REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.1841 OF 2010

M.L. Singla  ….Appellant(s)

VERSUS

Punjab National Bank and Anr.       …Respondent(s)

J U D G M E N T

Abhay Manohar Sapre, J.

1) This appeal is directed against the final

judgment and order dated 23.08.2007 passed by the

High Court of Punjab and Haryana at Chandigarh in

C.W.P. No.16286 of 2006 whereby the Division Bench

of the   High Court allowed the writ petition filed by

respondent No.1­Bank and quashed the award dated

30.05.2006 passed by the Presiding Officer, Central

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Government Industrial  Tribunal­cum­Labour  Court,

New Delhi in I.D. No.103/98.

2) In order to appreciate the controversy involved

in the appeal, it is necessary to set out the relevant

facts in detail infra.

3) The appellant herein was the employee of

respondent No.1­Punjab National Bank (PNB).

4) The appellant, at the relevant time, was working

as Cashier in the PNB, Branch Office at Jind

(Punjab).

5) On 21.03.1984, the appellant while on duty was

found consuming liquor in the Branch. On the same

day, respondent  No.1­Bank  also found shortage of

Rs.35,000/­ in daily cash balance on verification of

the daily accounts.

6) Respondent No.1­Bank, therefore, decided to

hold a departmental inquiry to probe the

aforementioned two charges against the appellant as

per the service rules.  

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7) A charge­sheet  was accordingly  served on  the

appellant on 11.10.1985. The charges read as under:

“1. That on 21.03.84 while you were working as Cashier Incharge at BO, Jind City, at about 01.30 p.m. you had asked Shri Hakikat Rai, Peon­cum­Guard to bring a glass of water and one Mathi which were provided to you by him and you took out a bottle of liquor from your drawer and consumed the same.

2. That on 21.03.84 while you were working as Cashier Incharge, you withdrew a sum of Rs.4,28,124.74 on different occasions leaving Rs.1,40,900/­ in  the cash safe  of  the Bank after the said withdrawals.   Besides this during normal business hours,  you had also received Rs.16,473.98 as direct receipt from customers and Rs.1,08,690/­ from the Asst. Cashier to  meet the  payment.   In  all, you made total payment of Rs.3,31,417.68 during the day and at the close  of the day, there should have been a cash balance of Rs.2,21,871.04 with you.   Besides this at closing of the day, you received Rs.95,448.35 on account of the balance of receipt made by the Assistant  Cashier.  Thus, including the cash in the cash safe total receipt made by Asstt. Cashier during the day of the closing balance should have been Rs.4,58,219.39 with you whereas the actual balance was only Rs.423,219.39 with you showing a shortage of Rs.35,000/­ and thus you acted in a manner which is prejudicial to the interest of the  Bank or  gross  negligence involving the Bank in serious loss.   Further, on your request you were advance Rs.35,000/­ from the suspense account to meet the shortage of

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Rs.35,000/­ occurred on that day due to your gross negligence.”

8) Respondent No.1­Bank on 06.12.1985

appointed an Enquiry Officer and the Presenting

Officer. The appellant on being served with the

charge­sheet submitted his reply on 29.10.1985.

Respondent No.1­Bank and the appellant then

participated in the enquiry and adduced evidence in

support of their respective stands.  

9) On 12.02.1987,  the Enquiry Officer submitted

his Enquiry Report. He held that both the charges are

proved against the delinquent employee (appellant

herein). The eventual conclusion on the two charges

reads as under:

“CHARGE­I The charge that on 21.03.84, while working as Cashier Incharge, BO Jind City at about 01.30 p.m., Shri Singla asked Shri Hakikat Rai, Peon­cum,­Guard to bring a glass  of  water  and one  ‘Mathi’,  which  were provided to him and he took out a bottle of liquor from the drawer consumed the same, stands fully substantiated and hence, proved.

