IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY & THE HONOURABLE MRS. JUSTICE K.HEMA WEDNESDAY, THE 23RD JANUARY 2008 / 3RD MAGHA 1929 WA.No. 142 of 2008() -------------------- AGAINST THE JUDGEMENT/ORDER IN OP.31772/1999 Dated 19/11/2007 .................... APPELLANT: IST RESPONDENT: ------------------------------------------------- FEDERAL BANK EMPLOYEES UNION, REPRESENTED BY ITS GENERAL SECRETARY, BANK ROAD, ALUVA-683 101. BY ADV. SRI.P.RAMAKRISHNAN SRI.A.JAYASANKAR RESPONDENTS: PETITIONER & 2ND RESPONDENT: ----------------------------------------------------------------------------- 1. THE FEDERAL BANK LIMITED, REGISTERED OFFICE, ALUVA-683 101, REPRESENTED BY ITS CHAIRMAN. 2. CENTRAL GOVERNMENT LABOUR COURT, ERNAKULAM. BY ADV. SRI. B.S. KRISHNAN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 23/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss J.B. Koshy & K.Hema, JJ. -------------------------------------- Writ Appeal No. 142 of 2008 --------------------------------------- Dated this the 23rd day of January, 2008 Judgment Koshy,J. A clerk employed in the first respondent bank, Sri.V.Kunjappan, by name, was dismissed from service for a misconduct proved in the enquiry. Appellant Trade union took up the issue and raised an industrial dispute regarding the dismissal of his service. The matter was referred to Central Government Labour Court. The allegation against Sri.V. Kunjappan was that he was transferred from Indoor Branch of the Bank to Thannithode Branch as per the transfer order of the bank dated 24.6.1992 and subsequently from Thannithode Branch to Agra Branch as per the transfer order of the Bank dated 26.9.1992. Accordingly, he joined at Thannithode Branch on 24.8.1992 and Agra Branch on 19.10.1992. He prepared T.A. bills for both journeys from Indoor to Thannithode and from Thannithode to Agra. The T.A. bill included second class A/C train fare for himself, his wife and his son, but, later, it came to notice that his son was studying at Indoor itself and, therefore, along with him his wife and son did not travel from Indore W.A.No. 142/2008 2 to Thannikode and from Thannikode to Agra. Thus, he falsified the documents and he obtained transfer expenses for his wife and son without incurring the same. The above misconducts were proved in the enquiry and he was dismissed from service with effect from 14.2.1996. His appeal was also rejected by the appellate authority and thereafter the Union took up the case. 2. The only dispute is regarding the proportionality of the punishment. It was contended that punishment of dismissal is very harsh. Sri.Kunjappan had a long number of years of unblemished service of more than two and a half decades in the bank and this was the first misconduct and a lenient view should be taken. It was further submitted that the misconduct committed by him was not relating to dealing with the customers and considering the long past service and nature of misconduct coupled with his position of employment (as a clerk), dismissal of service should not have been inflicted. According to the Union, punishment of dismissal was shockingly disproportionate. The Labour Court considered this aspect. At the time of dismissal, he was aged only 49. He joined the service of the bank in the year 1967 and had continuous service till 5.1.1994, the date of dismissal. The union prayed for reinstatement with full backwages. The Labour Court in W.A.No. 142/2008 3 Ext.P3 award found that though misconduct is proved, punishment of dismissal was totally disproportionate. For granting relief, Labour Court was of the opinion that denial of backwages for five years (which will be huge sum) is sufficient punishment considering the gravity of the misconduct. Hence, the Labour Court awarded as follows: "Having regard to the facts and circumstances of this case, I am of the view that the extreme penalty of dismissal on the workman by the management is too harsh and excessive and so requires modification. I therefore modify the punishment by directing the management to reinstate him in service with continuity of service but without backwages. An award has to be passed accordingly. In the result, an award is passed modifying the punishment and directing the management to reinstate the workman with continuity of service but without backwages." 3. The Management challenged the above award and the learned single Judge held that the Labour Court went wrong in interfering with the punishment imposed by the management as the charges proved against the workman were serious to warrant punishment of dismissal from service. Hence the award was set aside by the learned single Judge. The learned single Judge following the decisions of the Supreme Court in State Bank of India and another v. Bela Bagchi and others ((2005) 7 SCC 435) and State W.A.No. 142/2008 4 Bank of India and others v. Ramesh Dinkar Punde ((2006) 7 SCC 212), held that bank officers should be dealt with strictly. In Divisional Controller N.E.K.R.T.C. v. H. Amaresh ((2006) 6 SCC 185), the misconduct was misappropriation of public money and the depositors' account. In Ramesh Dinkar Punde's case and in other cases, the court was dealing with bank officers and managers who committed serious misappropriations. Here, the dismissed employee was only a clerk in the bank and there is no allegation of misappropriation of customer's account. Long unblemished past service was also considered by the Labour Court. 