Gujarat High Court
Vadilal Industries Pvt. Ltd vs Dinesh Ishwarlal Thakker on 13 April, 2017
Author: Sonia Gokani
Bench: Sonia Gokani
C/SCA/1265/2005 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 1265 of 2005
With
SPECIAL CIVIL APPLICATION NO. 12348 of 2005
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS JUSTICE SONIA GOKANI
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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VADILAL INDUSTRIES PVT. LTD.....Petitioner(s)
Versus
DINESH ISHWARLAL THAKKER....Respondent(s)
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Appearance:
MR VINAY BAIRAGRA for M/S TRIVEDI & GUPTA, ADVOCATE for the
Petitioner(s) No. 1 - 2
MR RD RAVAL, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MS JUSTICE SONIA GOKANI
Date : 13/04/2017
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COMMON ORAL JUDGMENT
1. Both these petitions arise from the common award, and therefore, are being decided by this common order. Employer Vadilal Industries Pvt. Ltd. shall be referred to as "the petitionerCompany", whereas employee Dinesh Ishwarlal Thakker shall be referred to as "the respondent" hereinafter in this judgment.
2. Brief facts leading to both these petitions are as follows: 2.1 The petitionerCompany, registered and incorporated under the provisions of the Companies Act, 1956, is engaged in manufacturing of Icecream, candy, frozen foods and other related products and for that purpose, has its factory situated at Ahmedabad. Petitioner No.2 is the Director of the Company, whereas respondent was a Clerk in the Accounts Section of the petitionerCompany. He was employed on 1.7.1982 in the Accounts Department for the purpose of keeping financial records and for Page 2 of 44 HC-NIC Page 2 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT maintaining the register showing the amount outstanding against the commodities supplied to various sales contractors.
3. The petitionerCompany for the purpose of maintaining financial records and also for maintaining accounts for the sale and distribution of commodities manufactured by it, has a separate account department, which employs number of employees, who are entrusted with the tasks of maintaining Accounts of Sales/Distribution made to sale contractors and for the purpose of such other allied activities. It is the case of the petitioner that it was the duty of the respondent to intimate the management of the total amount outstanding by various sales contractors against sale of commodities so that the management can initiate action against defaulting sales contractors and can also block supply till outstanding dues or payments have been received from them. It was also necessary for respondent and others working in the Accounts Department to put to the notice of the management Page 3 of 44 HC-NIC Page 3 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT any irregularities to enable them to correct the same. Any delay on the part of the respondent in bringing to the notice of the management any such discrepancy, would cause huge financial loss to the petitionerCompany and would, in turn, affect the overall working of the petitionerCompany. He was one of the five Account Clerks, who needed to deal with the salesmen and contractors and maintain, on regular basis, their accounts and outstanding dues. Above him were the Accounts Officer, Assistant Manager and the topmost person in this department was the Finance Manager. During the course of submissions, it emerges that other four Accounts Clerks used to deal with the Distributors, Transporters, Vendors, Cash payment and the employees' payment. The petitionerCompany had alleged that the respondent, on certain occasions, did not deliberately maintain the outstanding payment register and did not bring it to the notice of the Management, the outstanding dues and the payment to be made by sales distribution against sale of icecream and other commodities. It is Page 4 of 44 HC-NIC Page 4 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT also alleged, on preliminary verification, that it was found that he had nexus with sales defaulters of the petitionerCompany and outstanding amount to certain sales contractors was not purposefully brought to the notice of the management so that supply of commodities would not be discontinued and the same would go unattended till the loss would reach to enormous proportion causing huge loss to the revenue of the petitionerCompany.
4. Taking all such acts of omission with a serious note, the petitionerCompany issued show cause notice on 26.6.1985 asking him as to why he should not be chargesheeted and dismissed from service for his various acts of alleged misconduct and was also suspended pending the departmental proceedings.
5. The respondent replied to the same vide his letters dated 28.6.1985 and 9.7.1985. Having found that unsatisfactory, departmental proceedings were held. He was chargesheeted on Page 5 of 44 HC-NIC Page 5 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT 26.6.1985 and inquiry officer also was appointed. After availing opportunities, the respondent inquiry officer held the charges to have been proved in his report on 12.7.1985.
6. The disciplinary authority on considering the report of the inquiry officer dismissed the respondent from service with effect from 6.11.1985.
7. The disciplinary authority, on receipt of the inquiry officer's report, had issued a second show cause notice on 14.10.1985 and after availing him an opportunity of reply to the said show cause notice, which he did on 19.10.1985, dismissed him from service with effect from 6.11.1985. An application was moved under sub section (2) of section 33 of the Industrial Disputes Act, 1947 ("the I.D.Act" for short) before the Industrial Tribunal for approval of the action taken by the petitionerCompany in dismissing the respondent from service on charge of misconduct. He was also paid one month's wages as provided under the relevant provisions. The Page 6 of 44 HC-NIC Page 6 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT respondent had approached the office of the Labour Commissioner, Ahmedabad, who had issued notice to the petitionerCompany to remain present on 3.12.1985 to decide the question with regard to the reinstatement of the respondent with backwages. As nobody represented the petitionerCompany on the stipulated date, another notice was issued to remain present on 23.12.1985. On account of failure of conciliation, a reference was made to the Labour Court on 21.2.1986. The reference was numbered as Reference (LCA) No.593 of 1986. The statement of claim was presented by the respondent and the petitioner Company had filed written statement raising all objections against the request of reinstatement and other benefits.
