Madras High Court
The Management Of Best And Crompton ... vs The Presiding Officer, Ii Addl. Labour ... on 28 July, 2004
Equivalent citations: (2005)ILLJ168MAD, (2004)3MLJ668
JUDGMENT M. Thanikachalam, J.
1. The employer/management of Best & Crompton Engineering Limited, having failed in its attempt to sustain the order of dismissal of its employee viz., the second respondent herein, before the Labour Court, as well as before the learned single Judge of this Court, has preferred this appeal, impugning the order passed by this Court in W.P. No. 10423 of 1990.
2. The facts, which are essential to dispose of the writ appeal, in brief:
(a) The second respondent in this appeal by name R. Krishnaswamy was employed as a Printing Machine Operator in the appellant's pump factory at Ambattur. At the instance of the employer, the second respondent used to get xerox copies of documents, required by various units of the company, from an instant copier, for the amounts to be paid. It seems, there was some malpractice in the preparation of bills by correcting the amount in the original voucher by the cashier, by name Ananda Mohan, in connivance with the second respondent. Therefore, it seems, the Management questioned the conduct of the second respondent, for which in a way, he had admitted the corrections in the vouchers, by the cashier, as well as the sharing of booty, after the encashment of money, on the basis of corrected bills or vouchers, as the case may be, as per the reply dated 21.12.1985. In the statutory audit also, it was noticed that cash payments for the year 1985 have been tampered and on that basis, a confidential report was submitted to the company informing that the second respondent and Mr. P. Ananda Mohan, Cashier had in collision, misappropriated the company's fund by altering the bill amounts, as per the communication dated 23.12.1985. On that basis, the second respondent has been suspended on 26.12.1985, with immediate effect.
(b) The appellant after perusing the records, ascertaining the corrections made in the vouchers, thought fit that action should be taken against the cashier, as well as the second respondent, who connived with him, thereby defrauded the company to the extent of Rs. 24,253.20, for the period from 1.1.1985 to 31.10.1985. In this way, a charge memo came to be issued to the second respondent and the cashier also, (not a party in this appeal) on 19.3.1986, for which there was a reply, denying the allegations, demanding enquiry.
(c) The appellant company conducted a domestic enquiry, as per rules, which brought to surface the guilt of the cashier as well as the second respondent. On the basis of the findings, given by the Enquiry Officer, supplying the said findings, a show cause notice was issued to the second respondent on 10.7.1986, calling for reply, in writing, as to "why the punishment of dismissal should not be imposed on you". For this show cause notice, a detailed reply, questioning the enquiry itself, has been submitted by the second respondent, which failed to satisfy the Management, considering his earliest admission, as well as the findings rendered by the enquiry officer, based on materials which proved the guilt to the satisfaction. Therefore, as per the order dated 25.7.1986, the workman viz., the second respondent Krishnaswamy was dismissed from the service of the company with effect from 29.7.1986.
(d) Aggrieved by the dismissal order dated 25.7.1986, the workman/second respondent raised an industrial dispute, before the Labour Court at Madras, in I.D. No. 372/87, praying for setting aside of the dismissal order, for reinstatement with back wages, continuity of service and other benefits, with effect from the date of suspension.
(e) The learned Presiding Officer of the Labour Court, after receiving objections from the Management, considered the case of this workman along with the industrial dispute 387/97 relating to Ananda Mohan, the cashier. The learned Presiding Officer of the Labour Court, upon consideration and going through the documents and other relevant materials, came to the conclusion, inter alia,
(i) that the domestic enquiry conducted by the appellant Management was proper and there is no violation of any rules.
(ii) that the workman and the cashier have committed misappropriation of funds, thereby defrauded the company.
(iii) The major role of misappropriation was done only by the Cashier Ananda Mohan, whereas Krishnaswamy came to the scene at the final stage, after the misappropriation was done, and
(iv) that he has no direct nexus in respect of the correction of the amount in the bills.
In this view of the matter, the Presiding Officer of the Second Additional Labour Court felt, that the punishment of dismissal of the second respondent was disproportionate and the same should be reduced. The learned Presiding Officer, invoking the powers conferred under Section 11-A of the Industrial Disputes Act, 1947, as well as considering the previous conduct of the second respondent, in not involving in any charges, set aside the dismissal order, modified the punishment, denying back wages and other benefits, ordering reinstatement in service only with continuity of service, which order came to be challenged, at the instance of the management in W.P.No.10423/1990 before this Court.
