WP/5752/1999 : 1 : vss IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.5752 OF 1999 Maharashtra State Financial Corporation ... Petitioner V/s. Shri Nimba Jagannath Tamboli & Ors. ... Respondents Mr.V.P. Sawant for Petitioner Mr.V.P. Vaidya for Respondent No.1 Respondent Nos.2 and 3 – formal parties CORAM: SMT.NISHITA MHATRE, J. JUDGEMENT RESERVED ON: FEBRUARY 2, 2011 JUDGEMENT PRONOUNCED ON: MARCH 1, 2011 JUDGMENT: 1. The order impugned in the present petition has been passed by the Industrial Court on 2.9.1999 in revision application (ULP) No.152 of 1997 confirming the order passed by the Labour Court in complaint (ULP) No.145 of 1990. The Labour Court had declared that the petitioner had committed unfair labour practices under Item 1(b), (f) and (g) of Schedule IV of the MRTU & PULP Act by terminating the services of Respondent No.1. The petitioner was directed to reinstate Respondent No.1 in service with continuity and full backwages from 7.8.1990 i.e. the date of filing of the complaint till realisation. The Labour Court further directed that Respondent No.1 would not be entitled to any backwages from the date of dismissal i.e. 5.4.1989 till he filed a complaint on 7.8.1990. 2. The petition arises in the following manner: WP/5752/1999 : 2 : The petitioner which is the Maharashtra State Financial Corporation finances small scale industries in the State. The service conditions of its employees are governed by the Bombay State Financial Corporation (Staff) Regulations, 1954 (for short, hereinafter referred to as the `Staff Regulations'). These regulations have been framed under the State Financial Corporations Act. They have been approved and sanctioned by the State Government as well as the Reserve Bank of India. 3. The petitioner employed Respondent No.1 as a clerk from 1.9.1983. It appears that the respondent No.1 had not disclosed at the time of his appointment that a criminal case bearing No.298 of 1977 was pending against him before the JMFC, Nandurbar. The Respondent No.1 had been arraigned for committing an offence u/s 497 of the Indian Penal Code. By an order dated 31.3.1987, he was convicted and sentenced to suffer rigorous imprisonment for six months and to pay a fine of Rs.2,000/- or in default to suffer rigorous imprisonment for one year. The petitioner became aware of the conviction of Respondent No.1 because of a newspaper report. The petitioner therefore exercised its powers under Regulation 39 of the Staff Regulations and dismissed workman as he had been convicted for an offence involving moral turpitude. The order of dismissal was issued on 5.4.1989. 4. Respondent No.1 challenged the order of dismissal by preferring complaint (ULP) No.145 of 1990 contending that the petitioner had committed unfair labour practices under Item 1 of Schedule IV of the MRTU & PULP Act. 5. While the complaint was pending, Respondent No.1 was acquitted by the WP/5752/1999 : 3 : Sessions Court, Nandurbar in criminal Appeal No.23 of 1990 by the judgment and order dated 9.5.1991. The Sessions Court after scrutinisng the evidence on record held as follows: 14. After hearing the rival submissions of the respective counsels for the parties and after going through the Judgment of the learned Trial Court I find myself not in complete agreement with the view taken by the learned trial Court. After having gone through the evidence, I am not convinced that the prosecution's case against the appellant has been proved beyond reasonable doubt. This is certainly a case in which interference is warranted why because there is no cogent and satisfactory documentary or oral evidence on record to hold the accused guilty beyond reasonable doubt. So having considered the evidence of the present matter and the legal position of law I, arrived to this conclusion that the appellant-accused has succeeded in turning the appeal around his little finger. Thus this being the position, I pass the following order. 6. Respondent No.1 appealed to the petitioner to reinstate him as he had been acquitted by the Sessions Court. It appears that an appeal against the judgment and order of the Sessions Court has been preferred in this Court, which is pending. 7. The complaint was amended by Respondent No.1 to incorporate the fact that he had been acquitted by the Sessions Court, Nandurbar. Evidence of the respondent and an officer of the Petitioner, was led before the Labour court in support of the rival contentions. 8. The Labour Court by its order dated 25.8.1997 allowed the complaint by declaring that the petitioner had committed unfair labour practices under Items 1(b), (f) and (g) of Schedule IV of the MRTU & PULP Act. Respondent No.1 was granted reinstatement with continuity of service and full backwages. The Labour Court held that in view of the fact that Respondent No.1 had been acquitted by the Sessions WP/5752/1999 : 4 : Court the petitioner ought to have reinstated him in the light of the provisions of Regulation 39(2) of the Staff Regulations. The Labour Court relied on certain judgments to conclude that the order of dismissal was passed in utter disregard of the principles of natural justice and in colourable exercise of the employer's right. It also concluded that the punishment of dismissal was shockingly disproportionate. 