Heavy Electricals Ltd. Vs. M. Chandrasekhar Reddy & Ors  Insc 58 (25 January 2005)
Hegde & S.B. Sinha Santosh Hegde, J.
appeals are preferred against the common judgment of the High Court of
Judicature Andhra Pradesh at Hyderabad made
in Writ Appeal Nos. 1864 of 2001 and 1901 of 2001 whereby the High Court
dismissed the appeals filed by the appellant herein confirming the order of the
learned Single Judge dated 21-11-2001 made
in W.P. Nos. 29150 of 1997 and 10461 of 2000.
necessary for the disposal of these are as follows:- The respondent herein was
an employee working as Assistant Grade-I 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
appellant. As per the terms of the said title deeds of the property belonging
to the respondent was to be in custody of the appellant till the entire amount
of the loan with interest was discharged. 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. On the appellants coming
to know of the same, its officers approached the advocate who on behalf of the
respondent had issued the publication. Then they came to know that the original
title deeds which were supposed to be in deposit of the company was in his
because it was stealthily taken away from the custody of the appellant. Based
on said facts 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.
aggrieved of the said decision of the appellant, respondent approached the Additional Labour Court challenging the said enquiry report
as well as the consequential punishment imposed on him. The Labour Court after considering the report of the
Enquiry Officer has also examined certain witnesses summoned by it came to the
conclusion the finding given by the Enquiry Officer and also the confirmation
of the said finding by the Disciplinary Authority was legal and valid. It also
observed that in view of the said fact it did not see any reason to come to a
different conclusion from that of the Enquiry Officer. During the course of its
order it also observed that the most of the facts were not disputed and the
documents which were supposedly to be in the custody of the appellant found its
way to the possession of the respondent and by so obtaining the possession of
the document the appellant tried to sell the property when the mortgage was
still subsisting. The Labour
Court also recorded
the following finding :- "No doubt the confidence of the employer on this
petitioner has shaken by this occurrence but no instance of earlier mis-conduct
are spelt. On the other hand it appears he is an active participant in the
cultural activities and for common cause of the employees. Therefore, I also
feel the punishment of dismissal from service is harsh in the circumstances.
aggrieved by the said order directing the reinstatement of the respondent the
appellant preferred a writ petition before the learned Single Judge, the
respondent also being aggrieved by the order upholding his misconduct filed a
writ petition before the High Court challenging that part of the order. The
learned Single Judge after hearing the parties dismissed both the writ petitions.
In the course of his orders the learned Single Judge observed :- ".There
is any amount of spectrum of discretion vested with the Tribunal in taking into
consideration the facts and circumstances of the case. The decision relied upon
by the learned Counsel for the Management has to be taken into consideration
basing on the facts and circumstances of the case".
above basis writ petitions of the appellant as well as that of the respondent
came to be dismissed.
the said judgment of the learned Single Judge both the appellant and respondent
herein preferred appeals before the Division Bench of the High Court which
dismissed the writ appeals on the following grounds :- "In our opinion, a
reading of Section 11-A would show that the power of the Labour Court is
without limitation. The Labour
Court or the
Industrial Tribunal can interfere when the punishment awarded is
disproportionate to the proved guilt. Under such circumstances, the Labour Court, in our opinion, is bound to give
and should give its reasons in support of its decision. No doubt, the Labour
Court, after due discussion of the charges and the evidence adduced by both the
parties came to the conclusion that the charges stand proved" Having
carefully considered the entire facts and circumstances of the case, we do not
find any impropriety or illegality in the award of the Labour Court as
confirmed by the learned single Judge in modifying the punishment of dismissal
from service to that of reinstatement into service as a fresh candidate in the
post of Assistant Grade-II. The Labour Court, in our opinion, had exercised its discretionary power
under Section 11-A judiciously and has given valid and cogent reasons for
modifying the punishment." It is against the said judgments of the courts
below directing the fresh appointment of the respondent in spite of finding of
the Labour Court that the conclusions arrived at by
the Enquiry Officer is correct, the appellant is before us in these appeals.
Narain, learned counsel appearing for the appellant contended that the courts
below was totally in error in coming to the conclusion that there was absolute
discretion on the Labour Court under Section 11-A of the Industrial Dispute Act
to alter the sentence in spite of coming to conclusion that the enquiry
conducted by the management was correct and just and the finding of guilt
recorded by the Enquiry Officer is based on facts. She submitted the discretion
vested under Section 11 A of the Act has to be exercised judiciously bearing in
mind the nature and gravity of the misconduct proved as also the loss of
confidence genuinely entertained by the management. In support of her
contention she placed reliance on the judgments of this Court in the case of :-
(1) Air India Corporation, Bombay vs.
V.A. Rebellow and Anr. (1972 1 SCC 814), (2) Francis Klein & Company
Private Limited vs. Their Workmen & Anr. (1972 4 SCC 569), (3) Janata
Bazaar South Kanara Central Co-operative Wholesale Stores Limited & Ors. vs.