(f) In W.P. No. 10423/1990, the learned single judge concurring and confirming the findings, regarding the guilt of the second respondent viz., the misappropriation, came to the conclusion; as observed by the learned Presiding Officer of the Labour Court, the second respondent had no major role, whereas his role was only a limited one, that too, at the end or after the entire misappropriation has been completed. Though the learned Single Judge was of the firm view, that a person, who had committed misappropriation should be dealt with severely, not entitled to any leniency, however felt in this case, because of the conduct of the second respondent, he deserves some lenient punishment. In this view of the matter, agreeing with the view expressed by the first respondent, and confirming the same, he dismissed the W.P., which is under challenge in this appeal.
3. Heard the learned counsel for the appellant, Mr. S. Ravindran and the learned counsel for the respondents, Mr. S. Periasamy.
4. The learned counsel for the appellant, Mr. S. Ravindran submits, that the second respondent was the party to the manipulated, inflated bills, sharing the excess amount with the cashier, Ananda Mohan; that without the active involvement and participation of the second respondent, it was not at all possible for the cashier, to perpetuate the fraud on the company and misappropriate the company funds; that when the workman failed to enjoy or lost the confidence of the Management, no useful purpose would be served, in keeping him in service, and in this view alone, he had been dismissed from the service, which were not properly considered by the Labour Court, as well as the learned single Judge. It is further submitted that the learned Single Judge having found, that the findings of the Enquiry Officer are correct, which proved the misappropriation, should have allowed the writ petition, since a dishonest person, who lost the confidence of the company is not entitled to be retained in service, against the interest of the company. It is the further submission of the learned counsel, that ignoring the above facts which are not set aside, when the only option available in this case viz., the dismissal of the second respondent; unfortunately, the dismissal order was set aside, modifying the punishment, thereby imposing and thrusting a dishonest workman over the company, which will not be in the interest of the company, for its improvement. In this view, the main thrust of the learned counsel for the appellant is, that the orders of the learned single judge, as well as the order of the Presiding Officer, Labour Court should be set aside, restoring the dismissal order.
5. The learned counsel for the second respondent, opposing the above contentions submits, that the second respondent was working only as a Printing Machine Operator, who has no direct nexus with the cashier and in this view, had no opportunity also, to actively participate in the alleged misappropriation, in connivance with the Cashier, and considering this aspect, the role of the second respondent was very much limited, exercising the discretionary power given under Section 11-A of the Industrial Disputes Act, the learned single Judge as well as the presiding officer of the Labour Court modified the dismissal order, which deserves acceptance.
6. The appellant/management, upon prima facie satisfaction, that the second respondent had committed misappropriation, along with the cashier, issued a charge memo which reads:
"It has come to our notice that you have been getting xerox copies of documents made in a firm known as Instant Copy Centre situated at No.161, Thambu Chetty Street, Madras-1, and were obtaining bills with the value of the bill mentioned only in figures and not being written in words. After getting the signatures of the Manager, you connived with Cashier Sri Anandamohan, Roll No.B-1325 in the matter of making alterations in the bills inflating the value of the bill and got payment vouchers made by Sri Anandamohan, Roll NO.B-1325, were appropriating the excess amount. Enclosed statement shows the details of the bills, the nature of discrepancy, the figures both before and after inflation, over the name of the person who received the payment.
As a result of the above transactions, the company has been defrauded to the extent of Rs.24,253.20. The investigation in respect of Instand Copy Centre for the period 1.1.85 to 31.10.85 has been done.
When you were questioned about the discrepancy, you voluntarily gave a letter dated 21.12.85 in which you admitted the fraud and also admitted that you were doing it before with the connivance of Sri Anandamohan. Instand Copy Centre has also confirmed in writing by their letter DATED :. 12.3.86 that they received cash only for the amount actually mentioned in the bill and that they did not receive any money for the value shown in the payment vouchers. They also handed over to our representatives the xerox copy of the duplicate bills maintained by them relating to the relevant transactions.