8. Interim award came to be passed by the Labour Court on 2.7.2002, wherein it upheld the legality and validity of the departmental inquiry conducted against the respondent. Thereafter, Review Application No.4 of 2002 was preferred, which too, was rejected by the Labour Court.
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9. After both the sides were permitted to adduce the evidence oral as well as documentary, the Labour Court passed the award in Reference (LCA)No.593 of 1986 on 6.12.2003 holding in favour of the respondent and directing the reinstatement to the original post with 70% backwages with continuity of service and with all consequential benefits with Rs.500/ as cost.
10. Aggrieved petitioner is before this Court raising various grounds by way of filing Special Civil Application No.12348 of 2005. The petitioner has challenged the same by way of Special Civil Application No.1265 of 2005, whereas the respondent was also aggrieved because he has not been paid 100% of the backwages and also, at an interim stage, made a request to direct the petitioner to reinstate the present respondent by preferring Special Civil Application No.12348 of 2005.
11. This Court has heard learned advocate Page 8 of 44 HC-NIC Page 8 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT Mr.Vinay Bairagra, who has argued for and on behalf of M/s. Trivedi & Gupta for the petitioner. He has urged strenuously that it was a case of departmental proceedings, which has resulted into dismissal of an employee, who had lost trust of the employer. He, therefore, urged that the Tribunal, once having agreed, even at an interim stage to the legality of the outcome of inquiry, could not have interfered nor could it have replaced its own discretion of punishment in place of that of the disciplinary authority. He urged that once there is no trust, there would not arise any question of continuing in service, and therefore, the direction of reinstatement is ex facie erroneous and contrary to law. According to him, in the nature of the work that he had enjoyed, he was required to report all outstanding dues timely and for not having so done, he has caused huge loss to the petitioner Company. It is also to be examined from the angle that misappropriation does not have any one facet. His having not reported to the petitioner Company and having developed a nexus with some Page 9 of 44 HC-NIC Page 9 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT such persons, was surely seen by the petitioner Company as a big question mark to his integrity. He, therefore, has urged that the Court needs to interfere. He further has urged that pursuant to the direction issued by the Labour Court, the order of reinstatement had been implemented subject to the outcome of this petition. According to him, the employee had attained the age of superannuation in December, 2016. He has been already paid amount of Rs.6,42,000/ from the years 2005 to 2016. He further has urged that retirement benefits to the tune of Rs.38,471/ also had been given to him. He has sought to rely upon the following authorities:
1) South Indian Cashew Factories Workers' Union vs. Kerala State Cashew Development Corpn. Ltd. and others, (2006)5 SCC 201.
2) Divisional Controller, N.E.K.R.T.C. vs. H. Amaresh, (2006) 6 SCC 187.
3) U.P. State Road Transport Corp. & Anr. vs. Gopal Shukla and Anr., (2015) SCC Online SC 791.
4) U.P. State Road Transport Corporation vs. Mohan Lal Gupta and others, (2000) 9 SCC 521.
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5) Bharat Heavy Electricals Ltd. vs.
M.Chandrasekhar Reddy and others, (2005) 2 SCC
481.
6) Janatha Bazar (South Kanara Central Cooperative Wholesale Stores Ltd.) and others vs. Secretary, Sahakari Noukarara Sangha and others, (2000) 7 SCC 517.
7) In the case of Rajabhai R. Gadhavi vs. Divisional Controller decided by this Court in Special Civil Application No. 5286 of 2010 on 14.5.2010.
12. As against that, learned advocate Mr.R.D.Raval appearing for the employee has urged that the fact that the petitioner had been taken into service and has successfully completed his services till the date of retirement diminishes the theory of no trust. The employer whether had trust or not, the choice had been exercised and from the time he had been taken up pursuant to the Court's direction, there had been no untoward event. He emphatically urged that there was no misappropriation and there would be no help of Page 11 of 44 HC-NIC Page 11 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT the judgments, which have been pressed into service by learned advocate for the petitioner. He did not report to the company on three instances for which the amount has already been recovered and as there was late recovery, at best, it was a loss of interest of not more than Rs.3000/. He fairly admitted there was a mistake on his part. There is neither misappropriation nor any illintention. He further urged that the punishment should be in proportion to the charges proved prior to the inquiry. If he had admitted his mistake honestly, the employee cannot be given economic death penalty. He also further urged that he had agreed to 50% of the back wages. It is further urged that today the respondent employee is present in the Court and, on instructions, such submissions is being made without any prejudice to other rights of the petitioner.
13. On hearing learned advocates for both the sides and on thoroughly considering the material on record, what needs to be, at the outset, Page 12 of 44 HC-NIC Page 12 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT discussed is the law on the subject in relation to the power of the Labour Court in interfering with the punishment awarded in the departmental proceedings.
