Appeal No 440 of 1966
Appeal by special leave from the order dated May 30 1964 of the Central Government Labour Court Dhanbad in Application No LP 123 of 1962
H R Gokhale C AChopra P C Bhartari land 0
C Mathur for the appellant
Janardan Sharma for the respondent
The Judgment of the Court was delivered by Vaidialingam J
This appeal by special leave by the appellant Bank is directed against the order dated May 13 1964 of the Central Labour Court Dhanbad rejecting an application filed by the Bank under section 332b of the Act XIV of 1947 hereinafter called the Act and declining to grant approval of the action taken by the Bank by way of discharging the respondent workman from the Bank s services
The respondent was at the material time the Assistant Ac countant at the main Office of the Bank at Calcutta
In view of certain serious irregularities noticed by the Bank in respect of the work of the respondent in the Current Accounts Department and in particular in current account ledgers Nos 4 and 6 by order dated March 8 1961 the respondent was suspended with immediate effect
He was also informed that the charges against him would be communicated in due course
By a further communication dated March 1314 1961 the respondent was required to offer his explanation in respect of four allegations made in the said communication
The main allegations were that in respect of ledger accounts Nos 4 and 6 standing in the names of Messrs Commercial Bureau and Messers Evergreen Paper Syndicate and Messrs Gokul Chand Radharam respectively overdrafts had been allowed by the respondent from time to time without obtaining the sanction of the authorities competent to allow overdrafts
The other allegations were to the effect that the respondent who was charged with the duty of supervising both these ledgers
did not bring to the notice
of the authorities the said irregularities that must have come to his knowledge and that the pass book of ledger No 4 was missing
The respondent sent a reply dated March 17 1961 wherein he has admitted that in the course of discharge of his routine duties and responsibilities in good faith and honestly he had granted overdrafts to the parties referred to by the Bank temporarily in excess of their credits or limits without reference to the higher authorities
He also admitted that it was a blunder on his part and that he should not have done so
He offered an explanation to the effect that he was led to believe in the credit worthiness of the individuals because of their long association with the Bank and also because of the fact that on prior occassions overdrafts 253 had been granted to them in excess of permissible limits
He also stated that the Bank had not been put to any financial loss because of his having granted the overdrafts but he again admitted his negligence in not strictly abiding by the Bank s rules when he made the overdrafts
He however added that his conduct had always been guided by good faith and honesty
This Was the answer regarding the main allegations contained in the Bank s letter dated March 1314 1961
He also stated regarding the other minor allegations that it was not his duty to report about the debit balances which was the function of the ledger keeper and that he was not also responsible for the loss of the pass book of ledger No 4
He wound up his explanation by stating that his conduct in making the overdrafts without obtaining the sanction of the higher authorities was an omission which had been unfortunately committed by him and he expresed regret for the same and requested the management to excuse him accepting his explanation
The appellant Bank was not satisfied with the explanation offered by the respondent and communicated a charge sheet on June 3 1961
The main charges related to the overdrafts paid by the respondent in ledger Nos 4 and 6 without obtaining the permission of the proper sanctioning authority
The Bank also informed the respondent that he would be given a further opportunity to explain his conduct in relation to those matters and defend himself in the enquiry which would be held by the Agent of the Bank on June 20 1961 at 330 pm
The respondent again sent a reply dated July 11 1961 to the charge sheet served on him
In this reply also he admitted that in the course of discharge of his routine duties and responsibilities he had allowed the parties mentioned in the charge sheet to overdraw in excess of their credits without reference to the higher authorities and that it was a blunder on his part which he should not have committed
But he again reiterated that he in good faith and bona fide was led to believe about the credit worthiness of the parties who had long association with the Bank
He also emphasized here again that the Bank had not been put to any financial loss because of his conduct
He again admitted that this act of permitting the parties concerned to overdraw in excess of their limits without reference to the sanctioning authorities amounted to negligence but his conduct was perfectly bona fide and honest
He also offered explanation on the minor alle gations to the effect that it was the duty of the ledger keeper to give the figures regarding the overdrafts and that he had not done any mis reporting to the higher authorities
Finally he made a plea that he had been serving the institution for over 20 years without any blemish and the unfortunate omission done by him in the matter of not taking the sanction of the higher authorities might be excused accepting his expression of regret 254 The inquiry proceedings conducted by the Agent who was the Inquiry Officer produced before the Labour Court shows that the respondent was examined in the first instance
After eliciting answers regarding the duration of his employment in the institution and as to the nature of the work he was discharging he was asked about the charge sheet served on him as well as the explanation furnished by him
The respondent has categorically answered to the effect that he has understood the charge sheet and that he does not want to add anything more to the explanation that he has already submitted
