C.W.P. No.21600 of 2008 -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No.21600 of 2008 Date of Decision: 04.11.2009 State Bank of Patiala .....Petitioner Versus The Presiding Officer, Central Govt. Industry Tribunal-cum- Labour Court-I, Chandigarh and another ....Respondents Present: Mr. Vikas Chatrath, Advocate for the petitioner. Mr. P.C. Arora, Advocate for respondent No.2. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? Yes 2. To be referred to the Reporters or not ? Yes 3. Whether the judgment should be reported in the Digest? Yes -.- K. KANNAN J. 1. On a reference sought at the instance of the workman challenging the order of the management dismissing him from service, the Labour Court had set aside the punishment, while still upholding the misconduct attributed to the workman and directed that the workman shall suffer punishment of stoppage of five increments with cumulative effect. The modification of the punishment was in purported exercise of its power under Section 11-A of the Industrial Disputes Act. 2. The order that gave rise to the termination of service for the workman was after an issuance of a charge-sheet and a C.W.P. No.21600 of 2008 -2- domestic enquiry. The misconduct attributed to the workman was that during his tenure as a Godown Keeper with the State Bank of Patiala, Ludhiana Branch, he had allowed the goods, which had been hypothecated by the Bank to a customer in a godown to be substituted for inferior quality, which according to the management was prejudicial to the interest of the Bank and constituted a misconduct when a Godown Kepper was responsible for the safe custody of all the stocks pledged to the Bank in his charge and for all loss or damage to stocks or any deficiency or carelessness on his part with regard to various duties. The attempt during enquiry was to show that there had been no loss since the goods, which were in the godown were sufficiently valuable to cover the advances but still the Enquiry Officer found that the workman had allowed the goods of book value of Rs.4,50,224.35, which had been actually pledged to be removed at the instance of the borrower and stocks of paper/board of inferior quality aggregating to mere Rs.1,33,004/- had been substituted. The enquiry was assessed by the Labour Court to be fair and proper but found that the workman had been indiscreet or negligent but could not be attributed with any intent for misappropriation or deliberate act that could invite a serious punishment of dismissal from service. 3. The management which has challenged the order of the Labour Court sought to contend that if the enquiry had been fair C.W.P. No.21600 of 2008 -3- and proper as found by the Labour Court, the observation that the workman had no intention of transferring of stocks for wrongful gain or that he could not be stated to have acted against the interest of the Bank, could not be correct. In such an eventuality, even the Labour Court did not have the power to substitute the punishment awarded by the disciplinary authority. Referring to a judgment of this Hon'ble Court in Jaswant Singh Vs. Deputy General Manager Personnel, Punjab & Sind Bank and another 2008 (2)SCT 134, the learned counsel for the petitioner would contend that even if actual financial loss was not established, a mere attempt to misappropriate public funds gave rise to loss of confidence in such an employee rendering him unfit for retention in bank service. The Bench observed that even an acquittal by a Criminal Court could not preclude the employee from drawing up a disciplinary proceeding against the delinquent. The Court, therefore, reasoned that it would not interfere with the decision of the punishment authority especially in the absence of mala fides or violation of principles of natural justice in the conduct of the management. Learned counsel also refers to a decision of the Hon'ble Supreme Court in U.T. State Road Transport Corporation Vs. Vinod Kumar 2008(1) SCC 115 where the Hon'ble Supreme Court said that the Court should be reluctant to sport misplaced sympathy for a workman, who was charged with offence of misappropriation of funds and if the employer had lost C.W.P. No.21600 of 2008 -4- confidence or faith in such an employment, the punishment of dismissal from service ought not to be interfered. Referring to yet another decision in Employers Management West Bokaro Colliery of TISCO Ltd. Vs. Concerned Workman, Ram Pravesh Singh 2008(2) LLJ 309, the learned counsel urged that if the Enquiry Officer had found that the charges levelled against the workman had been established beyond reasonable doubt, the Court would be unjustified to set aside the order of the disciplinary authority confirming the Enquiry Officer's report and inflicting the workman with punishment of dismissal. The Hon'ble Supreme Court held that in a case where two views were possible on the evidence on record, then the Industrial Tribunal shall be very slow in coming to a conclusion other than the one arrived at by the domestic Tribunal by substituting its opinion in place of the opinion of the domestic Tribunal. 