1) In the case of South Indian Cashew Factories Workers' Union(supra), a workman of the respondent Corporation was, in a domestic enquiry, found guilty. The enquiry was conducted by the Assistant Personnel Manager of the respondent establishment. Consequent to the enquiry, the management imposed on the said workman, the punishment of reversion as factory clerk. The appellant Union then raised an industrial dispute. The Labour Court found that the enquiry was conducted by an employee of the Corporation, who had also made certain observations against the workman, which were not necessary for considering whether there was misconduct or not. Therefore, after holding that principles of natural justice were complied with, that the enquiry held was proper and valid and that the findings were not perverse, the Labour Court set aside the enquiry on the ground that the enquiry Page 13 of 44 HC-NIC Page 13 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT officer was an interested person and biased. The Labour Court also held that the enquiry officer had made some observations in the enquiry report, which were unwarranted and that showed that the enquiry officer was biased towards the workman. A Single Bench of the High Court upheld that award. However, a Division Bench reversed that decision. The appellant Union, therefore, approached the Apex Court. The Apex Court examined the scope of interference in domestic inquiries by the Labour Court and held that where punishment other than dismissal or discharge was inflicted, after a properly conducted enquiry in which there was no violation of principles of natural justice and the findings were not perverse, held that the Labour Court could not reappraise the evidence to examine the propriety of the quantum of punishment. The Court, further held that section 11A of the I.D. Act gives ample power to the Labour Court to reappraise the evidence adduced in the enquiry and also sit in appeal over the decision of the employer in imposing punishment. But, that section is applicable only in the case of dismissal or Page 14 of 44 HC-NIC Page 14 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT discharge of a workman. Since Section 11A was not applicable, the Labour Court had no power to reappraise the evidence to find out whether the findings of the enquiry officer were correct or not or whether the punishment imposed was adequate or not. Relevant findings and observations shall be necessary to be reproduced hereunder: "16. The Labour Court had earlier held that the enquiry was properly held and there was no violation of the principles of natural justice and that the findings were not perverse. The vitiating facts found by the Labour Court against the enquiry are erroneous and are liable to be set aside. If enquiry is fair and proper, in the absence of any allegations of victimization or unfair labour practice, the Labour Court has no power to interfere with the punishment imposed. Section 11A of the Act gives ample power to the Labour Court to re appraise the evidence adduced in the enquiry and also sit in appeal over the decision of the employer in imposing punishment. Section 11A of the Industrial Disputes Act is only applicable in the case of dismissal or discharge of a workman as clearly mentioned in the Section itself. Before the introduction of Section 11A in Indian Iron and Steel Co. Ltd. v. Their Workmen [(1958) SCR 667] this Court held that the Tribunal does not act as a Court of appeal and substitute its own judgment for that of the Management and that the Tribunal will interfere only when there is want of good faith, victimisation, unfair labour practice, etc. on the part of the management. There is no allegation of unfair labour practice, victimisation etc. in this case. The powers of the Labour Court in the absence of Section 11A Page 15 of 44 HC-NIC Page 15 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT is illustrated by this Court in Workmen of Firestone Tyre and Rubber Co. of India (Pvt.) Ltd. v. The Management [(1973) 1 SCC 813]. When enquiry was conducted fairly and properly, in the absence of any of the allegations of victimisation or malafides or unfair labour practice, Labour Court has no power to interfere with the punishment imposed by the management. Since Section 11A is not applicable, Labour Court has no power to re appraise the evidence to find out whether the findings of the enquiry officer are correct or not or whether the punishment imposed is adequate or not. Of course, Labour Court can interfere with the findings if the findings are perverse. But, here there is a clear finding that the findings are not perverse and principles of natural justice were complied with while conducting enquiry."
It is thus clear that in case of dismissal or discharge of workman, the reappraisal of the evidence adduced in the inquiry is permitted under section 11A. The Tribunal, of course, is not to act as Court of appeal and substitute its own judgment and it would interfere only when there is want of good faith or unfair labour practice etc. on the part of management.
14. In the case of H. Amaresh(supra), there was misappropriation of a small amount of SRTC funds of Rs.360.95 by conductor. He was in possession of the said excess amount and it was held to be Page 16 of 44 HC-NIC Page 16 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT misappropriation of fund by the employer. The Labour Court and the High Court, on the basis of the evidence of passengers, which had been adduced, had directed the order of reinstatement, which was held to be contrary to law by the Apex Court. The Court held that the jurisdiction vested with the Labour Court was exercised capriciously and arbitrarily in spite of the finding that the charge with regard to the pilferage, had been proved beyond any doubt. When the said charge was proved, which was grave in nature, interference with the punishment of dismissal could not be justified. Similarly, the High Court gets jurisdiction to interfere with the punishment in the exercise of its jurisdiction under Article 226 of the Constitution, only when it finds that the punishment imposed is shockingly disproportionate to the charges proved. It is necessary to mention background facts of the matter where the Apex Court had held so as narrated in paragraphs 3 and 4 of the judgment hereunder: "BACKGROUND FACTS:
3. The respondent joined the Corporation as a Page 17 of 44 HC-NIC Page 17 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT conductor. While he was on duty, the appellant Corporation noticed that he was under the influence of alcohol and did not issue tickets to the passengers. The appellantCorporation issued Articles of Charge to the respondent conductor and he replied to the same. The charges, which are grave in nature, are enumerated as below:
1. That it is reported that you are in a habit of consuming alcohol while on duty and created bad scene of the Corporation among the public by spoiling the image of the Corporation apart from financial loss to the Corporation. (not proved)
2. That on 27.12.90 you were booked on Devadurga Hosur N/o Schedule No.16/B. 16 along with Sri. Allapa driver No. 2022 but you were not able to discharge duties due to intoxication and after having consumed alcohol and you are not able to perform the schedule duty. In place another conductor had to be arranged inspite of acute shortage of conductor. (not proved) 3. Further the passenger of schedule No. 47 B/Hospet, 16B, Hosur N/o. were unnecessarily detained at bus stand from 2115 hours to 2230 hours, and you went away without getting dispatched from the controller. (not proved)
4. That on 28.12.90 after completion of the above said duties at about 14 hours, the KSRTC cash held by you was checked and found Rs. 360 95 as short and you were found in drunken condition. (proved)
4. Not satisfied with the reply, the appellantCorporation conducted the enquiry in accordance with the principles of natural justice and 'Conduct & Discipline' Regulations.