4. Now, we will come to the powers of the Labour Court in granting relief and in interfering with the punishment. Section 11A was introduced in the Industrial Disputes Act on 15.12.1971. Before introduction of section 11A, there was very limited power for the Labour Court or tribunal to interfere with the punishment imposed. The above power was overruled by introduction of section 11A. Enlarged power of the Labour Court after introduction of section 11A cannot be controlled by judicial interpretation based on decisions rendered based upon old decisions rendered prior to the introduction of section 11A. It will frustrates the very legislative intention in enacting that section. W.A.No. 142/2008 5 5. Section 11A of the Industrial Disputes Act reads as follows: "11A. Power of Labour Court, Tribunals, and National Tribunals to give appropriate relief in case of discharge or dismissal of workmen: Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and, in the course of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require. Provided that in any proceeding under this section the Labour Court, Tribunal or National Tribunal, as the case may be, shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter." 6. The power of the Labour Court in interfering with the punishment of granting relief before introduction of section 11A and after introduction of section 11A was dealt with by the Supreme Court in detail in The Workmen of M/s. Firestone Tyre and Rubber Co. of India (Pvt.) Ltd. and The Management and others (1973 (I) LLJ 278). The above judgment is being followed subsequently by all courts. The power of the Labour Court before the introduction of W.A.No. 142/2008 6 section 11A was explained in paragraph 29 of the judgment which shows that if proper enquiry is conducted and misconduct is proved, the tribunal or labour court has got jurisdiction to interfere in the punishment only when the punishment is shockingly disproportionate so as to suggest victimisation. Even if the order of dismissal is set aside, it is for the Labour Court to mould the relief like reinstatement with or without backwages or awarding of compensation. The object of introduction of section 11A was mentioned as follows in paragraph 30 of the above judgment: "30. The question is whether S.11A has made many changes in the legal position mentioned above and, if so, to what extent the statement of objects and reasons cannot be taken into account for the purpose of interpreting the plain words of the section. But, it gives an indication as to what the Legislature wanted to achieve. At the time of introducing S.11A in the Act, the Legislature must have been aware of the several principles laid down in the various decisions of this Court referred to above. The object is stated to be that the Tribunal should have power in cases, where necessary, to set aside the order of discharge or dismissal and direct reinstatement or may ward lesser punishment. The statement of objects and reasons has specifically referred to the limitations on the powers of an Industrial Tribunal as laid down by this Court in Indian Iron and Steel Co. Ltd. and another v. Their Workmen (1958 (I) LLJ 260)." W.A.No. 142/2008 7 After considering the rival contentions regarding the power of the Court under section 11A, the Court again held at paragraph 33 as follows: "This position, in our view, has now been changed by S.11A. The words "in the course of the adjudication proceeding, the Tribunal is satisfied that the order of discharge or dismissal was not justified" clearly indicates that the Tribunal is now clothed with the power to reappraise the evidence in the domestic enquiry and satisfy itself whether the said evidence relied on by an employer established the misconduct alleged against a workman. What was originally a plausible conclusion that could be drawn by an employer from the evidence, has now given place to a satisfaction being arrived at by the Tribunal that the finding of misconduct is correct. The limitations imposed on the powers of the Tribunal by the decision in Indian Iron & Steel Co. Ltd. case (supra), can no longer be invoked by an employer. The Tribunal is now at liberty to consider not only whether the finding of misconduct recorded by an employer is correct, but also to differ from the said finding if a proper case is made out. What was once largely in the realm of the satisfaction of the employer, has ceased to be so, and now it is the satisfaction of the Tribunal that finally decides the matter." Again, it was held as follows at paragraph 62: "62. We