The above allegations, if proved, would amount to misconduct as per the company's standing orders which read as follows:
1. Clause 19(d) : "Theft, fraud or dishonesty in connection with the firm's business or property".
2. Clause 19(j) : ".. any act subversive of discipline or effeciency"
You are hereby required to give your written explanation within 3 days of the receipt of this letter, failing which it will be presumed that you have no explanation to offer and such action as deemed fit will be taken against you.
7. From the reading of the above said charge, it is very clear that there was an accusation against the second respondent also, as if he had actively, physically participated in the misappropriation process. The charge further reads, the second respondent is also responsible for correcting the bills for the inflated figure, encashing the same, paid the actual value of the bill to the Instant copy center, and the balance of amount was appropriated by the cashier, as well as the workman. By going through the charge, we find no ambiguity and the delinquent viz., the second respondent was specifically informed about the charges, such as the role played by him. On the basis of the charges, domestic enquiry has been conducted. Sufficient and adequate opportunities were afforded to the workman, which brought to surface the guilt of the second respondent. Though, an attempt was made before the Labour Court, as if enquiries were not properly conducted and the joint enquiry along with the cashier was improper, that contention was not accepted by the Labour Court, as well as the learned single Judge and therefore, the same is not liable to be challenged before us. It is also not the case of the learned counsel for the second respondent before us, that the domestic enquiry was not properly conducted or opportunities were not given to defend the case etc. Therefore, the findings of the enquiry officer, which were confirmed by the presiding officer, as well as the learned single Judge, have to remain, since the same is supported by the admission of the delinquent himself, as seen from the records in an unequivocal terms. Moreover, the second respondent has admitted in his explanation dated 21.12.1985, that he used to take xerox copies at the Instant Copy Centre, hand over the bills to his Manager and thereafter, obtaining his signature, he used to hand over the same to Ananda Mohan. He has further admitted, that the accountant used to correct the voucher and they used to share the excess amount also from March 1985. He has also quantified the amount at Rs.3500/- to his share. The vouchers also would indicate, that he had received the amount, as indicated therein, whereas the said amount has not been paid to the Instant Copy Centre and paid only the actual amount as mentioned, before corrections in the bills.
8. The second respondent having signed in all the vouchers, acknowledging the payment, admitted the sharing of booty, is not entitled to say, that he has not played any active role, whereas he had acted only on the dictate of the cashier. If it is the case of the second respondent, that he had no knowledge from the inception and he came to know about the corrections, at later point of time, that too, only on the information supplied by the company, it could be said that this man participated without knowing, what is happening and in this view, he could be relieved. The materials available on record clinchingly prove, from the day one of the correction by the cashier for the period covered, the second respondent was also a party to the illegal activities. After the encashment, he has not paid the encahsed amount to Instant Copier, whereas paid only actual bill amount, which the instant copier is entitled to receive, thereby showing this respondent is fully aware of the fact, that by correcting the bills or vouchers, the cashier had drawn inflated amount, and paid only the bill amount to the Instant Copier. Because of this reason alone, even on 21.12.1985, he had candidly admitted about the correction, sharing of the money, etc. The findings rendered by the Labour Court is not set aside by the learned single Judge, which means, the result should follow, enforcing the effect of misappropriation.
9. Taking into consideration the above facts and circumstances of the case, we are of the considered opinion, that the learned Presiding Officer of the Labour Court, as well as the learned Single Judge have committed an error, in coming to the conclusion, that the second respondent has not participated actively and his role is limited, which could be described as a perverse finding also. If the Labour Court and the learned single Judge had felt that this second respondent has no active role, or nexus with the fraudulent act, they ought to have relieved the second respondent from the offence itself. The findings of the enquiry officer are not disturbed, which would indicate that this man also has involved in the misappropriation. Thus, settling the position, the second respondent had actively participated in committing fraud and misappropriating the company funds, we have to see what is the punishment to be inflicted, whether invoking Section 11-A of the Act, dismissal order slapped by the Management could be modified.