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CHARGE­II The charge that on 21.03.84 at BO Jind, a shortage of Rs.35,000/­ occurred in the cash handled by Shri M.L. Singla while working as Cashier Incharge due to gross negligence on his part, thus, causing bank a serious loss, also stands fully substantiated, hence, proved.”

10) Respondent No.1 then sent a show cause notice

along with the Enquiry Report on 25.07.1987 to the

appellant proposing therein to inflict the punishment

of dismissal from service. The appellant filed his

reply. On 29.08.1987, the Competent Authority,  on

perusal of the Enquiry Report and the reply,

concurred  with the findings  of the  Enquiry  Officer

and accordingly passed a dismissal order dated

29.08.1987.

11) The appellant, felt aggrieved  by  his  dismissal

order, filed appeal before the Appellate Authority as

provided in service rules. The Appellate Authority, by

order dated 26.02.1988, dismissed the appeal finding

no merit therein.

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12) The appellant then approached the State

Government praying for making an Industrial

Reference to the Labour Court to decide the legality

and correctness of his dismissal order under the

Industrial Dispute Act, 1947 (hereinafter referred to

as “the ID Act”.   The State Government acceded to

the  request  of the  appellant  and accordingly  made

the  following Reference on 16.08.1989 to the Labour

Court under Section 10 of the ID Act:

“Whether  the action of the management of Punjab National Bank in dismissing from service Shri M.L. Singla is justified? If not, to what relief is the workman entitled?”

13) The Labour Court, on receipt of the Reference,

issued notices to the parties. The parties filed their

statements. The Labour Court then asked both the

parties to adduce their evidence.  Both the parties

accordingly adduced their evidence.

14) By award dated 30.05.2006, the Labour Court

answered the Reference in appellant's favour. It was

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held that the finding of the Enquiry Officer on

Charge­I and II is perverse and, therefore, it was set

aside.  It was further held that since no evidence was

adduced by respondent No.1­Bank to prove that the

appellant (employee) was gainfully employed

elsewhere after his dismissal, he was entitled to claim

50% back wages along with the relief of

reinstatement. With these findings, the Labour Court

set aside the dismissal order dated 29.08.1987 and

answered the Reference  in appellant’s favour.  The

Labour Court, however, did not decide the question

as to whether the domestic enquiry is legal and

proper.  

15) Respondent No.1­Bank felt  aggrieved and  filed

writ petition in the High Court. The High Court, by

impugned order, allowed the  writ petition and set

aside the award of the Labour Court. As a

consequence thereof, the dismissal order dated

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29.08.1987 was held legal and proper and was

accordingly upheld.  

16) It is  against this  order, the  employee  has  felt

aggrieved and filed the present appeal by  way of

special leave in this Court.  

17) Heard Mr. Daya Krishna Sharma, learned

counsel for the appellant and  Mr. Rajesh  Kumar,

leaned counsel for respondent No.1­Bank.

18) Having heard the learned counsel for the parties

and on perusal of the record of the case, we find no

good ground to interfere in the   “conclusion” arrived

at by the High Court, but on our reasoning

mentioned infra.

18) It is necessary to examine the legality and

correctness of the award of the Labour Court in the

first instance and then the impugned order.

19) When  we examine the award in the light of

detailed facts set out above, we find that the Labour

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Court committed more than one jurisdictional error

in answering the Reference.  

20) The  first error was that  it failed to decide the

validity and legality of the domestic enquiry.   Since

the dismissal order was based on the domestic

enquiry, it was obligatory upon the Labour Court to

first decide the question as a preliminary issue as to

whether the domestic enquiry was legal and proper.  

21) Depending  upon  the  answer to this  question,

the Labour Court should have proceeded further to

decide the next question.  

22) If the answer to the question on the preliminary

issue  was that the domestic enquiry is legal and

proper, the  next  question to  be considered  by the

Labour Court was whether the punishment of

dismissal from the service is commensurate with the

gravity of the charges or is disproportionate requiring

interference in its quantum by the Labour Court.  