have already expressed our view regarding the interpretation of S.11A. We have held that the previous law, according to the decisions of this Court, in cases where a proper domestic enquiry had been held, was that the Tribunal had no jurisdiction to interfere with the finding of misconduct except under certain W.A.No. 142/2008 8 circumstances. The position further was that the Tribunal had no jurisdiction to interfere with the punishment imposed by an employer both in cases where the misconduct is established in a proper domestic enquiry as also in cases where the Tribunal finds such misconduct proved on the basis of evidence adduced before it. These limitations on the powers of the Tribunals were recognised by this Court mainly on the basis that the power to take disciplinary action and impose punishment was part of the managerial functions. That means that the law, as laid down by this Court over a period of years, had recognised certain managerial rights in an employer. We have pointed out that this position has now been changed by S.11A. The section has the effect of altering the law by abridging the rights of the employer inasmuch as it gives power to the Tribunal for the first time to differ both on a finding of misconduct arrived at by an employer as well as the punishment imposed by him." Even though Labour Court can grant relief and substitute punishment in appropriate cases, it can be done only for cogent reasons. Labour Courts and Industrial Tribunals cannot act as a benevolent dictator and grant relief indiscriminately. Misplaced sympathy to wrong doers may do more harm to the industries. Industrial peace, harmony, power of the management to run the establishment etc. cannot be forgotten by the tribunals or Labour Courts. The workmen found guilty of misconduct shall not be W.A.No. 142/2008 9 unpunished. But, punishment shall be in proportion to the misconduct proved. Power under section 11A to interfere with punishment should be imposed sparingly in compelling circumstances as power to take disciplinary action is essentially a managerial function. If the Labour Court or Tribunal for cogent reason finds that the punishment is too harsh, certainly, it has now power to interfere with the punishment and grant appropriate relief. If the misconduct is proved in a proper domestic enquiry or before the Labour Court itself, the Labour Court has got power to interfere with the punishment only if the punishment is too harsh and grossly disproportionate to the misconduct proved and even in such cases where the Labour Court finds that the punishment is disproportionate, reinstatement with or without backwages need not be granted in all cases. Appropriate punishment has to be decided by the Labour Court considering the entire facts and circumstances of the case, gravity of the misconduct, effect in the establishment of the relief to be granted etc. Moulding of relief is an onerous duty on the part of the Labour Court or Tribunal. Normally, the Labour Court cannot grant reinstatement in cases of proved misconducts W.A.No. 142/2008 10 involving dishonesty, theft, misappropriation, riotous behaviour inside the establishment or disorderly behaviour towards superiors as reinstatement of such employees will affect the internal discipline of the establishment. 7. In Hindustan Machine Tools Ltd. v. Mohd. Usman (1983 (II) LLJ 386), the Supreme Court upheld the award of the labour court reducing the punishment by setting aside the order of termination of service and substituted it with the punishment of stoppage of increments for two years. The courtobserved: "Section 11A confers power on the labour court to evaluate the severity of misconduct and to assess whether the punishment imposed by the employer is commensurate with the gravity of misconduct. The power is specifically conferred on the labour court under S. 11A. If the labour court after evaluating the gravity of misconduct held that punishment of termination of service is disproportionately heavy in relation to misconduct and exercised its discretion, this court, in the absence of any important legal principles, would not undertake to re-examine the question of adequacy or inadequacy of material for interference by labour court." In Jaswant Singh v. Pepsu Roadways Transport Corporation (1984 Lab.I.C. 7 SC), while affirming the award of the labour court ordering reinstatement of the workman, the court imposed the punishment of W.A.No. 142/2008 11 stopping three increments in the time scale in which he would be reinstated for the next three years with a view to keep the workman within the bounds of well-disciplined conduct so that the humanistic approach of the court may not induce him to repeat his intemperate performance. 