10. The learned counsel for the appellant submits, that once it is proved, the employee had committed misappropriation and behaved dishonestly, he is losing the confidence of the employer and such an employee could not be thrust, detriment to the interest of the management. We are of the considered opinion, that the submission made by the learned counsel for the appellant, is well founded, supported by judicial pronouncement, deserving acceptance. In a company or in an institution, between the employer and employee, there must be confidence and trust, for its well being and positive growth. An employer employs a workman paying salary under the hope and belief, that he would be loyal to the master and will not do anything harm to the company or institution, affecting adversely. If this position continues, undoubtedly, the employer as well as the employee would stand benefitted. When certain works in a company are entrusted to the employees, it is not possible always for the employer to follow the employee, observing his movement, to test whether he is loyal, honest, sincere, devotion to duty, etc. It is for the employee, to be loyal to the employer, since he has also to grow along with the management. This is based upon the confidence and trusted mutually. If that confidence is shaken, breached by the conduct of the workman or employee, by committing misappropriation, then no useful purpose would be served, by retaining that man, in the company, incurring loss or inviting problems always, which is not desirable for the healthy growth of a company. In the same manner, it is also not desirable, to direct the Management, to reinstate such a person, who had committed dishonest act, defrauding the company, making financial loss by misappropriation invoking the power conferred under Section 11-A of the Industrial Disputes Act. In case the employee had committed some ordinary mistake, without any intention, not deriving any pecuniary advantage, by that mistake, not causing any monitory loss to the company, then that kind of offence or the misconduct could be excused to some extent and the employee could be protected and not otherwise, that too in a case of misappropriation.
11. As early as 1971 itself, in Francis Klein & Co.(P.) Ltd. v. Workmen (1971 (2) LLJ 615), the Apex Court had the occasion to consider, whether a person, who lost the confidence of the employer, could be reinstated. The Apex Court has ruled, that the direction for reinstatement is not justified. At page 619, it is held as follows:
"In our view when an employer loses confidence in his employee particularly in respect of a person who is discharging an office of trust and confidence there can be no justification for directing his reinstatement."
It is further held:
"Even this direction is not a valid direction because if once the company has lost confidence in its employee it is idle to ask them to employ such a person in another job. What job can there be in a company which a person can be entrusted with and which does not entail reposing of confidence in that person."
Thus, it has held, such a person even cannot be posted in any other post, having less responsibility, since confidence is required in all the posts.
12. In Kerala Solvent Extractions Ltd. v. A. Unnikrishnan & Anr. (1994 II LLJ 888), the Apex Court deprecated misplaced sympathy, generosity and private benevolence, when discretionary powers are used in favour of a person, who does not deserve the same. In the case involved in the above decision, a workman obtained employment by suppressing the truth, regarding his educational qualification. When it came to light, his service had been terminated, which was challenged before the labour court, which held the conduct of the workman did not amount to false representation, which was upheld by the High Court, for different reasons. While upholding the order of the Labour Court, which set aside the termination, the learned Single Judge had observed that there would be no hardship or prejudice, caused to the appellant, if the respondent was reinstated. In this view, the learned Single Judge in that case passed an order, which reads:
"..As a special case and not by way of a precedent, the petitioner shall not implement the dismissal order and let the two workers continue in employment as directed."
When this order was challenged before the Apex Court, on the ground that such an undue liberalism and misplaced sympathy would subvert all discipline in administration, accepting the same, the Apex Court has held thus:
"In recent times, there is an increasing evidence of this, perhaps well-meant but wholly unsustainable, tendency towards a denudation of the legitimacy of judicial reasoning and process. The reliefs granted by the Courts must be seen to be logical and tenable within the framework of the law and should not incur and justify the criticism that the jurisdiction of Courts tends to degenerate into misplaced sympathy, generosity and private benevolence. It is essential to maintain the integrity of legal reasoning and the legitimacy of the conclusions. Thus must emanate logically from the legal findings and the judicial results must be seen to be principled and supportable on those findings. Expansive judicial mood of mistaken and misplaced compassion at the expense of the legitimacy of the process will eventually lead to mutually irreconcilable situations and denude the judicial process of its dignity, authority, predictability and respectability."