This answer must have reference to the explanation furnished by him on June 20 1961 in answer to the charge sheet wherein he has admitted his mistake in sanctioning the overdrafts to the parties concerned with out obtaining the sanction of the appropriate authorities
But inasmuch as he has stated in his explanation that on prior occasions also overdrafts have been allowed beyond the permissible limits certain questions were put to him in respect of those matters
The respondent no doubt appears to have stated that some of the cheques issued to the parties concerned have been initialled by an Officer of the Bank Mr Bhatena
The respondent again squarely admitted in his answers that he has committed a blunder in granting advances on his own responsibility of about Rs 87000
He has also admitted that he did not make any reference to the Agent when passing the cheques regarding the accounts of Messrs Evergreen Paper Syndicate or Messrs Gokul Chand Radharam
During the course of the inquiry the respondent was allowed to search the records concerned and trace if possible any cheques that may have been initialled by Mr Bhatena and no such cheque could be traced
Inasmuch as three other officers whose conduct was being enquired into had made certain statements against the respondent the latter was asked as to whether he wanted to examine or cross examine those persons and the respondent very clearly stated that he did not like to cross examine anybody
The Management then examined Mr Bhatena and Mr Savkar two Officers of the Bank in the presence of the respondent
It is also seen that the respondent has also put certain questions to those two witnesses and he has also stated that he has no further questions to be put to them
At the conclusion of the recording of the evidence it is seen that the respondent finally made an appeal to the Enquiring Officer to consider his case sympathetically at the same time admitting his acts of omission in the discharge of his duties
He has also expressed his gratitude for the patient hearing that has been given to him during the inquiry
The Enquiry Officer in his report dated November 10 1961 has after referring to the nature of the enquiry conducted by him 255 found the respondent guilty of the main charges of having permitted the parties concerned to obtain overdrafts beyond the permissible limits without having obtained the sanction of the appropriate authorities
In this connection the Enquiry Officer has referred to the fact that these allegations have been admitted by the respondent
Regarding the other minor allegations that the respondent caused other officers to record debit balances incorrectly and the loss of the pass book relating to ledger No 4 the respondent was exonerated
The Enquiry Officer was of the view that the offence committed by the respondent of which he had been found guilty was very serious which merited dismissal but in view of the long number of years of service put in by the respondent and as no loss has resulted to the Bank itself he held that the respondent should be discharged from service
The Bank communicated the order of discharge by its letter dated June 27 1962 enclosing a pay order for Rs 47270 being the wages for one month viz July 1962
The respondent who had a right to file an appeal against this order of discharge based upon the finding of the Enquiry Officer does not appear to have had recourse to any appeal but on the other hand filed a representation dated July 11 1962 before the Managing Director of the appellant Bank
Even in this representation he has not in any manner attacked the enquiry proceedings nor the findings recorded by the Enquiry Officer
On the other hand he again admitted his fault in having permitted overdrafts to the parties concerned without obtaining the sanction of the appropriate authorities after expressing regret for his conduct
He also stated that the Bank had not suffered any financial loss because of his conduct
Having due regard to these circumstances he made a plea for mercy being shown to him by cancelling the order of discharge and permitting him to resume his duties in the Bank
The Managing Director by his communication dated September 17 1962 rejected the representation made by the respondent and declined to reinstate him in the Bank s service
In the meanwhile inasmuch as an industrial dispute was pending before the National Industrial Tribunal the appellant had filed an application before the said Tribunal on March 17 1962 under section 332 of the Act seeking approval of the action taken against the respondent on the basis of the recommendation of the Enquiry Officer
This application was transferred to the Central Government Labour Court Dhanbad on April 18 1962
in the objections dated September 2 1963 filed by the respondent before the Labour Court for the first time he raised the plea that in view of the advice given by the officers of the Bank he sent replies admitting his guilt regarding the allegations made against him by the Bank
He also raised the plea that the overdrafts that were given by him to the parties concerned were 256 really due to oral orders given by the then Agent and the Superintendent on telephone
He also raised the plea that he was not allowed to represent his case through the Union before the Enquiry Officer nor was he allowed to cross examine the persons making allegations against him
We have elaborately referred to the matters mentioned above because the question that arises for consideration in this appeal is as to the correctness of the view of the Labour Court that the domestic enquiry conducted by the Bank as against the respondent is not fair and that principles of natural justice have been violated
The Labour Court by its order under attack
has held that the domestic enquiry conducted by the Bank is not proper and that rules of natural justice have not been observed and in consequence it has declined to grant the approval sought for by the Bank
At this stage it may be mentioned that the Labour Court has held in favour of the management that it has complied with the proviso to section 332b of the Act as interpreted by this Court in its decision in Strawboard Manufacturing Co vs Gobind1
That is it has held that the action of the Bank by way of discharge payment of wages and making of the application for approval have been taken as part of the same transaction
