice are not violated and the delinquent employee is in a position to adequately defend their case.
Recording of Minutes of Proceedings: The minutes of the entire proceeding/ testimonies of all parties should be recorded in a language based on the preference of the employee, and signed by each party and their witnesses (if any), preferably on the same day.
Audio and Video Recording of Proceedings: Proceedings of the inquiry shall also be video and audio-graphed for the purpose of evidence. Such tape recordings and video recordings are admissible in evidence under the Evidence Act. However, consent of the individuals being recorded should be obtained. In the event the employee refuses to give consent, the same may also be recorded and thereafter the inquiry proceedings should continue without it being video-recorded. The recording and contents thereof would have some bearing on the determination of the employee’s guilt, and therefore the same would be required to be provided to the employee at the time of the Inquiry Report, in pursuance of the principles of natural justice.
Right to Representation of Employee Including through a Lawyer: The employees have a right to be assisted in the inquiry proceedings by another workman of his choice, or an office bearer of a trade union of which the workman may be a part. However, the employees do not have an express right of representation through another person or a lawyer unless any of the service rules of the company specifically provide for the same. However, such right representation shall also pass the pertinent natural justice test of whether the denial of an opportunity to engage an advocate for representation would result in the denial of reasonable opportunity to an employee to show cause?. Courts in India have held that the right of a delinquent employee to be allowed legal representation depends upon the necessity of such a move for the conduct of a fair trial. Factors such as the evidence involved, the level of complication etc. have to be considered while considering a request for legal representation. Further, in the event an employer introduces a legally trained person to be part of the inquiry from the employer’s end, disallowing legal representation to the delinquent employee upon their request, may vitiate the entire proceedings since the same would be in contravention of the principles of natural justice.
Right to Representation of Employer: An employer may also appoint an employee as a management representative, to present the case of the company and to enable the Inquiry Officer to give his findings regarding the charges against the workman. We would recommend that someone who is well versed with the present proceedings and can effectively represent the case of the company is appointed as the representative. Once the representative is appointed, intimation regarding the same can also be sent to the Inquiry Officer.
Production and Inspection of Documents: All documents relied upon by an employer/ Inquiry Officer are required to be made available to the workman. The principles of natural justice firmly establish that no materials should be utilized against a charge-sheeted employee unless it is disclosed to him/her and he is given an opportunity to explain or rebut the same. If a document even if mentioned in the charge-sheet, is not relevant to the charges or is not relied upon by the Inquiry Officer in upholding the charge against the delinquent employee, it may be permissible to not supply a copy of such a document to the delinquent employee.
Production of Witnesses and Cross-Examination: It is the duty of the Inquiry Officer to ask the employee as well as the company representative if they wish to bring forth any witnesses to support their case. The Inquiry Officer should al so inform the employee that he has a right to cross-examine the company representative and witnesses, if any. Similarly, the company representative will have a right to cross examine the charge sheeted employee and his witnesses as well.
Right to Inquiry Report: Upon conclusion of the inquiry, the Inquiry Officer should notify the parties timelines within which the Inquiry Report setting out the findings of the Inquiry Proceedings, will be provided to the employee and the company, simultaneously.  The Inquiry Report would set out the findings of the Inquiry Officer together with cogent reasons for the same, before being submitted to the company.
Decision on Disciplinary Action and Show-Cause Notice: The decision on sanction(s) imposed, should take into account: (i) the gravity of misconduct; (ii) previous record of the employee, if any; (iii) and any other extenuating or aggravating circumstances that may exist. One or more of the following disciplinary actions may be taken against the employee including: (i) Penalty/Fine; (ii) Stoppage of increment and reduction of pay; (iii) Demotion in rank; (iv) Suspension from services; (v) Termination. The employee should be served with a show-cause notice giving him a reasonable opportunity of making representation against the proposed sanctions.
Disciplinary Action/Termination by the employer: Depending on the response received, the employer must communicate to the concerned employees that their response has been found to be unsatisfactory. Accordingly, the employer may proceed with the necessary sanctions against the employer, as determined, immediately.
Impact of Improper Domestic Inquiry, Evidentiary Value and Powers of Labour Court
Fairness and impartiality lie at the core of a domestic inquiry. If the domestic inquiry is not held in consonance with the principles of natural justice, providing the employee with reasonable opportunities, it may be a valid ground for a “tribunal to discard the findings of domestic Inquiry”.
Under the IDA, “industrial dispute means any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person.” Thus, in case of an improper domestic inquiry, a workman can make an application to the labour court/ tribunal for adjudication of the dispute. Such an application has to be made before the expiry of period of three years from the date of termination of service.
However, failure to conduct a domestic inquiry or a ‘proper’ domestic inquiry, does not automatically render an employer’s decision ‘illegal’ on this ground alone. An employer always has the opportunity to justify its actions before the labour court by leading evidence before it. In such a scenario, the entire matter would be open before the tribunal to decide whether the dismissal or discharge was justified, and it will have the jurisdiction to satisfy itself on the facts adduced before it by the employer.
