A two-judge Bench of Justice Ajay Rastogi and Justice Abhay S. Oka has held that the decision of the management in a domestic enquiry cannot be overturned on ipse dixit by the Labour Court and that its decision should not be based on mere hypothesis.

An appeal was preferred by the Appellant-Bank against the judgment of the Allahabad High Court which had upheld the award of the Tribunal reinstating the Respondent-workman with full back wages.

In this case, the Respondent-workman was charged with alleged gross misconduct in the discharge of his duties. A departmental enquiry was conducted and the Respondent was held guilty and was dismissed from services.

The Tribunal reversed the findings of the enquiry and held that the Appellant-Bank had failed to establish the charges against the Respondent-workman. Tribunal had set aside the order of dismissal and directed the Appellant-Bank to reinstate the Respondent-workman in service with full back wages. The High Court dismissed the Writ Petition of the Appellant Bank.

The Appellant argued before the Supreme Court that the Tribunal did not have the power to interfere within the scope of Section 11-A of the Industrial Disputes Act, and the Tribunal converted itself into a Court of Appeal. While the Respondent argued that the incident with respect to which the domestic enquiry was held had never occurred and that action was taken against him because he was an active member of a union.

The Apex Court after considering the contentions of the parties held that the Tribunal after reappraising the record of domestic enquiry held it to be proper and fair, had very limited scope to interfere in the domestic enquiry.

The Court held that the Tribunal converted itself into a Court of Appeal as an appellate authority and exceeded its jurisdiction.

"While appreciating the finding recorded in the course of domestic enquiry and tested on the broad principles of charge to be proved beyond reasonable doubt which is a test in the criminal justice system and has completely forgotten the fact that the domestic enquiry is to be tested on the principles of preponderance of probabilities," the Court observed.

The Bench opined, "The Tribunal has completely overlooked and exceeded its jurisdiction while interfering with the finding recorded during the course of enquiry in furtherance of which, the respondent was dismissed from service and the High Court has also committed a manifest error while passing the judgment impugned."

The Court further observed, "Judicial discretion, it is trite, cannot be exercised either whimsically or capriciously. It may scrutinize or analyse the evidence but what is important is how it does so."

While allowing the appeal, the Court held that no recovery shall be made in reference to payment which was made to the Respondent-workman by the Appellant-Bank during the interregnum period.