The Inquiry Officer found the charges levelled against the respondent proved. A true copy of the Inquiry Report dated 11.12.1991 has been filed and marked as AnnexureP1. It is useful to reproduce the Inquiry Officer's report in paras 4 and 5.
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"4. That act of misappropriation noticed after checking the way bill and many irregularities, namely failed to show the sale of tickets and over writing. Several places not shown the number of passengers and trip wise collection not mentioned target of revenue was Rs. 1250/ but the delinquent deposit sum of Rs. 638/75 paise. Lastly cash was remitted very late; hence these are the imputations of statement. The M.W.1 has given the detail as to the manner how he notices the irregularities as violations and misconduct having found in drunken state on duty.
In support he has got marked Ex. M.1 to 4, the documents which have not been refuted nor tested the veracity of witness. I have carefully examined the evidence of M.W.1 and the documents marked fully reveals that the delinquent has committed not only misconduct but misappropriated the cash by short remittance. I see no reason why the testimony of M.W.1 should be discarded when delinquent has failed to test the statement by cross examination.
5. In reply by way of written in defense the delinquent has simply denied the charges saying as baseless.
On case full consideration of all the aspects of case unhesitantly I can say that the delinquent has not created a doubt of evidence led by management and I hold that management has fully brought home the charges. There is no reason to discard the testimony of M.W.1, accordingly I hold that all the charges have been proved by the management. Hence this report."
The Apex Court held that there is absolutely no precision in regard to the factual aspects and findings rendered by the Labour Court. In the Page 19 of 44 HC-NIC Page 19 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT said award, the Labour Court directed reinstatement of the respondent despite holding him guilty of the charge of pilferage levelled against him and directed reinstatement with back wages. The Apex Court held that any dereliction of duty in this regard is highly detrimental to Corporation's financial well being and against public interest. The Apex Court held that once a domestic tribunal, based on evidence, comes to a particular conclusion, normally, it is not open to the tribunal and the courts to substitute their subjective opinion in place of the one arrived at by the domestic tribunal. Relevant paragraphs are as under: "20. Once a domestic Tribunal based on evidence comes to a particular conclusion normally it is not open to the tribunal and courts to substitute their subjective opinion in place of the one arrived at by the domestic tribunal.
21. Coming to the question of quantum of punishment, this Court in Divisional Controller, KSRTC (NWKRTC) vs. A.T. Mane, (2005) 3 SCC 254 has held as under: "Coming to the question of quantum of punishment, One should bear in mind the fact that it is not the amount of money misappropriated that becomes a primary factor for awarding punishment; on the contrary, it is the loss of confidence which is the primary factor to be taken into consideration. In our Page 20 of 44 HC-NIC Page 20 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT opinion, when a person is found guilty of misappropriating the Corporation's funds, there is nothing wrong in the Corporation losing confidence or faith in such a person and awarding a punishment of dismissal." "
15. Not only the charges levelled against the employee in the matter before the Apex Court in the above case were grave, it was a case where both the Labour Court and the High Court had agreed with the findings of the guilt of the charge of pilferage levelled against the person, who was conductor of the bus. The factual background and the gravity of the charges levelled against the employee shall have to be borne in mind, while applying the ratio of the said decision to the facts of the instant case.
16. In the case of Gopal Shukla and Anr.(supra) it was a case of an employee, who was working as a conductor in the service of U.P. State Transport Corporation. Despite the factum of carrying 25 passengers without ticket being proved, he was relieved and assuaged by substitution of punishment of dismissal with Page 21 of 44 HC-NIC Page 21 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT stoppage of two annual increments with cumulative effect taking aid of Section 6 (2A) of the U.P. Industrial Disputes Act, 1947 by the Labour Court in invocation of the doctrine of reformation and principle of mercy, and the High Court, in exercise of its supervisory jurisdiction has given the stamp of approval to the award by treating it as just and defensible fundamentally resting its conclusion on the foundation that the controversy hinged on the factual score. The Apex Court held that it is not the quantum per se but the breach of trust with reference to duty and obligation of the employee that must be the edifice of consideration for imposition of punishment. Relevant paragraphs are reproduced hereunder: "12. On a mere glance at the said reasons, it is quite vivid the reasons are really imaginary and reveal some kind of unacceptable theoretical perceptions by the Labour Court. The conduct of the conductor would clearly show that the factum of personal gain was established. The reason given that the passengers would have complained and they would not have taken the side of the conductor and would have made a complaint against the conductor are not based on any evidence, but are eloquently expressed by innate creativity of the Labour Court. As the factual matrix reveals, there could not have been any Page 22 of 44 HC-NIC Page 22 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT recovery. The nonrecovery of the amount does not mean that there was no personal gain to the conductor or concealing of corruption for personal gains by lodging a report with the police regarding misplacing of waybill by the employee. Needless to emphasise the said charge has been proven in the domestic enquiry. The Labour Court has not really dislodged that finding. It has really proceeded in a mercurial manner and adverted to the issue of misappropriation. It has remained wholly oblivious to the facts that conductor had allowed 25 passengers to travel without ticket; that by virtue of the said act, the Corporation had sustained loss; that he had mischievously lodged an FIR at the police station regarding misplacing of waybill by him; that his conduct manifestly shows his involvement for personal gain, and that the eventual act was to conceal the corruption which was rooted in his personal gain. The finding recorded by the Labour Court on this score is absolutely perverse and the High Court has repeated the reasons and concurred with the conclusion. Thus, the irresistible conclusion has to be that the charge pertaining to personal gain has been proved. We may clearly state that the contrary conclusion would tantamount to ignoring the obvious and, in a way, treating the pinchbeck to be real. Though there is concurrent finding of fact, but the approach being manifestly perverse, the same can be interfered with in exercise of power under Article 136 of the Constitution. It has been so held in Alamelu v. State13, Heinz India (P) Ltd. v. State of U.P.14 and Vishwanath Agrawal v. Sarla Vishwanath Agrawa.