4. In this case, although the charges are seemingly serious, the nature of misconduct, which was attributed to the workman and the circumstances under which they came about would require a further dilation. It was not a case of misappropriation and the resultant loss of trust as found in the Division Bench judgment in Jaswant Singh's case or the Hon'ble Supreme Court judgment in U.T. State Road Transport Corporation's case. Nor was it again a case like the one that obtained in the case of Employers Management West Bokaro Colliery of TISCO Ltd., C.W.P. No.21600 of 2008 -5- where the workman had been charged with indecent, riotous and disorderly behaviour with superior officers. The charge in this case was that in violation of the instructions of the Bank, the workman had delivered in unauthorized manner stocks to a customer, who had availed of a credit limit from the bank on the security of hypothecation of some goods and had substituted the goods of lesser value. The gravity of charge could be again understood only in the context of how the incident had happened and how limited a role that the workman had in the process. 5. The workman had joined the bank in the year 1973 and after six years of service as a Peon, he had been transferred to Khanna Branch. He was promoted in November 1984 as a Record Keeper/Godown Keeper and posted at Miller Ganj, Ludhiana Branch. The workman claimed that he had not been himself fully conversant with the Godown Keeper's duties since it was a technical job. The customer M/s S.C. Mehra had been an established customer with the Bank for more than 20 years and he had been well acquainted with the Branch Manager and he had no reason to suspect the bona fides of the customer. It was an admitted case that the operations of M/s S.C. Mehra were without any blemish and after the death of Mehra, a new partnership called M/s Mehra Sales and still later Rajendra Trading had been formed and which continued the financial transactions with the Bank. There were several godowns for the customer where large C.W.P. No.21600 of 2008 -6- paper boards had been stored. All the goods had not been taken any one time from a single premise. They have been stored in several godowns. It was revealed by the management witness PW-1 who said, "during my posting I have observed that EPA (workman) was gentle, honest and not mischievous till the incident of shortage came to notice." This shortage was again spoken to by PW-1 as having been noticed during an inspection done in Godown Nos.30, 32, 37 and 34. The goods, which were supposed to have been substituted could be seen to be not mere small items but they were huge bales of papers, card-boards or papers, straw board, duplex board etc. The nature of entrustment by the customer was that the goods stored in his own godown had been hypothecated to the Bank and to that extent, the Bank had purported to have taken possession of the godowns themselves with their own staff posted to keep vigilance against pilferage. All these goods could not have been taken out surreptitiously. They must have been more in the nature of accounting entries. The pilferage was reported by referring to the entries in the stock books and comparing them with the statement of accounts submitted by the customer as well as the stocks in the various godowns. The statement of account with the enclosures revealed the goods, which were reported to have been pledged varied with the actual verification of some goods which had been shown in the accounts as having been pledged. The personal inspection at C.W.P. No.21600 of 2008 -7- the various godowns was supposed to have revealed that the goods were of inferior quality. The other witness PW-2 also vouched in his evidence when he said that the functioning of the workman had always been satisfactory and his evidence was merely to the effect that by comparison of the documents relating to hypothecation and personal verification, there had been variance and the shortage was bound to be attributed to the workman's carelessness. Both the management witnesses had not spoken about any misappropriation of stocks. Both of them had not even given any evidence about active connivance of the workman with the customer. 6. On the other hand, the Branch Manager, Inder Singh, who was at that time having the transactions with the customer had been examined as DW-2. He had spoken about the fact that as soon as he came to know about the shortage after the inspection, he had called for an explanation from the workman. He gave evidence to the effect that the physical verification had not been done in the presence of the customer Harish Mehra but he himself had informed that if there was any shortage, he would make good the same. Smt. Shakuntla Devi wife of late Sh. G.M. Mehra who had also guaranteed the operation of the accounts, undertaken not merely to clear the dues but also to ensure that the shortage was made good. The Branch Manager had given evidence to the effect that the customer himself had manoeuvred C.W.P. No.21600 of 2008 -8- to substitute the goods that had resulted in shortage. 