ivil Appeal No 4381 of 1990
From the Judgment and Order dated 2381989 of the Bombay High Court in WP No 494 of 1982
Ashok H Desai Solicitor General Shishir Sharma and PH Parekh for the Appellant
Vinod Bobde SV Deshpande and PS Sadavartey for the Respondents
The Judgment of the Court was delivered by SAWANT J
Special leave granted
The appeal is set down for hearing by consent of both the parties
This appeal involves a question of interpretation of paragraphs 5215e and 52110c of the Award of the All India Industrial Tribunal Bank Disputes which is popularly known as the Shastri Award hereinafter referred to as the Award and is important for the entire banking industry in the country covered by the Award
In order to appreciate the significance of the ques tion it is necessary to narrate the facts leading to this appeal
The employee concerned was working as a clerk in the Gadchiroli branch of the appellant State Bank of India at the relevant time
A departmental inquiry was held against him for four acts of misconduct and the 16 inquiry officer came to the conclusion that two of the charges were fully proved while one charge was proved to a limited extent and the fourth charge was not established
On the basis of the report of the inquiry officer the compe tent authority tentatively decided to dismiss the employee from service and issued a notice to him under paragraph 52 110a of the Award to show cause as to why the said punishment should not be imposed on him
The competent authority also gave him a hearing as required by the said provision and thereafter passed an order the operative and relevant part of which is as follows Looking at the entire case I find that the established charges viz uttering indecent word threatening the Agent and failure to do the work allotted are quite serious charges and would warrant dismissal
However the employee has had the benefit of a very tenacious defence from the date of the issue of the show cause notice for dismissal and various arguments have been raised with a view to evade the punishment which would normally follow out of the serious ness of the offences
Taking note of them even though I do not quite find them tenable as indicated in my detailed observations thereon and of the extenuating circumstances most important of which is the comparatively young age of the employee I have decided not to impose the punishment of dismissal
At the same time I am of the opinion that it would not be desirable to retain Shri Sadavarte in the Bank s service and accordingly I order that he be discharged on payment of one month s pay and allowances in lieu of notice
In terms of para 52110c of the Sastry Award this would not amount to disciplinary action
An industrial dispute was raised by the first respondent Union and in due course it was referred to the Central Govt
Labour Court Bombay for adjudication
By its award of March 2 1981 the Labour Court held that the order of dismissal of the petitioner was proper
Against the said decision the respondent Union preferred a writ petition before the High Court raising several contentions
The High Court confined its decision only to one point viz whether the termination of the service was retrenchment and if so whether it was made in accordance with the provisions of Section 25F of the hereinaf ter referred to as the Act
The Court held that the termi nation of the services was retrenchment and was made in breach of the said provisions in as much as no retrenchment 17 compensation was paid to the employee
The termination of the services was therefore set aside
It is not possible to sustain the view taken by the High Court since it proceeds on too literal an interpreta tion of the provisions of paragraphs 5215e and 52 110c of the Award and ignoring their context
We may first refer to the provisions with regard to retrenchment under the Act
Section 200 of the Act defines retrenchment as follows Retrenchment means the termination by the em ployer of the service of a workman for any reason whatsoev er otherwise than as a punishment inflicted by way of disciplinary action but does not include a voluntary retirement of the workman or Compensation in cases of retrenchment
As pointed out above paragraph 521 is in Section 111 which contains the only other paragraph namely paragraph 520
That paragraph is a prologue to Section III and to paragraph 521 which both deal with procedure for taking disciplinary action
Para 520 reads as follows Under the subject of disciplinary action we deal with dismissal suspension warning or censure fine the making of adverse remarks and the stoppage of an increment
 It is therefore clear both from the heading of Section 111 as well as from the contents of para 520 that the provisions of para 521 deal with nothing but disciplinary action and tile procedure for taking such action
Paragraph 521 which is a self contained code of disciplinary action and of the procedure for taking it begins with the following statement A person against whom disciplinary action is proposed or likely to be taken should in the first in stance be informed of the particulars of the charge against him he should have a proper opportunity to give his expla nation as to such particulars
Final orders should be passed after due 18 consideration of all the relevant facts and circumstances
With this object in view we give the following directions  