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23) If the answer to this question  was that it is

disproportionate, the  Labour  Court  was  entitled to

interfere in the quantum of punishment by assigning

reasons and substitute  the punishment  in place of

the one imposed by respondent No.1­Bank.  This the

Labour  Court could do by taking recourse to the

powers under Section 11­A of the ID Act.

24) While deciding this question, it was not

necessary for the Labour  Court to examine as to

whether the charges are made out or not. In other

words, the enquiry for deciding the question should

have been confined to the factors such as­what is the

nature of the charge(s), its gravity, whether it is

major or  minor as per rules, the findings of the

Enquiry Officer on the charges, the employee's overall

service record  and the punishment imposed etc.

25) If the Labour Court had come to a conclusion

that the  domestic  enquiry is illegal  because  it  was

conducted in violation  of the principles of natural

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justice thereby causing prejudice to the rights of the

employee, respondent No.1­Bank was under legal

obligation to prove the misconduct (charges) alleged

against the  appellant (employee)  before the  Labour

Court  provided he had sought  such opportunity to

prove the charges on merits.

26) The Labour Court was then under legal

obligation to give such opportunity and then decide

the question as to  whether respondent  No.1­Bank

was able to prove the charges against the appellant

on merits or not.  

27) If the charges against the appellant were held

proved, the next question to be examined  was in

relation to the proportionality of the punishment

given to the appellant.

28) If the charges against the appellant were held

not proved, the appellant was entitled to claim

reinstatement with back wages either full or partial

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depending upon the case made out by the parties on

the issue of back wages.   

29) The second error  was that the Labour  Court

called upon the parties to  lead evidence on all the

issues including the charge of misconduct in the first

instance itself.  

30) The third error committed by the Labour Court

was that it proceeded to examine the findings of the

Enquiry Officer on the charges like an Appellate

Court, appreciated the evidence adduced before the

Enquiry Officer and the one adduced before  it  and

then came to a conclusion that the  findings of  the

Enquiry Officer are perverse. This the Labour Court

could not do.

31) Assuming that the Labour Court had the

jurisdiction to direct the parties in the first instance

itself to adduce evidence on merits in support of the

charges yet, in our opinion,  it  was obligatory upon

the Labour Court to first frame the preliminary issue

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on the question of legality and validity of the

domestic enquiry and confined its discussion only for

examining the  legality and propriety of the enquiry

proceedings.  

32) Depending upon the finding on the preliminary

issue on the legality of the enquiry proceedings, the

Labour Court should have proceeded to decide  the

next questions. The Labour Court while deciding the

preliminary issue could only rely upon the evidence,

which was relevant for deciding the issue of legality of

enquiry proceedings but not beyond it.  

33) In other words, the Labour Court failed to see

that it would have assumed the jurisdiction to

examine the charges on the  merits only after the

domestic enquiry had been held illegal and secondly,

the employer had sought permission to adduce

evidence on  merits to prove the charges and on

permission being granted he had led the evidence.

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34) The fourth error was award of 50% back wages

to the  appellant.  While  awarding  50% back wages,

the Labour Court did not examine the question as to

whether the appellant had pleaded and proved with

the aid of evidence that he was not gainfully

employed after his dismissal from service.  

35) In order to claim back wages, it was necessary

for the appellant to plead and prove that he was not

gainfully employed after his dismissal with the aid of

evidence. Respondent No.1­Bank too was entitled to

adduce evidence to prove otherwise.   (See­ M.P. State

Electricity Board vs. Jarina Bee(Smt.),  (2003) 6 SCC 141,

G.M. Haryana Roadways vs. Rudhan Singh, (2005) 5 SCC

591,  U.P. State Brassware  Corporation vs. Uday Narain

Pandey, (2006)  1  SCC 479,  J.K.  Synthetics Ltd.  vs.  K.P.