As a general rule, an Inquiry Officer’s report and finding holds prima facie evidentiary value before Court. The SCI in State of Rajasthan & Ors. v. Heem Singh, reiterated that a labour court or tribunal cannot substitute its own appraisal of the evidence for that of the officer conducting the domestic enquiry. Rather, the Court is only required to determine and ensure whether the finding in a disciplinary enquiry is based on some evidence and an initial or threshold level of scrutiny is undertaken.
It has been pointed out by the courts that the findings of an Inquiry Report could be said to be perverse and disregarded in evidence only if it can be shown that such finding is unsupported evidentiarily or is contrary to all the evidence adduced. The finding of domestic tribunal cannot be held to be perverse or liable to be disregarded only on the ground that it could have possibly reached a different conclusion based on the evidence produced.
Further, when there is a dispute as to what happened before a court or tribunal, the records of the Inquiry Officer under the Inquiry Reports and statements of the Inquiry Officer in regard to it is generally taken to be correct and true in evidence, unless it can be shown that there was any reason or motive for the Inquiry Officer to give false evidence.
Once an award is made by a labour court or tribunal it is thereafter regarded to be final and cannot be called in question by any court in any manner whatsoever. The IDA does not prescribe any statutory remedy by way of an appeal to the award rendered by the labour court or tribunal. However, the parties may approach the High Court in its writ jurisdiction seeking a judicial review of the decision of the labour court or tribunal. The order passed by the High Court may further be challenged before the SCI in a Special Leave Petition.
Impact of Section 11-A of IDA on Relevance of Domestic Inquiry
Section 11A of the IDA introduced in 1971 gives broad powers to labour courts, tribunals and national tribunals to discharge or dismiss the workmen if it is satisfied that the order was not justified. Certainly, Section 11A reduces the importance of a domestic inquiry, inasmuch as the labour court has been granted broad appellate court powers along with the authority to undertake a full-blown inquiry and appreciation of evidence, even where no domestic inquiry has been conducted.
The SCI in the landmark case of Workmen of Firestone Tyre & Rubber Co. of India (P) Ltd. v. The Management of Firestone Tyre & Rubber Co. of India (P) Ltd  laid down the broad principles regarding the holding of an inquiry. The SCI held that even if no Inquiry has been conducted by an employer or if the inquiry is found to be defective, the tribunal will have to give an opportunity to the employer and employee to adduce evidence before it, in order to satisfy itself about the validity of the order.
A full bench of the SCI in the recent case of The State of Uttarakhand v. Sureshwati has reiterated that:
“the important effect of omission to hold an Inquiry 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.”
Thus, it is no longer res-integra that domestic inquiry before dismissal of a workmen is not sine qua non in all cases. As elucidated above, in the absence of a disciplinary inquiry before termination, both the employee and the employer have to adduce evidence before the labour court/tribunal who will examine the evidence and decide the dispute in accordance with law.
Although no statute or law specifically lays down the procedure to conduct the disciplinary inquiry, the Model Standing Orders applicable to different states as well as judicial pronouncements on principles of natural justice have laid down guiding principles to be followed in conduct of domestic inquires. The very concept of domestic inquiry is formed on the basis of principles of natural justice; primarily the protection of rights of the workers in the era of industrial disputes. However, time and again courts have faced scenarios where the basic principles of natural justice are disregarded by the employer or the inquiry committee, in reaching a conclusion against an employee. An inquiry committee is appointed by the employer himself, also does not often inspire the confidence of the delinquent workmen.
Over time, legislation and judicial interpretation has progressively given wider powers into the hands of labour courts itself. Section 11-A of the IDA itself provides extensive powers to the tribunals or labour courts followed by appeal before the High Court. In cases where employer conducts inquiry and concludes existence of misconduct: the tribunal is empowered to re-apprise the evidence and arrive at its own conclusion one way or the other. In doing so, the tribunal can (i) hold that the domestic inquiry was proper or defective; and/or (ii) agree or disagree with the employer’s finding of a misconduct and in a proper case hold that no misconduct is proved; and/or (iii) where misconduct is proved, the disciplinary action is proportionate or disproportionate to the misconduct committed. Further, in cases where disciplinary action is carried out without inquiry or defective inquiry, the tribunal once again allows both, the employer to justify his action and the employee to negate employer’s justification.
Resultantly, the significance of domestic inquiry held within the industries is decreasing. This has led to significant overburdening of labour court and tribunals over oftentimes, trivial and internal company issues.
A paradigm shift in independence of domestic enquiries would go a long way in restoring industrial harmony and discipline in India. The need of the hour is constitution of a panel comprising retired judges, labour law practitioners etc. armed with quasi-judicial powers to hold enquiries. Inquiry officers appointed from such government/ court approved panel would inspire confidence and would reduce frivolous cases requiring interference of labour courts. Domestic inquiries are a boon for the workmen, industries and the society; if they are conducted as they ought to be.
 Hombe Gowda Educational Trust v. State of Karnataka, 2006 (1) SCC 430.