9. Aggrieved by the order of the Labour Court, the petitioner had preferred revision application (ULP) No.152 of 1997 contending that since Respondent No.1 had not been honourably acquitted he was not entitled to be reinstated in service. The Industrial Court did not accept the contentions of the petitioner. It held that the fact that the appellate Court had set aside the conviction and had ordered refund of `2,000/- to the accused i.e. the Respondent No.1, indicated that the acquittal was honourable and it mattered little whether the word “honourable” was used in the judgment by the Sessions Court. 10. Mr.Sawant, learned Counsel appearing for the Petitioner, submitted that Regulation 39(2) would come into play only if the employee is honourably acquitted and not otherwise. He submitted that the judgment of the Sessions Court cannot be considered to mean that the workman had obtained a “clean acquittal”. He pointed out that the Sessions Court had given the benefit of doubt to Respondent No.1 while acquitting him. The conclusion drawn in the judgment and order is that there was no satisfactory evidence on record to hold “the accused guilty beyond reasonable doubt”. Mr.Sawant interpreted this phrase to mean that the Sessions Court had given the benefit of doubt to the Respondent No.1 while acquitting him. He further submitted that Respondent No.1 has not challenged the discretion vested in the WP/5752/1999 : 5 : petitioner to exercise its powers under Regulation 39. According to him, such discretion has been exercised by the petitioner in good faith. He urged that when Respondent No.1 has been convicted by the trial Court of an offence involving moral turpitude, which conviction though set aside, did not amount to an honourable acquittal. Therefore, submitted Mr.Sawant, the Respondent No.1 ought not to have been reinstated, especially since the appeal against his acquittal is pending before this Court. The learned Counsel further submitted that the Labour Court could not have passed an order by interfering with the discretion vested in the petitioner to decide whether to reinstate a workman who has been acquitted for an offence involving moral turpitude. He submitted that the discretion vested in the petitioner is implicit in Regulation 39. 11. Mr.Vaidya, appearing for Respondent No.1, on the other hand submitted that both the Labour Court and the Industrial Court had concluded, on the interpretation of the judgment and order of the Sessions Court, that the order passed by that Court was one of “honourable acquittal”. Both the Courts below have, therefore, rightly set aside the dismissal order and directed reinstatement. He submitted that both the Labour Court and the Industrial Court had considered the interpretation of the term `honourable acquittal’ contained in Regulation 39(2) and found that the order of the Sessions Court amounted to an honourable acquittal. He further submitted that the Sessions Court had concluded that the prosecution was unable to prove towards the case by leading cogent evidence and, therefore, the conviction of Respondent No.1 had been set aside. According to him, the conclusion that the prosecution had not been able to prove its case beyond reasonable doubt does not amount to respondent No.1 being given the benefit of doubt. He further submitted that the Sessions Court WP/5752/1999 : 6 : has scanned the entire evidence on record and concluded that the prosecution was unable to prove by cogent evidence that the respondent No.1 had committed the offence alleged against him. 12. Before considering the rival contentions of the learned Counsel for the parties, in my opinion, it would be appropriate to extract Regulation 39. It reads as under: 39. Employees arrested For Debt Or on Criminal Charge: (1) An employee who is arrested for debt or on a criminal charges shall be considered as under suspension from the date of his arrest, and shall be allowed the payments admissible to an employee under suspension under Regulation 40 until the termination of the proceedings against him, when an adjustment of his pay and allowances shall be made according to the circumstances of the case and in the light of the decision as to whether his absence is to be accounted for as a period of duty or leave, the full pay and allowances being given only in the event of the employee being acquitted of all blame and treated as on duty during the period of his absence less the period spent by the employee in actual detention. An employee who is committed to prison for debt or is convicted of any offence involving moral