13. In view of the aforesaid analysis, the irresistible conclusion is that both the Labour Court and the High Court have fallen in error by imposing a lesser punishment on the respondentworkman whereas the only punishment, on establishment of the charges which have been accepted by the labour court, should have been dismissal and not a lesser one.
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14. In the facts and circumstances of the case, we are impelled to state that the exercise of power under Section 6(2A) of the Act by the Labour Court is absolutely arbitrary and it can be said without any shadow of doubt that it has not been exercised in a judicial manner. Additionally, when we have further held that the charge pertaining to personal gain has been established, the said view gets more support. It is so, as has been observed in Shobha Suresh Jumani v. Appellate Tribunal16 that there is a cancerous growth of corruption which has affected the moral standards of people and all forms of governmental administration.
15. In Niranjan Hemchandra Sashittal v. State of Maharashtra17, it has been observed that: "... corruption mothers disorder, destroys societal will to progress, accelerates undeserved ambitions, kills the conscience, jettisons the glory of the institutions, paralyses the economic health of a country, corrodes the sense of civility and mars the marrows of governance. It is worth noting that immoral acquisition of wealth destroys the energy of the people believing in honesty, and history records with agony how they have suffered. The only redeeming fact is that collective sensibility respects such suffering as it is in consonance with the constitutional morality."
In the said case, it has also been observed that the degree of corruption is immaterial. In the case at hand, as we perceive, the delinquent employee has harboured the notion that when the cancerous growth has affected the system, he can further allow it to grow by covering it like an octopus, with its tentacles disallowing any kind of surgical operation or treatment so that the lesion continues. The whole act is reprehensible and such a situation does not even remotely commend any lenience.
16. Consequently, the appeal is allowed and the Page 24 of 44 HC-NIC Page 24 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT award passed by the Labour Court as well as the order passed by the High Court is set aside and the order of dismissal imposed by the Corporation is restored. There shall be no order as to costs."
The Court held that the degree of corruption is immaterial. In the case at hand, as we perceive, the delinquent employee has harboured the notion that when the cancerous growth has affected the system, he can further allow it to grow by covering it like an octopus, with its tentacles disallowing any kind of surgical operation or treatment so that the lesion continues. The Court, therefore, held that it is not a case where any leniency should be shown.
17. In the case of Janatha Bazar (South Kanara Central Cooperative Wholesale Stores Ltd.) and others(supra), it was a case of charge of misappropriation of goods, which was established in the domestic enquiry and delinquent employee was dismissed. The Labour Court erred in directing his reinstatement with 25% back wages on the ground that his past record was without blemish. The Apex Court held that it was a proved case of misappropriation, Page 25 of 44 HC-NIC Page 25 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT which did not call for any sympathy. The employer exercised discretion in imposing penalty after misconduct was proved in domestic enquiry. The Court held that the Labour Court cannot substitute the penalty imposed by the employer and there is no question of showing uncalledfor sympathy and reinstating the employees in service. It was the case of the employees of Cooperative society having been charged of breach of trust and misappropriation of the value of goods amounting to Rs.20,000(rounded off). It was based on shortage of goods noticed on stock verification. After holding inquiry, the management had dismissed all the employees, who were respondents before the Apex Court. The Court's findings and observations, which are relevant for the purpose of this petition, deserve reproduction as under: "(6.) As stated above, the learned single Judge and the Division Bench in writ appeals confirmed the findings given by the Labour Court that charges against the workmen for breach of trust and misappropriation of funds entrusted to them for the value mentioned in the chargesheet had been established. After giving the said findings, in our view, the Labour Court materially erred in setting aside the order passed by the Management removing the workmen from the service and reinstating them with 25 Per Cent back wages. Once act of misappropriation is proved, may be for a small or large amount, there is no question of Page 26 of 44 HC-NIC Page 26 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT showing uncalled for sympathy and reinstalling the employees in service. Law on this point is well settled. (Re : Municipal Committee, Bahadurgarh V/s. Krishnan Behari, (1996) 2 SCC
714) ). In U. P. State Road Transport Corporation V/s. Basudeo Chaudhary, (1997) 11 SCC 370 this Court set aside the Judgement passed by the High Court in a case where a conductor serving with the U. P. State Road Transport Corporation was removed from service on the ground that alleged misconduct of the conductor was attempt to cause loss of Rs. 65.00 to the Corporation by issuing tickets to 23 passengers for a sum of Rs. 2.35 but recovering @ Rs. 5.35 per head and also by making entry in the waybill as having received the amount of Rs. 2.35, which figure was subsequently altered to Rs. 2.85. The Court held that it was not possible to say that Corporation removing the conductor from service has imposed a punishment which is disproportionate to his misconduct. Similarly in Punjab Dairy Development Corporation Ltd. V/s. Kala Singh, (1997) 6 SCC 159 : , this, Court considered the case of a workman who was working as a Dairy helper cum cleaner for collecting the milk from various centres and was charged for the misconduct that he inflated the quantum of milk supplies in milk centres and also inflated the quality of fat contents where there were less fat contents. The Court held that "in view of proof of misconduct a necessary consequence will be that Management has lost confidence that the workman would truthfully and faithfully carry on his duties and consequently the Labour Court rightly declined to exercise the power under Section 11A of the I.D. Act to grant relief with minor penalty".