7. The Enquiry Officer had not stated anywhere that the workman had been guilty of misconduct of misappropriation or connivance with the customer for the release of goods which had been hypothecated. The Enquiry Officer, however, found that the Store Keeper was always responsible for the safety of the goods and if there had been a shortage and the goods had gone out, it could have been done only with the knowledge of the Store Keeper. The Enquiry Officer also found fault with the workman in not having reported to the Head Office immediately when the workman had self-confessed inadequate experience in handling the work as a Godown Keeper. He also found fault with the lapse of the workman in being silent and continuing with the performance as Godown Keeper and found him guilty of the charges. 8. The facts, which had been elicited in the enquiry before the Enquiry Officer revealed that the workman had been negligent; he had not been sufficient prudent in keeping proper track of the goods that had been entered in the stock registers and whether they tallied with the actual existence of the stocks within the godowns. If the goods had been substituted, it was more the result of negligent act than any deliberate act amounting to misappropriation or fraud. As I have already observed both the management witnesses had vouched for the good conduct of the C.W.P. No.21600 of 2008 -9- Store Keeper at all times except the singular incident whether the verification showed that there had been a shortage. It was under these circumstances that the Labour Court found that although the enquiry was fair and proper and although the charge had been proved, it would be grossly unjust to visit the workman with the dismissal from service and altered the punishment to one of stoppage of five increments with cumulative effect. The power to substitute the punishment where it was grossly excessive certainly resided with the Labour Court by virtue of the provisions under Section 11-A of the Industrial Disputes Act. The Labour Court had considered what was relevant and had modified the punishment. The decisions relied on by the learned counsel for the management dealt with instances of actual misappropriation and conduct of the workman that were highly questionable. Even the Manager of the Bank, who was responsible and who was working in the Branch at that time when the alleged shortage was found, had spoken to support the defence of the workman. There had been actually no loss to the management. The fact of actual loss has always been taken to be irrelevant when there was a case of misappropriation but in this case it was not a case of misappropriation stricto sensu; on the other hand it was a case of substituted security of inferior value at the instance of a customer who had a long standing association with the Bank and whose credibility could not have been C.W.P. No.21600 of 2008 -10- suspected by the lowly placed Store Keeper. The Labour Court did not find fault with the ultimate findings recorded by the Enquiry Officer. It only found by examining the circumstances and the nature of misconduct attributed to the workman that it was not a brazen act of dishonesty. It was a misconduct in a technical sense of having to own up the responsibility for the integrity of the stocks in his control. The workman had definitely fallen below the benchmark but perhaps too far below the notch to visit him with the punishment of dismissal and hence modified by the Labour Court. 9. The learned counsel also argued that the issue of back wages would have to be seen always in the context of the evidence and merely because dismissal order is set aside, the workman shall not have the benefit of back wages. The learned counsel relied on the decisions of the Hon'ble Supreme Court in Krishi Utpadan Mandi Samity, Manglor Vs. Pahal Singh 2007 (12) SCC 193 and General Manager, Haryana Roadways Vs. Rudhan Singh 2005(5) SCC 591. In the former case in Krishi Utpadan Mandi Samity, Manglor Vs. Pahal Singh, the Hon'ble Supreme Court was referring to the facts that would have to be taken into account for awarding full back wages and in the latter, in General Manager, Haryana Roadways Vs. Rudhan Singh, dealing with the case of a daily wager who had worked only for a very short period, held, if the relief had been for reinstatement C.W.P. No.21600 of 2008 -11- with full back wages simpliciter, there would be a scope for considering whether awarding full back wages would be justified. In this case, however, the Court had substituted the punishment for stoppage of increments for five years with cumulative effect. The other way of looking at it, is five years of the service of the workman are practically effaced for, his increments and the ultimate terminal benefits that could have accrued to the workman had been stopped. That itself was sufficient punishment and a further denial to the workman of any portion of the back wages would be more harsh than what the situation would warrant. The decisions of the Hon'ble Supreme Court do not address the situation of where a punishment such as stoppage of increments had been awarded. In this case there is a punishment already meted out by the Labour Court of denying to the workman the increments with cummulative effect. The direction for denial of full back wages, under the circumstances, is not unwarranted. 10. The award of the Labour Court is confirmed in all respects and the writ petition is dismissed but there shall be, however, no direction as to costs. (K. KANNAN) JUDGE November 04, 2009 Pankaj*