For coming to the conclusion that the inquiry proceedings are violative of the rules of natural justice the Labour Court has given three reasons i in the inquiry the respondent has been examined even in the first instance and he was cross examined to elicit points in support of the charges ii the respondent was not allowed to crossexamine witnesses and iii the respondent was prejudiced in his defence as he had to conduct his defence without the assistance of the Union during the enquiry
There can be no controversy that the principles of natural justice must be observed in the conduct of a domestic enquiry and the workman concerned must be allowed reasonable opportunity to defend himself
It has also been held by this Court that rules of natural justice require that the workman proceeded against should be informed clearly of the charges levelled against him witnesses should be normally examined in the presence of the employee in respect of the charges if statements taken previously and given by witnesses are relied on they should be made available to the workman concerned the workman should be given a fair opportunity to examine witnesses including him self in support of his defence and the Enquiry Officer should record his findings based upon the evidence so adduced
So far as grounds Nos 2 and 3 given by the Labour Court are concerned it is clear from the record of the enquiry proceedings that the respondent was permitted to put questions to Mr Bhatena and Mr Savkar who were examined during the enquiry 1 1962 Supp 3 SCR 618
257 We have also referred to the fact that the Enquiry Officer has recorded that the respondent has stated that he has no further questions to be put to them
We have also referred to the fact that the inquiry proceedings show that the respondent was specifically asked as to whether he wanted to examine or cross examine the three other Officers whose conduct was also under enquiry and who had made certain statements against the respondent but the respondent categorically stated that he did not like to examine or cross examine any of those persons
The respondent has not stated even in the representations made by him to the Managing Director that he was not given any opportunity to cross examine the witnesses produced in the inquiry
Again even in his evidence before the Labour Court the respondent has categorically stated that he has not made any request in writing for being represented by the Union at the inquiry
Apart from the fact that he has no such right even factually it is seen that he made no such request
Therefore the findings of the Tribunal that the respondent was not permitted to cross examine the witnesses during the domestic enquiry and that he was prejudiced in his defence because he was not permitted to have the assistance of the Union are both erroneous
Then the question is as to whether the inquiry proceedings can be considered to have been conducted in violation of the rules of natural justice inasmuch as the respondent was examined even in the first instance
We have already indicated that as a fact it is borne out by the records that the respondent so far as the inquiry against him was concerned was examined in the first instance and Mr Bhatena and Mr Savkar were examined later
According to the Labour Court the object of the management in examining the respondent in the domestic enquiry even in the first instance was to have the charges substantiated by statements got out of the mouth of the employee rather than to examine witnesses for the Bank in support of the charges
It is the further view of the Labour Court that the respondent has been so to say cross examined just to elicit points in substantiation of the charges
These circumstances according to the Labour Court violate the principles of natural justice and as such vitiate the domestic enquiry
In this connection the Labour Court has relied upon certain observations contained in the judgment of this Court in Associated Cement Co Ltd vs Workmen1 viz It seems to us that it is not fair in domestic enquiries against industrial employees that at the very commencement of the enquiry the employee should be 1  661 258 closely cross examined even before any other evidence is led against him and draws the inference that under no circumstances should a workman whose conduct is the subject of disciplinary proceedings by a domestic tribunal should be examined in the first instance
We are of the opinion that no such conclusion could be drawn from the decision referred to above
In that case it will be Seen  the management had charge sheeted one Malak Ram with disorderly behaviour when a cinema show was being given
Malak Ram at all stages stoutly denied his having taken part in any hooliganism or rowdyism as alleged by the management
Under those circumstances instead of adducing evidence in the first instance regarding the allegations made against Malak Ram in the domestic enquiry the management commenced the proceedings with a very close examination of Malak Ram himself
The nature of the questions put to him also clearly indicated that the worker was being cross examined and answers sought to be elicited in support of the allegations made by the management
This Court in coming to the conclusion that the conduct of an enquiry in that manner constitutes a very serious infirmity made the ob servations quoted above
Therefore it will be seen that in that case when the workman concerned was totally denying the allegations made against him it was the duty of the management to let in evidence in the first instance to substantiate its allegations and permit the workman to cross examine those witnesses and also permit him to let in independent evidence in defence of his plea and this Court emphasized that the normal rule to be followed in such enquiries is as stated above
In the case before us we have already referred to the various proceedings that have taken place from which it will be seen clearly that the workman was  at all stages admitting the truth of the allegations made against him by the management
