Bazar V. Vs  INSC 489 (21 September 2000)
Shah, & D.P. Mohapatra.Shah, J.
learned counsel for the parties exhaustively.
The question involved in these appeals isWhether High Court was justified in
confirming the order passed by the Labour Court reinstating the
respondents-workmen with 25% back wages inspite of specific finding of fact
that the charges of breach of trust and misappropriation of goods for the value
given in the said charges had been clearly established. Apparently, it would be
an unjustified direction to reinstate an employee against whom charge of
misappropriation is established. A proved act of misappropriation cannot be
taken lightly even though number of such misappropriation cases remain
undisclosed and such employees or others amass wealth by such means. In any
case, misappropriation cannot be rewarded or legalised by reinstatement in
service with full or part of back wages.
matrix of the facts as culled out from the case are thatthe appellant is a
Co-operative Society registered under the Karnataka Co- operative Societies
Act, 1959. The Management charged four of its employees, namely Smt.
B., Sri D. Chandrashekhar, Sri Madhukar Shetty and Sri B. Damodhar Naik, with
breach of trust and misappropriation of the value of goods amounting to
Rs.24,239.97 and Rs.19,884.06 during the period 1.7.1977 to 30.6.1978. The said
charges were based on shortage of goods noticed on stock verification for the
above said period.
holding an enquiry, the management dismissed all the above employees.
Thereafter, the employees Union raised an industrial dispute and on 26.6.1981 a
reference was made by the Government to the Labour Court, Managalore, under
Section 10 of the Industrial Disputes Act, 1947 (hereinafter referred to as the
Act) in I.D. No.45/1981. The Labour Court considered the documentary evidence
produced by the Management; the audit report for the relevant period from
1.7.1977 to 30.6.1978; the admissions of the indicted workmen who deposed that
the goods were sent to their counters for sale by means of supply slips and the
fact that they have not accounted for the shortage of goods noticed, the value
of which is given in the audit report, and recorded the finding that the
charges of breach of trust and misappropriation of the goods entrusted to them
of the value given in the charges have been clearly established. In the award
passed by the Labour
Court, there is a
thorough discussion of the evidence adduced by the Management and the Workmen
and sufficient reasons are given in support of the finding that the charges
alleged against the workmen are proved. After recording evidence and hearing
both the sides, the Labour
Court vide its award
dated 30.1.1995 held that the charges of breach of trust and misappropriation
by the employees were proved. However, the Labour Court in exercise of its discretionary power under Section 11A of
the Act ordered their reinstatement with 25% of back wages. The Labour Court further ordered for continuity of
their service by imposing penalty of stoppage of 5 increments with cumulative
effect and for fixing their pay on the basis of imposition of such penalty from
the date of their dismissal till the date of reinstatement. Against the award
of the Labour Court, both the parties filed writ
petitions before the High Court of Karnataka. The Learned Single Judge
confirming the award passed by the Labour Court dismissed both the writ petitions.
aggrieved by the common order passed by the learned Single Judge, both the
parties filed Writ Appeals No. 8795 of 1996 and 1954 of 1997 before the
Division Bench of the High Court. The Division Bench found that the Labour Court had arrived at its conclusion after
thoroughly considering the entire evidence and, therefore, it did not call for
any interference. Further, with regard to the question whether the Labour Court
was justified in interfering with the order of dismissal passed by the
Disciplinary Authority in exercise of its powers under Section 11A of the Act,
the High Court came to the conclusion that the Labour Court gave reasons for
coming to its conclusion and those reasons could be considered as justifiable
and sufficient grounds to interfere with the punishment imposed by the
employer. By common judgment and order dated 18.9.1998, the writ appeals were
these appeals by special leave.
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
charge-sheet 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% back wages. Once act of misappropriation is proved,
may be for a small or large amount, there is no question of showing uncalled
for sympathy and re- instating the employees in service. Law on this point is
well settled. [Re.: Municipal Committee, Bahadurgarh v. Krishnan Behari and
Others (1996) 2 SCC 714]. In U.P. State Road Transport Corporation v. Basudeo Chaudhary
and Another [(1997) 11 SCC 370] this Court set aside the judgment 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/- 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. and
Another v. Kala Singh and Others [(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.
view of the aforesaid settled legal position, the High Court materially erred
in confirming the directions given by the Labour Court in reinstating the respondent-workmen with 25% back wages.
For giving the aforesaid direction, the Labour Court considered that there is no evidence regarding past
misconduct by the employees and, therefore, it can be observed that they have
rendered several years of service without any blemish and to some extent, there
was lapse on the part of the Management.
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
result, the appeals are allowed. The impugned order passed by the High Court
confirming the award dated 30.1.1995 passed by the Labour Court is set aside. There shall be no
order as to costs.