18. In the case of Mohan Lal Gupta and others(supra), the Court held that if the Page 27 of 44 HC-NIC Page 27 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT Corporation loses its confidence visavis the employees, it will neither be proper nor fair on the part of the Court to substitute the findings and confidence of the employer with that of its own by allowing reinstatement. The Court held, on facts, that the Court could not substitute its own confidence and direct reinstatement. It was a charge against storekeeper for shortfall. The Labour Court satisfied itself that domestic enquiry was properly conducted. The employee too could not properly account for shortage of property entrusted to him by employer. Therefore, once there is proof of charge, no leniency needs to be taken awarding minor punishment of stopping four increments with cumulative effect. It is, thus, held that if the appellant Corporation loses its confidence visavis the employees, it will neither be proper nor fair on the part of the Court to substitute the findings and confidence of the employer with that of its own by allowing reinstatement. Once the misconduct stands proved in such a situation by reason of gravity of the offence, the Labour Court cannot Page 28 of 44 HC-NIC Page 28 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT exercise its discretion and alter the punishment. It was the case of the employer that huge quantity of mobile oil was missing on the top of public bus in a drum, which was contended to have been leaked out and, therefore, the shortage. The inquiry was conducted and the workman had admitted that 141 litres of mobile oil was short. There was no explanation as to why the empty drum was not found at the time of verification. Having agreed with the charges proved, the Court took a lenient view and held that the termination of service was highly excessive punishment and in this background, the Apex Court held that it was not fair nor proper to substitute the findings and the Court ought to have exercised its discretion for punishment.
19. In the case of M.Chandrasekhar Reddy and others (supra), the Apex Court held that there is no such thing as unlimited jurisdiction vested in any judicial or quasijudicial forum under section 11A and the Apex Court held that an unfettered discretion is a sworn enemy of the Page 29 of 44 HC-NIC Page 29 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT constitutional guarantee against discrimination. No authority be it administrative or judicial, has any power to exercise the discretion vested in it unless the same is based on justifiable grounds supported by acceptable materials and reasons. The respondent was an employee working as Assistant GradeI in the Stores Department of the appellants, R & D Division at Hyderabad. He borrowed house building advance by depositing title deeds of his properties as securities, creating an equitable mortgage in favour of the appellantBharat Heavy Electricals Ltd. While the mortgage was still subsisting and an amount of Rs. 1,34,951/ was due from the respondent, the appellant's officers came to know that certain public notices were published in the local Newspaper calling upon the intending purchasers to make their offers for the purchase of the property belonging to the respondent which was mortgaged to the appellant by deposit of title deeds. The original title deeds, which were supposed to be in deposit of the company, was in respondent's custody. Obviously, because it was Page 30 of 44 HC-NIC Page 30 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT stealthily taken away from the custody of the employer. Therefore, a departmental enquiry was instituted and on the reports submitted by the Enquiry Officer holding the appellant guilty of the misconduct charged and taking into consideration the seriousness of the charge, the services of the respondent were terminated. The Labour Court had directed reinstatement and by upholding his misconduct and in respect of the findings of the Labour Court that the conclusion arrived at by the inquiry officer were correct, it had substituted its discretion. The observation of the Division Bench that under section 11A, the Labour Court has powers without limitation also was not sustained by the Apex Court holding that there was no unfettered power nor discretion to any authority, be it administrative or judicial. Relevant paragraphs of the said judgment are as under: "15. The Labour Court while exercising its discretion recorded that though the confidence of the employer on the respondent is shaken still it gave 3 reasons for exercising its discretion, they are : (A) No instance of earlier misconduct are spelt.
(B) It appears the respondent is an active Page 31 of 44 HC-NIC Page 31 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT participant in the cultural activities and for common cause of the employees.
(C) Therefore, it felt the punishment of dismissal from service is harsh, in the facts and circumstances of the case.
16. These extenuating circumstances recorded by the Labour Court is in the background of the following proved facts : (A) Title deeds deposited with the appellant for borrowing money were surreptitiously taken away without the permission of the appellant which act amounts to theft.
(B) The said documents so stolen were admitted to be used for the purpose of selling the property which amounts to fraud.
(C) The documents so taken was sought to be justified by a letter where the signatures are forged amounting to forgery.
17. The question the Labour Court ought to have asked itself while exercising its discretion under Section 11 A should have been whether the reasons given by it that there was no earlier misconduct or that the respondent is an active participant in cultural activities is sufficient to come a reasonable conclusion that a punishment of dismissal was harsh in the background of the finding recorded by itself as to the confidence of the employer on the respondent which according to the Labour Court was shaken by the misconduct.
18. In our opinion with no stretch of imagination either the extenuating circumstances recorded by the Labour Court or the exercise of its discretion could be termed either as reasonable or judicious. In our opinion even the learned Single Judge and the Division Bench erroneously held that the Labour Court had unlimited jurisdiction under Section 11A of the Act. It is because of the above erroneous legal foundation as to the vastness of power vested with the Labour Court. The High Court accepted the interference by the Labour Court in the award of punishment. Thus, the Page 32 of 44 HC-NIC Page 32 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT Labour Court as well as the High Court fell in error in granting the relief to the respondent which is challenged in this petition.