Agrawal & Anr., (2007) 2 SCC 433, Metropolitan Transport

Corporation vs.  V. Venkatesan, (2009) 9 SCC 601,  Jagbir

Singh vs.  Haryana State  Agriculture  Marketing Board &

Anr., (2009) 15 SCC 327) and  Deepali Gundu Surwase vs.

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Kranti Junior Adhyapak Mahavidyalaya(D.Ed.) & Ors.,

(2013) 10 SCC 324.   

36) The aforementioned four errors, in our opinion,

go to the root of the matter and being jurisdictional in

nature and against the law laid down by this Court in

a number of decisions, as detailed  infra, render the

award in question unsustainable.    

37) Now coming to the reasoning of the High Court,

we find that the High Court having referred to few

decisions of this  Court on the subject,  which were

mostly on the powers of the Court under  Section 11A

of the ID Act, failed to notice the aforementioned

jurisdictional errors committed by the Labour Court.

Indeed, in our view, these errors were apparent in the

award of the  Labour  Court and, therefore, should

have  been noticed  for  being  corrected by  clarifying

the legal position keeping in view the law laid down

by this  Court in several decisions and the  matter

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should have been remanded to the Labour Court for

deciding it afresh.  

38) The High Court  instead proceeded to examine

the findings  of the  Labour  Court  and the  Enquiry

Officer on two charges on merits in its writ

jurisdiction by entering into the factual arena which,

in our opinion, was not permissible and on its

appreciation came to a conclusion that the reasoning

of the Labour Court on Charge­I is perverse whereas

the finding of the Enquiry Officer on the said charge

is proper.  

39) The High Court accordingly reversed the finding

of the Labour Court on Charge­I and restored that of

the Enquiry Officer. The High Court then held that

since the Charge­I is proved, it is enough to sustain

the dismissal order and, therefore, it is not necessary

to examine the merits and demerits of Charge­II.

40) We cannot concur with the approach and the

reasoning of the Labour Court or/and the High Court

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detailed above which, in our view, does not appear to

be in conformity with the law laid down by this Court

in a number of decisions.

41) The law on this subject was examined by this

Court in several decisions beginning from  Bharat

Sugar Mills Ltd. vs.  Jai Singh  (1962) 3 SCR 684,

Management of Ritz Theater (P) Ltd.  vs.  Its

Workmen  (1963) 3 SCR 461,  Workmen of Motipur

Sugar Factory Pvt. Ltd.  vs.  Motipur Sugar

Factory (1965) 3 SCR 588, State Bank of India vs.

R.K. Jain (1972) 4 SCC 304, Delhi Cloth & General

Mills Co.  vs.  Ludh Budh Singh  (1972) 1 SCC 595,

Workmen  vs.  Firestone Tyre & Rubber Company

of India (1973) 1 SCC 813 and Cooper Engineering

Ltd. vs.  P.P. Mundhe (1975) 2 SCC 671.

42) All the aforementioned decisions were examined

in detail by a Bench of Three Judges of this Court in

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Shankar  Chakravarti  vs.  Britannia  Biscuit Co.

Ltd. (1979) 3 SCC 371.  

43) Though in  Shankar Chakravarti’s  case

(supra), the question was when the domestic enquiry

is  held illegal and improper by the  Labour  Court,

whether the Labour Court is duty bound to afford an

opportunity to the employer to lead evidence to prove

the charge against the workman on merits before the

Labour Court.  

44) This Court while answering the aforesaid

question held that  it  is for the employer to ask for

such opportunity to lead evidence to prove the charge

of misconduct and once such prayer is made in any

form, i.e., orally or by application or in the pleading,

the same cannot be denied to the employer.  It has to

be granted to enable him to prove the misconduct.