turpitude shall be liable to dismissal. (2) Where a conviction of an employee is set side by a higher court, and the employee is acquitted honourably, he may be reinstated in service Explanation: - In this Regulation the expression “termination of proceedings” shall mean the decision of the lowest court which first finally disposes of the case. Committal or conviction shall mean committal or conviction by the lowest court or any of the appellate courts, and it shall be open to the Corporation to dismiss an employee who is committed to prison or who is convicted of a criminal charge as from the date of the order of the court that convicts him. 1. The case against Respondent No.1 is that he did not disclose at the time of his appointment on 1.9.1983 that a criminal case was pending against him. Mr.Sawant has not brought to my notice any Regulation requiring such a disclosure to be made at the time of appointment in service. Be that as it may, the question would be whether the respondent No.1 should be reinstated in service after the judgment and order of the Sessions Court. Respondent No.1 was charged with the WP/5752/1999 : 7 : offence of adultery u/s 497 of the Indian Penal Code. The JMFC, Nandurbar had found that he was guilty of the offence and, therefore, punished him by sentencing him for six months rigorous imprisonment and a fine of Rs.2000/-. In default, Respondent No.1 was directed to undergo R.I. for one year. The Sessions Court, Nandurbar has observed that the prosecution had totally failed to make out a case against the respondent No.1. The Sessions Court concluded that the evidence pertaining to two documents on which the prosecution relied which were allegedly executed and signed by the woman involved in the case had been so signed under pressure and coercion. It is in these circumstances that the Sessions Court held that the prosecution had not been able to prove the case against the respondent beyond the reasonable doubt. 2. In my opinion, merely because the Sessions Court has expressed its view by stating that the prosecution has not been able to prove the case against the respondent “beyond reasonable doubt”, it would not mean that the Court had given the benefit of doubt to respondent No.1. In the case of Dattatraya Vasudeo Kulkarni vs. Director of Agriculture, Maharashtra State, 1984 (3) SLR 83 the Division Bench of this Court considered the concept of “honourable acquittal”. The petitioner in that case had been convicted for criminal breach of trust and misappropriation. His services had been terminated by taking recourse to Rule 152 of the Bombay Civil Services Rules. However, the High Court set aside the order of the Sessions Court and acquitted the petitioner of the charges levelled against him. The contention of the petitioner in that case was that his suspension during the period after he was convicted ought to be revoked and the period should be treated as time spent on duty. The Division Bench held that the Petitioner in that case had been acquitted WP/5752/1999 : 8 : because the prosecution had failed to lead evidence to establish the guilt. The High Court while setting aside this judgment and order of the Sessions Court had held that the prosecution had failed to prove its case beyond a reasonable doubt. The Division Bench held that this expression cannot be read in isolation but would have to be read with the infirmities in the prosecution case. In the light of provisions of Rule 152 and 156 of the Bombay Civil Service Rules, the Court held that that subject of honourable acquittal or full exoneration are irrelevant in terms of Regulation 156 as what has to be considered is whether the employee has been acquitted of the blame or acquitted of the charges levelled against him. 3. Similarly in the case of Hafizuddin Inayatullah Kazi vs. J.C. Agarwal & Ors., 1980 (41) FLR 171, a learned Single Judge of this Court has observed thus: 9. In my view, therefore though it is very difficult to define precisely what is meant by the words `honourably acquitted', it is safe to say that if an accused is acquitted or discharged because of some technicality not having been complied with or on the ground that though there is some evidence against him, he must be acquitted by giving benefit of doubt, it may not amount to an honourable acquittal. However, if an accused is acquitted after full consideration of evidence because the prosecution witnesses were disbelieved and the prosecution had miserably failed to prove the charges it would amount to honourable acquittal. It is difficult to understand what more is required for honourable acquittal of the accused than acquittal of the accused on disbelieving the prosecution evidence in toto. In the present case, though there are some observations made at the end of the judgment by the High Court acquitting the petitioner which may appear to be ambiguous, if the judgment is read as a whole, there can be little