It classifies delinquencies into three categories namely i offences ii gross misconduct and iii minor miscon duct and prescribes procedure to deal with each of them
Sub paragraph 1 to 3 deal with the cases of of fences
Sub para 1 defines offence to mean any act involv ing moral turpitude and for which an employee is liable to conviction and sentence under the provisions of law
Sub para 2a states that when in the opinion of the management the employee has committed an offence and he is not prose cuted by the prosecuting agency the bank may take steps to prosecute him or get him prosecuted
The bank is also empow ered to suspend the employee in such circumstances
Sub paragraph 2b states that if the employee is convicted in such prosecution he may either be dismissed or be given any lesser form of punishment as mentioned in sub para 5 below
However if he is acquitted with or without the benefit of doubt sub para 2c lays down two different procedures to meet the two situations
It states that even if an employee is given a clean acquittal it is open to the management to proceed against him under the provisions set out in sub paras 9 and 10 relating to discharges
It may be mentioned here that the provisions with regard to the discharges in sub paras 9 and 10 referred to here are contained only in sub para 10c and they come into play only when the management decides under sub para 9 to take a disciplinary action and the action is taken after the procedure for the same as laid down in sub para 10 is followed
But with that we may deal with a little later
In cases of clean acquittal and a departmental inquiry held thereafter the management is given yet another option
Instead of the discharge as provided under sub para 10c the management may only terminate the services of the em ployee with three months  pay and allowances in lieu of notice if it comes to the decision not to continue the employee in service
In such cases he shall be deemed to have been on duty during the entire period of suspension if any and therefore shall be entitled to the full pay and allowances minus the subsistence allowances he had drawn and also to all other privileges for the period of suspension
Such simple termination of service is not provided for either in sub para 5 or in sub para 10
Thus it is obvious from sub paragraph 2c that when a departmental inquiry is held or 19 when disciplinary action is taken in case of a clean acquit tal
two options are given to the management namely
i to discharge the employee under sub paragraph 10c with or without notice or on payment of only a month s pay and allowances in lieu of notice but without the benefit of the suspension being converted into a period of duty or ii to terminate the services with three months  pay and allow ances in lieu of notice and also with the further benefit of converting the period of suspension into a period of duty
However when the acquittal is with the benefit of doubt and the management does not proceed to discharge the employee under sub para 10c but wants to resort to the second option of the termination of service with three months  pay and allowances in lieu of notice it is left to the discretion of the management to pay the employee such portion of the pay and allowances for the period of suspen sion as the management may deem proper and unless the management so directs the period of suspension is not to be treated as the period spent on duty
It should however
be remembered that the course of action open to the management under sub paragraph 2c is in the alternative to and not in negation of the other modes of punishment namely to dis miss etc
the employee
What is however necessary to note is the distinction between an action of discharge following the disciplinary proceedings under sub paras 9 and 10 and that of simple termination of service under sub para 2c
The same distinction is also maintained in sub para 2d
Sub para 3 throws yet more light on the subject
It states that where an employee is guilty of an offence but he is not put on trial within a year of the commission of the offence the management may deal with him as if he had committed an act of gross misconduct or minor miscon duct as the case may be
The employee may not be put on trial within an year either because the prosecuting author ity refuses to do so or because it comes to the conclusion that there is no case for prosecution
Hence although the management is empowered to proceed against the employee under the provisions set out in sub paras 9 and lO relating to discharge he has to be given the benefit of being treated on duty for the period he was under suspension if any and he is entitled to all the further benefits accruing on that account
In the departmental inquiry following such non prosecution the management may also come to the decision not to continue the employee in service
In that case instead of proceeding against him
under the provisions relating to discharge in sub paras 9 and 10 the management is empowered to terminate his services with three months  pay and allowances in lieu of notice as provided in sub para 20 2
Thus sub paragraph 3 like sub para 2 also makes a distinction between discharge under sub paragraph 10c and a mere termination of service with three months  pay and allowances in lieu of notice
It is the latter action which amounts to the simple discharge and for it a separate provision is made in paragraph 522 in Section IV
We will refer to that provision at a later stage