This Court further held that no duty is cast upon the

Court to offer such opportunity to the employer  suo

motu, if he does not ask for it. In other words, he has

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to ask for from the Court by any of the three modes

mentioned above.

45) While  examining the  aforementioned  question,

this Court also took note of several decision of this

Court wherein this Court examined the questions in

extenso, namely, where dismissal is based on

enquiry, or  no enquiry or illegal enquiry,  how the

Court should decide the legality of dismissal.  We

have mentioned these cases in Para 41.

46) In our view, the reasoning, which we have given

while dealing with the first three errors committed by

the Labour Court in Paras 2o to 33, are based on the

law laid  down  in  aforementioned cases,  which  are

approved in Shankar Chakravarti’s case (supra).

46) Having examined the approach, reasoning and

the conclusion arrived at by the Labour Court and

the High Court which is not legally sustainable, the

next question which arises for consideration is what

course should be adopted to decide the case.

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47) We  are, however,  not inclined to remand the

case to the Labour Court after lapse of a long period

of more than a decade. It is more so when we have

examined the entire case on merits also.

48) As  mentioned  above, there  was no  categorical

finding recorded by the Labour Court and the High

Court as to whether the domestic enquiry was legal

or proper.  We, therefore, proceed to examine this

issue in the first instance.

49) Having perused the enquiry proceedings along

with the Enquiry Report, we are of the view that no

fault  of  any nature can be noticed in the domestic

enquiry proceedings for more than one reason.

50) First, the appellant was given full opportunity at

every stage of the proceedings which he availed;

Second,  he  never raised  any  objection complaining

causing of any prejudice of any nature to him before

the Enquiry Officer; Third, he received all the

papers/documents filed and relied upon by

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respondent No.1­Bank in support of the charge­

sheet; Fourth, he filed reply, cross examined the

employer’s witnesses, examined his witnesses in

defense, attended the proceedings and lastly, the

Enquiry Officer appreciated the evidence and

submitted his reasoned report running in several

pages holding the appellant guilty of both the

charges.  

51) In short, in our opinion, no case is made out to

hold that the domestic enquiry suffers from any

procedural lapse or was conducted in violation of the

principle of natural justice thereby causing any

prejudice to the rights of the appellant.

52) Once it is held that the domestic enquiry is legal

and proper, the next question arises for consideration

is as to  whether the punishment imposed on the

appellant is just and legal or it is disproportionate to

the gravity of the charges.

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53) It is not in dispute that both the charges were

held proved in domestic enquiry. One cannot possibly

argue that the charges  were simple in nature. In

other words, both the charges were of a serious

nature.  

54) So far as Charge­I is concerned, it was proved in

the enquiry that the appellant had consumed liquor

while on duty.  No employer  would ever allow or

tolerate such behavior of his employee while on duty.

The employer  had, therefore,  every  right to initiate

domestic enquiry against such employee for such

reprehensible conduct and behavior.

55) So far as Charge­II is concerned, that a shortage

of  Rs.35,000/­ cash was found in cash balance on

the particular day was also held proved. It is not in

dispute that the appellant was working as Cashier.

He was on duty on that day. He was, therefore,

directly responsible for the shortage found in the

cash.  

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56) In our opinion,   both the charges being serious

in  nature, therefore, the  order  of  dismissal  passed

against the appellant cannot be faulted with and nor

it can be said to be, in any way, disproportionate to

the gravity of charges. In other words, punishment of

dismissal  was proportionate with the gravity of the

charges and hence deserves to be upheld.

57) In view of the foregoing discussion, though we

agree  with the conclusion arrived at by the  High

Court, which also resulted in upholding of the

dismissal order, but this we do so on our reasoning

detailed above.

58) The appeal thus found to be devoid of any merit.

It fails and is accordingly dismissed.    

                  ………...................................J.   [ABHAY MANOHAR SAPRE]

                                    …...……..................................J.

        [S. ABDUL NAZEER] New Delhi; September 20, 2018  

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