19. The learned counsel for the appellant has rightly relied upon the decisions of this Court in support of her argument. In Air India Corporation (supra) this Court held with reference to loss of confidence as follows : "..Once bonafide loss of confidence is affirmed the impugned order must be considered to be immune from challenge.."
20. In Francis Klein & Company Prviate Ltd. (supra) this Court held : " 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." ..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.."
21. In Janta Bazaar South Kanara (supra) this Court held : "Once act of misappropriation is proved, may be for a small or large amount, there is no question of showing uncalled for sympathy and reinstating the employees in service. Law on this point is well settled"
"In case of proved misappropriation, in our view, there is no question of considering past service 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 empoyer in such cases.."
22. In UPS RTC (supra) this Court held : "The employee has been found to be guilty of misappropriation and in such an event, if the Page 33 of 44 HC-NIC Page 33 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT appellantCorporation loses its confidence vis ` vis the employee, it will be neither proper nor fair on the part of the Court to substitute the finding and confidence of the employer with that of its own in allowing reinstatement. The misconduct stands proved and in such a situation, by reason of the gravity of the offence, the Labour Court cannot exercise its discretion and alter the punishment."
23. With reference to Section 11A of the Act, in the case of The Workment of Firestone Tyre & Rubber Company Ltd. (supra) this Court held : " Once the misconduct is proved, the Tribunal had to sustain the order of punishment unless it was harsh indicating victimisation."
"If a proper enquiry is conducted by an employer and a correct finding arrived at regarding the misconduct, the Tribunal, even though it has now power to differ from the conclusions arrived at by the management, will have to give every cogent reasons for not accepting the view of the employer"
24. In CMC Hospital Employees' Union & Anr. (supra) this Court held : ".. Section 11A cannot be considered as conferring an arbitrary power on the Industrial Tribunal or the Labour Court. The power under Section 11A of the Act has to be exercised judicially and the Industrial Tribunal or the Labour Court is expected to interfere with the decision of a management under Section 11A of the Act only when it is satisfied that the punishment imposed by the management is highly disproportionate to the degree of guilt of the workman concerned. The Industrial Tribunal or the Labour Court has to give reasons for its decision"
25. In our opinion all the above judgments applies with full force to the facts of this case. The Labour Court has itself come to the conclusion the management has lost confidence in the respondent. If that be the case the question of it exercising its jurisdiction Page 34 of 44 HC-NIC Page 34 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT under Section 11A to alter or reduce the punishment does not arise.
26. That apart the reasons given by the Labour Court to reduce the penalty are reasons which are not sufficient for the purpose of reducing the sentence by using its discretionary power. The fact that the misconduct now alleged is the first misconduct again is no ground to condone the misconduct. On the facts of this case as recorded by the Labour Court the loss of confidence is imminent, no finding has been given by the courts below including Labour Court that either the fact of loss of confidence or the quantum of punishment is so harsh as to be vindictive or shockingly disproportionate. Without such finding based on records interference with the award of punishment in a domestic inquiry is impermissible. "
20. In the case of Rajabhai R. Gadhavi (supra), it was the case of a bus conductor, who, after collecting the fair, had not issued tickets. He was given chargesheet and departmental inquiry also was conducted. He was given the punishment of dismissal, which was challenged before the Labour Court, which rejected it by passing an award, and the same was challenged before this Court. The Court, after considering all the facts and also the decision of the Labour Court and by discussing various case laws, held that the Labour Court had rightly not exercised the powers Page 35 of 44 HC-NIC Page 35 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT under section 11A of the I.D. Act. Punishment of dismissal, is a serious misconduct and cannot be considered disproportionate, unjust and harsh and, while exercising the powers under Article 227 also, no interference was desirable. This decision had been upheld by the Division Bench in Letters Patent Appeal No.2557 of 2010 and allied matters and the Court had dismissed this appeal in limine.
21. Law, thus, emerges quite clearly that ordinarily, neither under the power under section 11A of the I.D. Act nor in exercise of the writ jurisdiction, under Article 227 of the Constitution of India, the Court is required to interfere with the imposition of punishment. Once having concluded on the legality of the inquiry that was held by the employer with regard to the discretion exercised by the employer, in awarding the punishment, unless there is an order of dismissal or discharge, the Labour Court is not to interfere nor to substitute its own findings. Even if it decides to substitute, there should be Page 36 of 44 HC-NIC Page 36 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT either want of good faith or unfair labour practice or where, the Court finds no justification in upholding the punishment. Whereas, interference so far as punishment is concerned under Article 226 of the Constitution of India, it would be permissible only when the punishment shocks and shakes the conscience of the Court.
22. It also further emerges that in case of misappropriation when the employee has lost confidence of the employer, the Courts are not to substitute its discretion nor are they required to award lesser punishment in place of those awarded by the employer, after holding the departmental proceedings in accordance with law and following the principles of natural justice.