What is necessary to bear in mind at this stage is the distinction made be tween the discharge under sub paragraph 10 and simple termination of service in sub paras 2c 2d and 3
Sub para 4 of paragraph 52 1 defines gross miscon duct and sub para 5 prescribes punishment for gross misconduct
Sub para 6 defines Minor misconduct and sub para 7 prescribes punishment for such misconduct
Sub para 8 then states the manner in which the record is to be kept when action is taken under sub paras 3 5 or 7 which deal with the punishment for gross misconduct or minor misconduct as the case may be
Sub para 5 as stated above follows on the heels of the enumeration of gross misconducts in sub para 4 and reads as follows 5 An employee found guilty of gross misconduct may a be dismissed without notice or b be warned or censured or have an adverse remark entered against him or c be fined or d have his increment stopped or e have his misconduct condoned and be merely discharged
It should be clear from the context in which sub clause e of subparagraph 5 occurs that the entire expression namely have his misconduct condoned and be merely dis charged has nothing but penal implications and the measure mentioned therein is a sequel to the disciplinary action taken for one of the gross misconducts mentioned in sub para 4
It is not possible to arrive at any other conclusion on a reading of the sub paragraph as a whole
The discharge spoken of there is nothing but a punishment for a gross miscon 21 duct
This is so not only because it is enumerated as one of the punishments along with others but also because firstly there is a provision of simple discharge elsewhere in para graph 522 of the Award as pointed earlier and when the Award intended to provide for it it has done so in sub paras 2c 2d and 3
If it was intended to provide for a discharge simpliciter there which was not meant to be penal there was no need to enumerate it in sub para 5 which specifically enumerates punishments for acts of gross misconduct
Secondly nothing prevented the authors of the Award in stating in the said sub clause e that the discharge simpliciter was in terms of paragraph 522
We have pointed out earlier the distinction made by the Award in sub paragraphs 2c 2d and 3 between the discharge following proceedings under paras 9 and 10 and the simple termination of service or discharge simpliciter as contemplated by paragraph 522
Sub paragraphs 9 and 10 of paragraphs 521 lay down the procedure for taking disciplinary action as well as for awarding punishment following such action
Sub para 9 says that when it is decided to take a disciplinary action against an employee such decision shall be communicated to him within three days thereof
Sub Para 10a then lays down the procedure to be followed while conducting the disciplinary proceedings
It also enjoins upon the manage ment to give the employee a hearing with regard to the nature of the proposed punishment
The latter provision has also bearing on the construction of sub clause c thereof
We will advert to it instantly
Sub clause b of sub para 10 gives power to the management to suspend the employee pending inquiry
Its other provisions also throw light on the construction of sub clause c thereof
These provisions state that although the employee is suspended during the inquiry if on the conclusion of the inquiry it is decided to take no action whatsoever against him he shall be deemed to have been on duty throughout the period of suspension and would accord ingly be entitled to the full wages and allowances and all other privileges for the said period
On the other hand if some punishment other than dismissal is inflicted it is left to the discretion of the management to treat either the whole or a part of the period of suspension as on duty with the right to corresponding portion of the wages allowances etc
These provisions would indicate that discharge under sub paras 2c 3 5 and 10c is also a punishment for when the employee is discharged under the said provi sions after inquiry under the provisions of sub paras 9 and 10 there is no provision made for treating either the whole or part of the period of suspension during the in quiry as on duty
22 Then follows the provision of sub clause c which is crucial for our purpose
The said sub clause reads as fol lows In awarding punishment by way of disciplinary action the authority concerned shall take into account the gravity of the misconduct the previous record if any of the employee and any other aggravating or extenuating cir cumstances that may exist
Where sufficiently extenuating circumstances exist the misconduct may be condoned and in case such misconduct is of the gross type he may be merely discharged with or without notice or on payment of a month s pay and allowances in lieu of notice
Such dis charge may also be given where the evidence is found to be insufficient to sustain the charge and where the bank does not for some reason or other think it expedient to retain the employee in question any longer in service
Discharge in such cases shall not be deemed to amount to disciplinary action
 In view of the fact that sub clause a requires that a hearing should be given to the employee against the proposed punishment the authority is enjoined under sub clause c to take into account the gravity of the mis conduct the previous record of the employee and any other aggravating or extenuating circumstances that may exist and may be brought on record while awarding punishment by way of disciplinary action
