NEW SHORROCK MILLS vs MAHESHBHAI T. RAO

The Supreme Court held that under Section 79 of The Bombay Industrial Relations Act, 1946, the Labour Court can set aside a discharge order if it finds the inquiry was conducted legally and with natural justice, but it cannot substitute the punishment unless the penalty is found to be disproportionate. The Court upheld the Labour Court's finding of misconduct against the employee but ruled that reinstatement with back wages was not justified given the severity of the misconduct. The appeal was dismissed, affirming the Labour Court's decision to reinstate the employee with reduced back wages.