doubt that the accused was acquitted not by giving benefit of doubt, in spite of there being some evidence against him, but because the prosecution failed to prove the case against him. In the present case, the Sessions Court has disbelieved the evidence of the prosecution and has further held that there was no cogent evidence on record to prove the charges levelled against Respondent No.1. WP/5752/1999 : 9 : 4. In the case of Management of Reserve Bank of India, New Delhi vs. Bhopal Singh Panchal, (1994) 1 SCC 541, the Court interpreted the Regulations 39 and 46 of the RBI Regulations. Sub Regulation 4 of 46 indicated that an employee who had been dismissed on account of his conviction by the lower Court would be entitled to reinstatement in service if (a) the conviction is set aside by the higher Court and (b) the employee is honourably acquitted. The Court held that an order granting benefit of doubt to the employee while acquitting him would not be an honourable acquittal. This judgement is not applicable to the facts in this case as the Respondent No.1 has not been acquitted by giving him the benefit of doubt. 5. In my opinion, in the present case, the acquittal of Respondent No.1 by the Sessions Court, Nandurbar cannot be considered to be an acquittal on the basis of the benefit of doubt being given to Respondent No.1. The Sessions Court has clearly mentioned that the prosecution had not “proved beyond reasonable doubt” the case against Respondent No.1. The Court has observed that interference with the judgement and order of the JMFC was warranted because there was no cogent and satisfactory documentary or oral evidence on record to hold “the accused guilty beyond reasonable doubt”. In my opinion, these expressions clearly mean that the prosecution was unable to prove its case to the hilt which is absolutely necessary for a conviction. However, this is not the same as saying that the accused has been acquitted by giving him the benefit of doubt. On a perusal of the judgment of the Sessions Court, I find that it has disbelieved the evidence led by the prosecution as it was of the view that the star witness of the prosecution namely the woman involved had been forced and coerced into making a statement against the accused i.e. WP/5752/1999 : 10 : Respondent No.1 by the members of her family. The Sessions Court has believed the evidence of the PSI who had stated on oath that the lady had not made her statement freely and without any coercion. In my view, therefore, it is obvious that the prosecution having failed to prove its case, the Sessions Court had acquitted Respondent No.1. The term “acquitted honourably” contained in Regulation 39(2) is fully applicable in the present case. Thus, although the appeal is pending before this Court in view of the explanation contained in Regulation 39, in my opinion, the orders of the Labour Court and the Industrial Court are not erroneous. The Sessions Court being the higher Court has acquitted the employee honourably though the word “honourable” has not been used. 6. Mr.Sawant has argued that there is always a discretion vested in the management as to whether to reinstate the employee or not even after he is acquitted “honourably”. It is true that the phraseology of Regulation 39(2) indicates that there is a discretion vested in the management as the word “may” has been used. In the context of Regulation 39(2) the word “may” cannot be interpreted to mean “shall”. However, such discretion cannot be used arbitrarily, capriciously or whimsically. In fact there are no guidelines contained in the Regulations as to how this discretion is to be used. But such power cannot be untrammelled especially when a public body such as the Petitioner is vested with it. Reasons must be recorded in writing by the Petitioner for not reinstating an employee who has been acquitted honourably. These reasons must be disclosed in the order passed on the application for reinstatement made by an acquitted employee. In any event they must be recorded in writing in a note or elsewhere by the Petitioner before communicating its decision to an acquitted employee. No reasons have been WP/5752/1999 : 11 : mentioned either in the written statement or in any note or elsewhere as to why the petitioner has thought it fit not to reinstate the employee who has been acquitted honourably. The main contention on behalf of the petitioner is that an acquittal is not honourable and, therefore, the employee has not been reinstated. However, as already noted, the Sessions Court has acquitted Respondent No.1 honourably though without using the word “honourably”. Therefore, the petitioner ought to have reinstated the Respondent No.1. 7. The petition is therefore dismissed. Rule discharged. No order as to costs. 8. Mr.Sawant seeks continuation of stay granted by the Court while admitting the petition. In my view, there is no need to continue that stay. Stay refused.