The sub clause then provides for discharge with or without notice or on payment of a month s pay and allow ances in lieu of notice
The punishment of discharge is to be awarded in two circumstances
The first circumstance is when there are sufficiently extenuating circumstances but the misconduct is of a gross type
In other words where the misconduct is not of a gross type and there are exten uating circumstances the misconduct may merely be condoned without the authority proceeding to inflict the punishment of discharge
That is made clear by stating thus and in case such misconduct is of the gross type he may be merely discharged etc
The second circumstance in which the au thority is given power to inflict such discharge is when the charge is such that the Bank does not for some reason or other think it expedient to retain the employee any longer in service but the evidence is insufficient to prove the charge
Read in the context therefore the discharge given under sub clause c can hardly be doubted as being a pun ishment
However as was sought to be contended on behalf of the respondent Union and certainly with some force the last sentence of the said clause is couched in 23 a language which is calculated to create considerable doubt and confusion with regard to the true nature of the action of discharge spoken of there
The said sentence states in so many words that the discharge effected under both the cir cumstances shall not be deemed to amount to disciplinary action
Read in isolation the said sentence does purport to convey that the discharge is not by way of a punishment and on that score we may not find any fault with the reason ing of the High Court
But as stated at the very outset we have to read this sentence also in its proper context and in the light of the other provisions of the Award
As pointed out earlier one of the two circumstances in which such discharge is to be effected is when the miscon duct is of a gross type and even if there are extenuating circumstances
It is to provide a punishment precisely for misconducts of gross type that a provision for such dis charge is made in sub clause e of sub para 5 to which we have already made a reference
Read with the said sub para 5e the provision of the present sub clause c of sub para 10 becomes more clear
If a misconduct is not of a gross type it may be merely condoned without any further action
But when it is of gross type the authority has no option but to condone and to proceed to discharge the em ployee
The expressions used both in sub para 5e and sub para 10c in that respect are identical
Similar is the action contemplated for the second circumstances referred to in sub para 10c namely when the charge though unsustain able for want of evidence is such that it is considered inexpedient to retain the employee in service
If our reading of the provisions is correct then it needs no elaborate explanation as to why the punishment of discharge both in sub para 5e and 10c has been worded as it is and why further it became necessary to add the last sentence to sub para 10c
Since in the context such a discharge is by way of punishment the relevant provisions give a discretionary power to the authority to convert what would otherwise be a dismissal into a mere discharge
This is for the benefit of the employee
It protects him from the baneful consequences of dismissal
At the same time it relieves the management of the burden of retaining him in service when it has become inexpedient to do so
Thus the provision of such discharge works to the advantage of both
At the same time it cannot be gainsaid that the said dis charge is as a result of the disciplinary proceeding
Al though in form it may not and for the reasons stated above in the peculiar circumstances it is intended that it should not look like a disciplinary action it cannot be denied that it flows from and is a result of the disciplinary proceed 24 ings
To make clear
however that the action though spawned by the disciplinary proceedings should not prejudice the employee the last sentence in question has been added by way of an abundant precaution
That this is not a discharge simpliciter or a simple termination of service becomes clear when it is compared both with the provisions of paragraph 5221 and with those of sub paras 2c 2d and 3 of paragraph 521 itself
Paragraph 522 as stated earlier is in section IV and is entitled procedure for termination of employment as dis tinct from the title of section III namely procedure for taking disciplinary action in which paragraph 521 occurs
Paragraph 522 begins by saying We now proceed to the sub ject of termination of employment
We give the following directions   Thereafter in sub paragraph 1 thereof it speaks of a simple termination of service of a permanent employee and in sub paragraph 4 talks of simi lar discharge simpliciter of employees other than permanent employees
But what is important to note is that the dis charge simpliciter or simple termination of service which is provided for here has two distinguishing features
Firstly it is effected in cases not involving disciplinary action for mis conduct and secondly it is to be effected by giving three months  notice or of payment of three months  pay and allowances in lieu of notice in the case of permanent employees and by giving one month s notice or on payment of one month s pay and allowances in lieu of notice in case of probationers