Secretary, Sahakari Noukarara Sangha & Ors. (2000 7 SCC 517), (4) UPS RTC
vs. Mohan Lal Gupta (2000 9 SCC 521) and (5) The Workmen of Firestone Tyre
& Rubber Co. vs. The Management & Ors. (1973 1 SCC 813).
Rao, learned senior counsel appearing for the respondent submitted that under
Section 11 A of the Act the Labour Court
was well within its jurisdiction to interfere with the quantum of punishment if
it came to the just conclusion that the penalty imposed on the employee is
disproportionate and the same shakes the court's conscience. He submitted in
view of the fact that the respondent had returned the entire loan amount and
the appellant-company has not suffered any monetary loss. The Labour Court was justified in altering the
punishment. He also submitted that though the Labour Court did not accept the
respondent's case that the documents in question were given to him by the
company itself, on the material on record it is seen that on a request made by
the respondent the officers of the appellant company had handed him over the
documents so that he can sell the property and return the loan taken by him. He
also submitted that right till the date of this misconduct the respondent's behaviour
has been exemplary and he has served the company honestly and efficiently,
therefore, for this one stray act of misconduct he ought not to be punished and
so called loss of confidence pleaded by the management is imaginary, therefore,
he justified the Labour Court's exercise of its wide jurisdiction judiciously
which was upheld by the learned Single Judge as well as by the Division Bench
of the High Court and there is absolutely no reason for this Court to interfere
with such concurrent finding.
an admitted fact that the documents kept in deposit for obtaining a loan from
the appellant company by the respondent by way of a mortgage did find its way
to the office of the lawyer of the respondent and of the respondent did make an
attempt to sell the property by calling for offers by way of Newspaper
the respondent pleaded that the documents were given to him on his request by
the management itself, the findings of facts recorded by the Enquiry Officer as
well as by the Labour
Court was that these
documents were taken away without the consent or knowledge of the management.
It is seen that the Labour
Court itself from the
evidence of three witnesses examined by it came to the conclusion that case of
the respondent that the document was returned by the management was false and
the signature of the three witnesses on the letter produced by the respondent
was forged. Hence, the inference to be drawn on this finding is that apart from
removing the documents illegally the respondent also tried to justify the
removal by producing certain fabricated documents. Though the respondent
challenged these finding right up to the Division Bench those findings have now
become final, therefore, we will have to proceed on the basis that the
allegation of misconduct leveled against the respondent stands proved.
then is whether the misconduct alleged against is so serious or grave as to
create a genuine lack of confidence in respondent by the appellant.
considering this question of loss of confidence and the jurisdiction of the Labour
Court in interfering with the quantum of punishment the learned Single Judge
was of the following opinion :- "There is any amount of spectrum of
discretion vested with the Tribunal in taking into consideration the facts and
circumstance of the case" The Division Bench in appeal concurred with the said
finding of the learned Single Judge by observing :- "In our opinion, a
reading of Section 11A would show that the power of the Labour Court is without
respect, we are unable to agree with these findings of the High Court. In our
opinion, there is no such thing as unlimited jurisdiction vested with any
judicial or quasi judicial forum. An unfettered discretion is a sworn enemy of
the constitutional guaranty against discrimination. An unlimited jurisdiction
leads to unreasonableness. No authority be it an 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 thereof.
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 :-
instance of earlier misconduct are spelt.
appears the respondent is an active participant in the cultural activities and
for common cause of the employees.
Therefore, it felt the punishment of dismissal from service is harsh, in the
facts and circumstances of the case.
extenuating circumstances recorded by the Labour Court is in the background of the following proved facts :-
Title deeds deposited with the appellant for borrowing money were
surreptitiously taken away without the permission of the appellant which act
amounts to theft.
The said documents so stolen were admitted to be used for the purpose of
selling the property which amounts to fraud.
The documents so taken was sought to be justified by a letter where the
signatures are forged amounting to forgery.
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.
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 11-A 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 Labour Court as well as the High Court fell in
error in granting the relief to the respondent which is challenged in this
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.." 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.
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.." In Janta Bazaar
South Kanara (supra) this Court held :-
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.." In
UPS RTC (supra) this Court held :-
employee has been found to be guilty of misappropriation and in such an event,
if the appellant-Corporation 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."
With reference to Section 11-A 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" In CMC Hospital
Employees' Union & Anr. (supra) this Court held :-
Section 11-A cannot be considered as conferring an arbitrary power on the
Industrial Tribunal or the Labour Court.
The power under Section 11-A 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 11-A 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" 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 under Section 11-A to alter or
reduce the punishment does not arise.
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.
the reasons stated above the appeals succeed. The impugned orders to the extent
they direct the reinstatement of the respondent is set aside. The order of
dismissal of the respondent made by the appellant pursuant to the inquiry is
allowed to the above extent.