23. In this background, if this Court examine the award, which has been passed by the Labour Court in the matter on hand, it has examined the charges, which had been levelled against the respondent. There were three charges. First charge was in relation to the Proforma No.490 Page 37 of 44 HC-NIC Page 37 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT dated 28.5.1985 issued to one Shri Mukeshbhai L.Patel for 170 boxes of icecream for the Car No.4330. The sales contractor was to deposit sum of Rs.5426/. This was to be shown by the respondent in his report dated 29.5.1985 or within one or two days. Instead of that he had shown it in his unaccounted Register for the first time, after he remained present in a meeting, which was convened on 15.6.1985. Thus, from 28.5.1985 to 16.6.1985 for nearly 19 days, at no stage, he had shown this amount in the proforma and amount of Rs.13,935/ was not deposited by the sales contractor. The second charge was that in Proforma No.596 dated 4.6.1985 issued to one Vinodbhai Patel, the outstanding amount was Rs.3711.60 ps. He had shown it for the first time in unaccounted Register on 15.6.1985, delaying it by 10 days and, thus, the petitioner Company suffered economic loss. Likewise, Proforma No.705 dated 5.6.1985 was issued to one Ramjaysinh Rajput for the sum of Rs.3951.60 ps. It was for the first time shown in his unaccounted Register in Account No.703 on Page 38 of 44 HC-NIC Page 38 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT 21.6.1985. He is alleged to have suppressed this fact till 21.6.1985 and, thereby, caused loss to the petitionercompany. In a show cause notice, which was replied to by respondent, he explained that duplicate copy, which otherwise was given to him by his colleague, once the goods were sent to the sales contractor, had not been given to him. He also had drawn the attention of his superior one Shri Rajesh Desai. Orally, his explanation was that the bills might have been misplaced and in the end he had stated that these are common mistakes of his and he feels extremely sorry for such mistakes, if any loss is caused to the company thereby. Other two charges, according to the Labour Court, also were almost on the similar lines. The Court was of the opinion that there was no misappropriation, as he had no direct dealing. He had not timely filled in the proforma and that had caused loss to the company by receiving the payment belatedly. In such background, the Court held that the punishment of dismissal is gross and, therefore, replaced that by stoppage of increment with future effect and Page 39 of 44 HC-NIC Page 39 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT reinstated the respondent with 70% backwages with continuity of service and with other consequential benefits.
24. As discussed hereinabove, under section 11A on having found that the departmental proceedings had been conducted on following the procedure of law and when no illegality or regularity had been found in conducting the departmental proceedings, there would not be requirement of the Court to interfere with the punishment aspect and yet in exercise of powers under section 11A, the Court has so done it. The reasons are not far to be fetched. It is a case of alleged misappropriation for his not having prepared the proforma of outstanding amount in a day or two, which ordinarily he is expected to do as an Account Clerk after receiving the second copy of the bill that would be raised for goods and commodities slip to the distributor or sales contractor. It is, from the very beginning, his defence that he has not received the second copy, which ordinarily his table would receive from Mr.Rajesh Page 40 of 44 HC-NIC Page 40 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT Desai, who was examined for and behalf of the petitionerCompany, and, who had orally asked him not to prepare the bill for want of such copy. The fact remains that before the Court also copy produced was the third copy and not the second copy.
25. Be that as it may, the fact remains that the copy was to be prepared by four other clerks in the Accounts Department and the copy would be sent to the respondent, as it was his onus to point out to the company the outstanding amount of dues. Admittedly, there was no dealing of either cash or his having misplaced any such copies or his having received such copies and for a long time sat tight over it. There is no oral or documentary evidence adduced by the company or through another clerk, who had prepared it and sent it or through any superior officer that he had received it well within time and yet had not prepared it by way of proforma and had thereby caused loss to the company. Such proforma had been raised in about 15 to 17 days of time and Page 41 of 44 HC-NIC Page 41 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT the petitioner company had received the payment. It is only the lapse of 15 to 20 days, which is presumed to be loss to the company. His admission of not having prepared the proforma has been overemphasized. It is their case that, at no point of time, there was a loss by the company of the amount, which has been mentioned in all the three charges. There is nothing to indicate whether any show cause notice is issued or any legal action is initiated against any of those employees or the contractors and whether with those sales contractors concerned, contracts have been terminated. The Labour Court committed no error and in fact was absolutely right when it found that punishment awarded of the dismissal is shockingly disproportionate to the charge, which has been proved. The person had made a request to treat this as a simple mistake instead of reading too much into it. This Court also, in exercise of its powers under Article 226, ordinarily would not want to interfere with the discretion exercised by the Labour Court unless it is patently erroneous or any illegality emerges from such award. Resultantly, on the aspect of quashing and Page 42 of 44 HC-NIC Page 42 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT setting aside the order of dismissal and reinstating the petitioner, no interference is desirable.
26. So far as the grant of continuity of service and the backwages to the tune of 100% is concerned, this Court is of the opinion that for a long period from 1985 to 2003, and thereafter till he was reinstated in service in the year 2005 upon the order passed by the Court, he has worked and, therefore, the grant of backwages to the tune of 100% is surely not what the law would permit. So far as grant of 70% of the backwages is concerned, in the opinion of this Court, also is quite on the higher side and ought not to have been granted. The backwages are required to be reduced to 20% from the date of order till reinstatement with continuity of service and all other consequent benefits, as may be available to other employees. As mentioned in beginning, the petitioner since has already attained the age of superannuation and has been given the benefit, as mentioned in above paragraphs, if any other Page 43 of 44 HC-NIC Page 43 of 44 Created On Tue Aug 15 11:36:35 IST 2017 C/SCA/1265/2005 JUDGMENT benefit remains to be given, the petitioner company shall give to the respondent within 8 weeks from the date of receipt of the copy of this order. Petitions stand disposed of accordingly. Rule is discharged.
(MS SONIA GOKANI, J.) SUDHIR Page 44 of 44 HC-NIC Page 44 of 44 Created On Tue Aug 15 11:36:35 IST 2017