The Bombay High Court has reaffirmed that termination of a long-serving employee without a domestic enquiry violates fundamental principles of natural justice under the Industrial Disputes Act, even where the employee admits to late attendance. The judgment clarifies that admission of misconduct does not obviate the statutory requirement of a fair hearing.
Background & Facts
The Dispute
The dispute arose from the termination of M. Thomas, a 24-year employee of Larsen & Toubro Ltd., for allegedly reporting late to duty on 35 occasions between April and June 2001. The employer issued a show cause notice on 21 September 2001, alleging habitual late attendance despite a reporting time of 8:45 a.m. Thomas responded with a detailed written explanation, asserting that while he arrived late, he consistently worked beyond duty hours without claiming overtime. He cited his contributions to bank guarantee processing, financial audits, and operational efficiency. The employer terminated his services on 2 October 2001 without conducting any domestic enquiry.
Procedural History
- 2001: Termination order issued on 2 October 2001
- 2003: Industrial dispute referred to 3rd Labour Court, Mumbai as Reference (IDA) No. 47/2003
- 2007: Labour Court set aside termination, ordered reinstatement with full backwages
- 2008: Petitioner filed Writ Petition No. 770 of 2008 before Bombay High Court
- 2009: Motion for payment of backwages withdrawn; petition remained pending
- 2026: Bombay High Court delivered judgment on 6 March 2026
Relief Sought
The petitioner sought to set aside the Labour Court’s award directing reinstatement. The respondent sought dismissal of the writ petition and enforcement of reinstatement with backwages.
The Legal Issue
The central question was whether Section 25F of the Industrial Disputes Act, 1947 permits termination of a workman with over one year of continuous service without a domestic enquiry, even if the employee admits to misconduct in a written reply to a show cause notice.
Arguments Presented
For the Petitioner
Larsen & Toubro argued that Thomas’s written reply constituted an unequivocal admission of late attendance, rendering a domestic enquiry unnecessary. Counsel relied on the employer’s right to maintain discipline and contended that repeated misconduct justified termination without procedural formalities. He emphasized that the termination order addressed the merits of the defence, implying a de facto enquiry.
For the Respondent
Thomas’s counsel contended that the show cause notice was not a chargesheet and could not substitute for a formal disciplinary proceeding. She invoked Section 25F, which mandates a domestic enquiry before termination for employees with over one year of service. She argued that Thomas’s reply was a defence, not an admission, and that termination was retaliatory, linked to his refusal to accept voluntary retirement.
The Court's Analysis
The Court examined the nature of the reply submitted by Thomas and found it did not constitute an admission of guilt. The statement, "it is clear that if I have come late, I have gone back late," was contextualized within a broader narrative of dedication, extra hours worked, and systemic irregularities in office timings. The Court held that a show cause notice cannot replace a chargesheet or a domestic enquiry under Section 25F.
"The reply of the workman is not an admission of guilt but a defence explaining the circumstances of his attendance. The employer’s failure to conduct a domestic enquiry is fatal to the termination."
The Court further noted that the termination order itself engaged with the substance of Thomas’s defence, indicating that the employer did not treat the reply as conclusive. The absence of documentary evidence, such as attendance registers or prior warnings, further weakened the employer’s case. The Court distinguished this from cases where misconduct is proven beyond doubt through irrefutable records, emphasizing that procedural compliance is non-negotiable under the IDA.
The Court also considered the length of service - 24 years - as a mitigating factor. Termination of such a long-serving employee for a non-criminal, non-violent breach of attendance policy, without any prior disciplinary action, was deemed disproportionate. The Court rejected the notion that loss of confidence alone justifies bypassing statutory safeguards.
The Verdict
The petitioner’s writ petition was partly allowed. The Bombay High Court held that termination without a domestic enquiry violated Section 25F of the Industrial Disputes Act. Reinstatement was denied, but the Court substituted it with a lump-sum compensation of Rs. 10,00,000 in lieu of backwages and reinstatement, while preserving statutory dues like provident fund and gratuity.
What This Means For Similar Cases
Domestic Enquiry Is Mandatory Under Section 25F
- Practitioners must treat Section 25F as a non-waivable procedural safeguard
- Even clear admissions in written replies do not eliminate the need for a formal enquiry
- Employers must issue a chargesheet, afford opportunity of hearing, and record findings
Compensation Can Replace Reinstatement in Long-Serving Employees
- Courts may award lump-sum compensation instead of reinstatement where the employee is near retirement
- Compensation must reflect lost wages, service tenure, and mitigating factors
- Statutory dues (PF, gratuity) remain payable separately
Late Attendance Alone Does Not Justify Termination
- Habitual late attendance, without evidence of disruption or prior warnings, is insufficient for termination
- Employers must demonstrate progressive discipline before resorting to dismissal
- Documentation of attendance, counselling, and warnings is critical for lawful termination
