INDIA Trends and Developments Contributed by: Preetha Soman, Madhur Khandelwal and Aishwarya Maria Manjooran, JSA Advocates & Solicitors
does not permit findings based on no evidence or surmises. Consequences of flawed process The financial risks of botched investigations were highlighted by the Karnataka High Court in Septem - ber 2025 in M/s Jet Airways (India) Pvt. Ltd. v Prashant Rao (Writ Petition No. 15526 of 2017). In a wrongful termination case, the court awarded significant back wages (INR1.3 million plus interest) to an employee because the internal inquiry violated principles of nat - ural justice. The court dismissed the writ petition and restored the order of the Central Government Admin- istrative Tribunal-cum-Labour Court (“Tribunal”). Nota - bly, the Court confirmed the payment of back wages as per the Tribunal’s order, despite the company’s insolvency proceedings, treating it as a priority due, especially due to the fact that the company was not under liquidation at the time when the impugned order was passed by the Tribunal. Acquittal is not reinstatement: employer autonomy in disciplinary action The Supreme Court case of Airports Authority of India (AAI) v Pradip Kumar Banerjee (2025 INSC 149) is essential for understanding the differences between departmental and criminal investigations and how acquittal from one does not void the other. The core ruling establishes that an employee’s acquit - tal in a criminal court, even on serious charges like corruption, does not automatically entitle them to rein - statement if the employer’s internal inquiry finds them guilty. Accordingly, it was held that acquittal in a crimi - nal case does not automatically invalidate termination for the same facts if the internal inquiry followed the due process and thereafter dismissed the employee from employment. The judgment underscored that the internal discipli - nary process of an establishment relies on the “pre - ponderance of probabilities”, which is a significantly lower legal threshold than the principle of “beyond a reasonable doubt” which is required for a criminal conviction. Furthermore, the court clarified that evidence, such as confessional statements made to the Central Bureau
of Investigation, even if excluded from a criminal trial, can be admissible in the departmental inquiry. The judgment serves as a powerful validation of an employer’s right to maintain discipline and integrity by confirming that courts cannot re-evaluate the evidence of a domestic inquiry unless the finding is deemed perverse or violates fundamental principles of law. The Labour Codes 2025: institutionalising inquiries With the enactment of the four Labour Codes, India is at a cusp of a total and complete revamp of its labour law landscape. A key change is the introduction of formal grievance redressal systems. With the notification of the Industrial Relations Code, 2020 (“IR Code”), the landscape of internal investiga - tions has shifted from “good practice” to “statutory mandate”. The new law has formalised two critical pillars of workplace justice: the Grievance Redressal Committee (GRC) and the standardised disciplinary inquiry process to be followed in case of misconduct by employees. GRC Section 4 of the IR Code mandates that every industri - al establishment employing 20 or more workers must constitute a GRC, thereby democratising access to formal dispute resolution. The erstwhile law, ie, the Industrial Disputes Act, 1947, did provide for the crea - tion and constitution of a GRC in the workplace in a specified manner, but employers were permitted to side-step the requirements stipulated under the Act, if they had another grievance redressal mechanism already in place at the organisation. This essentially translated into many organisations setting up redres - sal mechanisms in the manner they deemed fit, which was not often robust. The IR Code, on the other hand, does not provide any such relaxations or exemptions to establishments and now requires a GRC to be constituted in a spe - cific manner, by each establishment that employs 20 or more “workers” (that is, non-managerial-level employees). The GRC must consist of an equal num - ber of members representing the employer and the workers, subject to other requirements as provided under the IR Code. Notably, the chairpersonship must
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