There is some apparent conflict in the provi sions of sub clause 1 and sub clause 4 with regard to the period of notice in case of an employee other than a permanent employee
It is however immaterial for our purpose
There are yet other conditions imposed by sub para 6 of paragraph 522 when the termination of the service of the employees is on account of the closing down of the establishment or when retrenchment of more than 5 employees is to be effected
But those conditions again do not oblit erate the distinction between discharge simpliciter or simple termination of service other than as a result of a disciplinary proceeding and discharge effected under sub paras 5e and 10c as a result of such proceedings
As stated earlier the termination of employment other than discharge provided for in sub paras 2c 2d and 3 of paragraph 521 also requires three months  pay and allow ances in lieu of notice as do the provisions of paragraph 5221
But unlike the provisions of paragraph 5221 which require three months  notice or payment of three months  pay and allowances only in case of permanent employees and one month s notice or one month s pay and allowances in lieu of notice in case of employees other than per 25 manent employees the relevant provisions of paragraphs 5212c and 5213 require a notice of three months  or pay and allowances for three months  in lieu of notice in respect of all employees
Further what is equally important to note is that whereas para 5221 and 5212c and 3 relating to simple termination of service require the requisite notice to be given or the payment of salary allow ances in lieu thereof
the provisions of discharge contained in the sub paras 2c and 3 and 10c of para 521 do not in all cases require notice or pay and allowances in lieu of notice
The discharge may also be affected under the said provisions without any notice or pay and allowances in lieu of it
Thus the distinction between the discharge contemplated under paragraph 52110c and discharge sim pliciter or simple termination of employment under the other provisions is clear enough
This will also show that the two belong to different categories and are not the same
While the former is intended to be punitive
the latter is not
As is further clear from the provisions of paragraphs 5212c
2d and 3
the discharge contemplated there
as against simple termination
is in proceedings under sub paragraphs 9 and 10 infra relating to discharge
In other words
it is as a result of a disciplinary proceed ing 12
Apart from it we find that to construe the dis charge under 5215e and 52110c as a simple discharge not flowing from disciplinary proceedings will deprive an employee of a valuable advantage
viz that of challenging the legality and propriety of the disciplinary action taken against him
whatever the form of the order by showing that he was either not guilty of any misconduct or that the misconduct was not of a gross type or that the punishment meted out to him by way of discharge was not warranted in the circumstances etc
It is not
therefore
in the inter ests of the employees to construe the provisions as the High Court has done
The predominant object of the Award is to protect the interests of the employees
It is for all these reasons that we are unable to accept the very able arguments advanced by Mr Bobde on behalf of the respondent Union to support the reasoning of the High Court
The result to our aforesaid discussion is that the termination of service of the employee in the present case under paragraph 52110c of the Award is as a result of the disciplinary proceedings and is punitive
It is there fore
not retrenchment within the meaning of Section 200 of the Act
Hence there was no question of complying with the provisions of Section 25F of the Act
The decision 26 of the High Court has
therefore to be set aside
In view of the interpretation placed by us on the provisions of paragraph 5215e and 52110c there is a queer situation in which both the appellant Bank and the respondent Union would find themselves
The Bank has been supporting the interpretation which we have placed and the respondent Union has been opposing it
but both not looking beyond their immediate interest involved in the present case which is qua an individual employee
We are happy that the Bank has canvassed the view that it has done in this case
For that view is calculated to benefit the employees at large and in the long run though it may be to its advan tage and to the disadvantage of the individual employee in this case
The respondent Union however by pressing the proposition to the contrary was supporting a view which was not in the interests of the employee at all
Though there fore it may be a loser in the present case it should thank itself that the interpretation is not in accordance with the submissions made on its behalf
This leaves us with the question of the relief to be granted in the present case
Shri Bobde
submitted that if we are not to accept the interpretation placed by the High Court on the provisions in question we should remand the matter to the High Court for deciding the other contentions raised in the writ petition since the court had not gone into the same and had allowed the petition only on the basis of its interpretation of the said provisions
We find that this course is not advisable in the present case for various reasons
The mis conducts complained of against the employee are of 1966