 Article 311, Constitution of India, 1950 – “Dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State
(1) No person who is a member of a civil service of the Union or an all India service or a civil service of a State or holds a civil post under the Union or a State shall be dismissed or removed by a authority subordinate to that by which he was appointed
(2) No such person as aforesaid shall be dismissed or removed or reduced in rank except after an inquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges Provided that where it is proposed after such inquiry, to impose upon him any such penalty, such penalty may be imposed on the basis of the evidence adduced during such inquiry and it shall not be necessary to give such person any opportunity of making representation on the penalty proposed…”
 See for details, I P Massey, Administrative Law (2003), pp.161-212.
 Khem Chand v Union of India, AIR 1958 SC 300.
 Section 3: “Submission of draft standing orders.—
(1) Within six months from the date on which this Act becomes applicable to an industrial establishment, the employer shall submit to the Certifying Officer five copies of the draft standing orders proposed by him for adoption in his industrial establishment…”
 See, for example: Section 22, The Punjab Shops and Commercial Establishments Act, 1958 – “Notice of removal. – (1) No employee shall be removed from service unless and until one month’s previous notice or pay in lieu thereof has been given to him:
Provided that –
(a) no employee shall be entitled to the notice or pay in lieu thereof if he is removed on account of misconduct established on record;
(b) No employee shall be entitled to one month’s notice or notice pay unless and until he has been in the service of the employer continuously for a period of three months.”
 Roop Singh Negi v. Punjab National Bank and Others, 2009 2 SCC 570.
 Mohd. Yunus Khan v. State of U.P. and Ors., (2010) 10 SCC 539.
 Venkataraman v. Union of India, AIR 1954 SC 375.
 D.K. Yadav v. J.M.A. Industries, 1993 SCR (3) 930.
 Mukhtar Singh v. State of U.P, AIR 1957 All 297, 301; D.K. Yadav v. JMA Industries Ltd. 1993 GLH (2) 174.
 See: Meenglas Tea Estate v. The Workmen, AIR 1963 SC 1719.
 Roop Singh Negi v. Punjab National Bank and Others, 2009 SCC 2 570.
 Wainganga Bahu-Uddeshiya Vikas Sanstha and Ors. v. Diwakar and Ors. 2012 SCC OnLine Bom 1414; Annasaheb Dattatreya Sandbhor v. Garware Wall Ropes Ltd. and Ors. (2002) IV LLJ 708 Bom.
 Ram Prakash Pal v. Chairman, U.P.S.R.T.C. & Others, WRIT – A No. – 38264 of 1996 before the Hon’ble Allahabad High Court.
 P. Gopalakrishnan v. State of Kerala, AIR 2020 SC 1; Burhanuddin Bukhari v. Brijmohan Ramdas Mehra & Ors. 1976-2 SCC 17; Ram Singh & Ors. v. Col. Ram Singh, 1985 SCR Supl. (2) 399.
 Management of National Seeds Corporation Ltd., v. K. V. Rama Reddy, 2007 II LLJ 30.
 Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkarni and Others, 1983 AIR SC 109.
 Union of India v. Rajan Kumar Mohalik, (2000) 3 Cur LR 117 (Bom).
 R.v. Architects Registration Tribunal, 1945 (2) All ER 131.
 Chandrama Tewari v. Union of India AIR 1988 SC 117.
 Ram Prakash Pal v. Chairman, U.P.S.R.T.C. & Others, WRIT – A No. – 38264 of 1996 before the Hon’ble Allahabad High Court.
 Union of India v. Mohd. Ramzan Khan, (1991) 1 SCC 588, 596.
 Dadra & Nagar Haveli v. Gulabhia M Lad, (2010) 5 SCC 775.
 Tata Oil Mills v. Workmen, AIR 1965 SC 155.
 Section 2A (1), Industrial Disputes Act, 1947.
 Section 2(k), Industrial Disputes Act, 1947.
 Section 2A (2), Industrial Disputes Act, 1947.
 Section 2A (3), Industrial Disputes Act, 1947.
 Workmen of Motipur Sugar Factory Private Ltd. v. Motipur Sugar Factory, (1965) 3 SCR 588.
 State of Rajasthan & Ors. v. Heem Singh, 2020 SCC OnLine SC 886.
 Narinder Mohan Arya v. United India Insurance Co. Ltd., (2006) 4 SCC 713.
 Doom Dooma Tea Co. Ltd. v. Workmen Of Daimukhia Tea Estate, (1960 IILLJ 56 SC).
 Union of India v. T.R. Varma, 1958 SCR 499.
 Section 17(2), Industrial Disputes Act, 1947.
 Workmen of Firestone Tyre & Rubber Co. of India (P) Ltd. v. The Management of Firestone Tyre & Rubber Co. of India (P) Ltd, (1973) 1 SCC 813.
 The State of Uttarakhand v. Sureshwati, (2021) 3 SCC 108.
This article has been authored by Ms. Radhika Dubey, Partner at Cyril Amarchand Mangaldas and Mr. Aman Singhania, former Associate at Cyril Amarchand Mangaldas. This blog is a part of RSRR’s Excerpts from Experts Blog Series, initiated to bring forth discussion by experts on contemporary legal issues.