In his communication dated March 17 1961 as well as in his reply to the charges made by him on June 20 1961 he has categorically admitted that he has committed a mistake in permitting the constituents concerned to overdraw without obtaining the sanction of the appropriate authorities
Even when the enquiry proceedings began he had stated that he had nothing more to add in respect of the charges framed against him
When once the workman himself has in answer to the charge levelled against him admitted his guilt in our opinion there will be nothing more for the management to enquire into
That was the position in the case before us
Therefore we are not inclined to agree with the reasoning of the Labour Court that when there has been an admission  of guilt by the respondent himself it can still be stated that there is a violation of the principles of natural justice merely because of the fact that the workman was examined in the first instance
Nor are we impressed with the further view expressed by the Labour Court that the way in which answers 259 were elicited from the workman showed that there has been a cross examination by the management to obtain points in substantiation of the charges
We have gone through the entire examination of the respondent at the domestic enquiry and we are satisfied that there is no such infirmity
In fact the question of the management trying to obtain answers to support the charges does not arise at all in this case because the respondent has consistently admitted his guilt at all stages
On the other hand the nature of the questions put to the respondent clearly indicate that the management when once the workman had admitted his guilt was only giving him an opportunity to explain his conduct or to refer to circumstances if any which could be taken into account in extenuation of his conduct
The management had also permitted the respondent to put questions to the other two witnesses examined during the enquiry viz Mr Bhatena and Mr Savkar
We must however emphasize that the rules of natural jus tice as laid down by this Court will have to be observed in the conduct of a domestic enquiry against a workman
If the allegations are denied by the workman it is needless to state that the burden of proving the truth of those allegations will be on the management and the witnesses called by the management must be allowed to be cross examined by the workman and the latter must also be given an opportunity to examine himself and adduce any other evidence that he might choose in support of his plea
But if the workman admits
his guilt to insist upon the manage ment to let in evidence above the allegations will in our opinion only be an empty formality
In such a case it will be open to the management to examine the workman himself even in the first instance so as to enable him to offer any explanation for his conduct or to place before the management any circumstances which will go to mitigate the gravity of the offence
But even then the examination of the workman under such circumstances should not savour of an inquisition
If after the examination of the workman the management chooses to examine any witnesses the workman must be given a reasonable opportunity to cross examine those witnesses and also to adduce any other evidence  that he may choose
Having considered the enquiry proceedings in its entirety in this case we are satisfied that there has been no violation of the rules of natural justice
Therefore it follows that the order of the Labour Court refusing to grant approval as asked for by the management is erroneous and as such it is set aside
In the result the appeal is allowed  but parties will bear their own costs in this appeal
GC Appeal allowed


Summary:
The respondent who was an employee of the appellant bank was charged with issuing unauthorised overdrafts to a constituent
A domestic enquiry was held against him
In two written explanations before the enquiry he admitted the allegations against him and only pleaded extenuating circumstances
At the enquiry he was examined in the first instance having again admitted his fault he was asked certain questions by the Enquiry Officer in respect of the extenuating circumstances pleaded by him
Two more witnesses were then examined by the Enquiry Officer
Finally according to the latter s report the respondent was discharged
In proceedings under section 332b of the the Labour Court Dhanbad held that the enquiry was bad for violation of natural justice inasmuch as the respondent had teen examined before other witnesses and was unduly cross examined
The bank appealed by special leave
Held The rules of natural justice as laid down by this Court have to be observed in the conduct of a domestic enquiry against a workman
If the allegations are denied by the workman the burden of proving the truth of those allegations will be on the management and the witnesses called by the management must be allowed to be cross examined by the workman and the latter must also be given an opportunity to examine himself and adduce any other evidence that he might choose in support of his plea
But if the workman admits his guilt to insist upon the management to let in evidence about the allegations will be an empty formality
In such a case it will be open to the management to examine the workman himself even in the first instance so as to enable him to offer any explanation for his conduct or to place before the management any circumstances which will go to mitigate the gravity of the offence
But even then the examination of the workman under such circumstances should not savour of an inquisition
If after the examination of the workman the management chooses to examine any witnesses the workman must be given a reasonable opportunity to cross examine those witnesses and also to adduce any other evidence that he may choose
259D F In the present case the respondent in his written explanations had admitted the charges and therefore there was no violation of natural justice in first examining him
The questions put to him were not unfair
The Labour Court was wrong in not giving approval to his discharge
258F 259A G Associated Cement Co Ltd vs Workman  distinguished
Strawboard Manufacturing Co vs Gobind 1962 Supp
3 SCR 618 referred to251 252