He was chargesheeted in January 1968 and re moved from service on April 9 1970
The Court proceedings have been pending since then till today ie for more than about 23 years now
In the meanwhile we are informed that the appellant who was a clerk on the date he was charge sheeted has become a lawyer and has been practicing as such
We further find that the mis conducts which are held proved by the Labour Court are of gross type within the meaning of paragraph 5214 of the Award
The Labour Court is the final fact finding forum
Further
while setting aside the order of the Labour Court the High Court has granted re instatement in service and back wages as follows i 50 per cent of the back wages from 9470 to 241175 which is the date of the reference for adjudication to the Labour Court on the ground that the damages for the delay in making should be shared by both the parties equally and ii full back wages 27 from 251175 till 31579 on the ground that though the employee started his practice as a lawyer in June 1978 he was not well settled in practice for the first year and iii no back wages for the period from 1679 till the date of his re instatement which is the date of the High Court s judgment
ie August 23 1989
Shri Desai
the learned Solicitor General appearing for the Bank wanted to produce before us a letter from the Maharashtra State Electricity Board to show that in fact the employee was in gainful employment with the said Board for about six years
Although we have not taken the said letter on record there is no denial of such employment from the side of the employee
We are further informed that pursuant to the order of the High Court the employee has already received an amount of Rs93000
The effect of our decision would be to set aside not only the order of re instatement but also of the back wages which would require the employee to refund the said amount of Rs93000
Of course Shri Bobde stated that the employee was prepared to refund the said amount and to contest the petition on other grounds
At present
the employee is in his fifties
Taking into consid eration all the facts we are of the view that it would serve the interests of justice if we set aside the order of the High Court and restore that of the Labour Court without requiring the employee to refund the amount which he has already received
The appeal is allowed
accordingly
There will be no order as to costs
N V K Appeal allowed


Summary:
The petitioner sought admission to a medical college in the State of Maharashtra on the footing that she belonged to the Scheduled Tribe of Mahadeo Koli and submitted several caste certificates including her father s Secondary School Leaving Certificate
The Scrutiny Committee the expert body for determining such claims rejected her claim on the basis of entries made in 1945 in the register of the Municipal Primary School where her father had his primary education which showed that the caste of the petitioner s father was recorded as Son Koli 
This decision was upheld by the Additional Commissioner for Tribal Development
The High Court summarily dismissed the petitioner s writ petition
In the Special Leave Petition before this Court on behalf of the petitioner it was contended that the High Court was in error in rejecting the Writ Petition summarily and that the Scrutiny Committee had proceeded on an entirely erroneous basis as the real basis of the petitioner s claim was that Son Kolis were a section of the Schedule Tribe of Mahadeo Koli
Dismissing the Special Leave Petition this Court HELD Entry 29 of the list of Scheduled Tribes in the State of Maharashtra appearing in Para 9 of the shows that Koli Mahadeo  is a Scheduled Tribe recognised in Maharashtra
In the list of Backward Classes issued by the State Kolis are recognised as belonging to other backward classes
Son Kolis are shown as belonging to other backward classes in the list of other backward classes
These docu ments nowhere support the claim that Son Kolis are a section of Scheduled Tribe of Mahadeo Koli
Though Kolis are de scribed as a tribe in the publication entitled Transactions of the Bombay Geog 2 raphical Society from 1836 to 1838 a perusal of the rele vant observations shows that no distinction has been drawn in the said publication between castes and tribes
2D F Admittedly Mahadeo Koli is a Scheduled Tribe whereas Son Koli is a caste
The Scrutiny Committee cannot be fault ed for placing great reliance on the entries in the register of the primary school where the petitioner s father took his primary education as at the time when these entries were made there was no reason why he should have made a wrong statement about the caste or tribe to which he belonged
These entries were made in 1945 when there was no special advantage which the Scheduled Tribe of Mahadeo Koli enjoyed over the members of the caste of Son Koli
The certificates relied upon by the petitioner have been rejected by the Scrutiny Committee primarily because these certificates were inconsistent with the entries in the said register of the Primary School relating to the petitioner s father to which the Committee attached great probative value as it was of the view that they were made at a time when no question of making any manipulation arose
The reasons given by the Scrutiny Committee for the rejection cannot be said to be irrelevant or perverse
There is no complaint that the rules of fair play have not been observed by the Scrutiny Commit tee
4A E