13. The Apex Court in Janatha Bazaar S.K.K.C.C.W.S. Ltd. v. Secy. S.N. Sangha (2000 (2) LLJ 1395) has ruled, once the act of misappropriation was proved, there was no question of showing uncalled for sympathy, to the workmen or of considering their past unblemished record. In the case on hand, the learned Presiding Officer, as well as the learned Single Judge took the view, that the second respondent has not involved in any other misconduct or in his 23 years of service, no charge memo was issued, and taking the past, so called unblemished records, a lenient view was taken, thereby setting aside the dismissal order, ordering to reinstate in service, with the continuity of service alone. The fact that the second respondent has not received any charge memo previously and there was no disciplinary proceedings of any kind, would not automatically mean, that the worker has not involved in any offence or he is a meritorious person deserving all kind of sympathy. It is not the case, that the second respondent has been awarded any meritorious certificate, by the company, year by year or considering the past service, thereby recognising him as an indispensable workman. The fact, that no charge memo had been issued, if at all would indicate that the Management has not taken any action or at least the adverse conduct of the workman if any, had not come to the notice of the Management. This should not be taken into consideration to legalise an illegal act, involving misappropriation of the funds, belonging to the company.
14. In the case involved in the above ruling, as a matter of fact, it was established that the charges for breach of trust and misappropriation of funds, entrusted to employee. Despite the fact, the Labour Court, as well as the High Court set aside the dismissal order of the Management, and directed them for reinstatement with 25% back wages, which came to be challenged before the Supreme Court. Their Lordships of the Apex Court, considering the facts and circumstances of the case, as well as the settled law, has held:
"In case of proved misappropriation, in our view, there is no question of considering past record. It is the discretion of the employer to consider the same in appropriate cases, but the Labour Court cannot substitute the penalty imposed by the employer in such cases."
The above ratio is squarely applicable to the case on hand.
15. In Mgmt of Catholic Syrian Bank Ltd v. Ind. Trib., Madras & Anr (1999 (2) LLJ 194), this Court had an occasion to consider, whether a person who committed fraudulent and dishonest act, could be considered for reinstatement in the service, as well as whether the past conduct of the employee has to be taken into consideration, if so what is the effect. In the above ruling, it is held:
"The past conduct of the employee viz., that he has not suffered any penalty earlier is not by itself sufficient to hold that the order of dismissal should not have been passed. Reference to the past record of service in the Bipartite Settlement is not meant to a trap to render ineffective, order of termination passed as a consequence of grave misconduct having been proved."
It is further held as follows:
"It is the function of the Court to ensure that moralistic standards like honesty and integrity, the condemnation of fraud, theft and the like are maintained to the extent they are required under the law expressly or impliedly. It can hardly be said that every employee has a right to commit fraud or theft or to be dishonest in his dealings either with the employer or with the customers of the employer. No employee can claim a right to commit fraud during the course of his employment with his employer and in relation to the affairs of the employe or its customers".
The learned Judge has also considered the plight of the workman with human face, and observed, "Though in cases, where it is warranted, justice may be required to be rendered with mercy, that itself however, is not to be carried to the extent of abandoning of ethical standards reflected in the law on the ground that it is not the function of the Court to be concerned with such moral or ethical standard."
Thus observing, it is held, it is not the duty of the employer to retain his employee, who had committed fraudulent acts, by misappropriating the customers' money dishonestly and for that there should not be a reward. If a person, who had committed misappropriation, is reinstated with back wages or otherwise, then it would amount to legalising the illegal acts, committed by the employee, thereby in a way indirectly encouraging that kind of misconduct also, giving premium, which should not be the role of the court, under the guise of sympathy.
16. The learned Presiding Officer of the Labour Court, as well as the learned single Judge of this Court, having confirmed the misconduct of the second respondent viz., misappropriation, went to the extent of condoning the same, as if the second respondent is not directly connected with the misappropriation, thereby took a lenient view, imposing a person upon the management, who had lost the confidence of the Management. In this view of the matter, invoking Section 11-A of the Industrial Disputes Act also, dismissal order slapped by the Management could not be modified.
17. In view of the above settled position of law and in view of the fact that the misappropriation committed by the second respondent is proved, in our considered opinion, the order of the learned Single Judge confirming the order of the learned Presiding Officer, reinstating the second respondent without back wages, with continuity of service, is not legally sustainable and it is liable to be set aside.
For the above-mentioned reasons, the result therefore is, the appeal is allowed and the order of the Presiding Officer of the Labour Court, directing reinstatement of the second respondent, which is confirmed by the learned single Judge, is set aside, restoring the dismissal order of the 2nd respondent by the appellant, dated 25.7.1986. No order as to costs.
It is made clear that if any amount already paid to the second respondent under Section 17-B of the Industrial Disputes Act, or during the pendency of this appeal need not be repaid by the second respondent.