8. In this case, Labour Court was of the opinion that denial of backwages for about five years will be sufficient punishment for a bank clerk for the misconduct of claiming false T.A. bill for his wife and son on his transfer. The Labour Court has taken into account the fact that he has an unblemished record of service for more than two and a half decades and also of the opinion that one more opportunity should be granted and also considered the observations of the Supreme Court in Scooter India Limited, Lucknow v Labour Court and others (AIR 1989 SC 149) wherein the Apex Court held that justice must be tempered with mercy and and if there is long unblemished service, an opportunity should be granted to the erring workman to reform himself and prove to be a loyal and disciplined employee of the management even if the misconduct is proved and Labour Court has power under section 11A for reduction of the penalty. In the above case, the Supreme Court held that the direction of the labour court on the facts and in W.A.No. 142/2008 12 the circumstances of the case, for reinstatement of the employee with 75% backwages on the ground that the delinquent workman should be given an opportunity to reform himself and prove to be loyal and disciplined employee, was not illegal and arbitrary even though the disciplinary inquiry was fair and lawful. It was also held as follows: "4. The High Court, while sustaining the award passed by the Labour Court, adverted to section 6 (2A) of the Act which is analogous to section 11A of the Industrial Act and pointed out that the section confers wide powers on the Labour Court to interfere with an order of discharge or dismissal of a workman and to direct the setting aside of the discharge or dismissal and ordering the reinstatement of the workman on such terms and conditions as it may think fit, including the substitution of any lesser punishment for discharge or dismissal as the circumstances of the case may require and as such the Labour Court was well within its jurisdiction in setting aside the order of termination of services of the respondent and instead ordering his reinstatement together with 75% backwages." "7. .................... The Labour Court has taken the view that justice must be tempered with mercy and that the erring workman should be given an opportunity to reform himself and prove to be a loyal and disciplined employee of the petitioner company. It cannot therefore be said that merely because the Labour Court had found the enquiry to be fair and lawful and the findings not to be vitiated in any manner, it ought not to have interfered with the order of termination of service passed against the W.A.No. 142/2008 13 respondent in exercise of its powers under section 6 (2A) of the Act." In Jitendra Singh Rathor v. Shri Baidyanath Ayurved Bhawan Ltd. and another (1984 Lab.I.C. 554), the Apex Court held as follows: "The Tribunal while directing reinstatement and keeping the delinquency in view could withhold payment of a part or the whole of the back wages. In our opinion, the High Court was right in taking the view that when payment of back wages either in full or part is withheld it amounts to a penalty. Withholding of back wages to the extent of half in the facts of the case was, therefore, by way of penalty referable to proved misconduct and that situation could not have been answered by the High Court by saying that the relief of reinstatement was being granted on terms of withholding of half of the back wages and, therefore, did not constitute penalty. 4. Under S.11A of the Act, advisedly wide discretion has been vested in the Tribunal in the matter of awarding relief according to the circumstances of the case. The High Court under Art.227 of the Constitution does not enjoy such power though as a superior court, it is vested with the right of superintendence. The High Court is indisputably entitled to scrutinise the orders of the subordinate tribunals within the well accepted limitations and therefore, it could in an appropriate case quash the award of the Tribunal and thereupon remit the matter to it for fresh disposal in accordance with law and directions, if any ....... " It was argued by the counsel for the Union that there is no jurisdictional error or perverse finding. Valid and cogent reasons W.A.No. 142/2008 14 were given by the labour court for granting reinstatement and this Court under article 226 or 227 of the Constitution of India should not have interfered in Ext.P3 award. However, we are of the opinion that since the misconduct was proved involving dishonesty, it is not proper to award reinstatement of a bank employee. Instead of reinstatement, Labour Court should have awarded some relief short of reinstatement. In the normal circumstances, we would have remanded the matter to the Labour Court. But, it is submitted that the workman died during the pendency of the writ petition. Therefore, both sides agree that there is no need for sending back the matter for moulding the relief and this court itself can mould the relief. We have already seen that after a long number of years of unblemished service, his service was terminated before completing 50 years of age. He was only a clerk. Backwages lost itself was very huge. Counsel for the management submitted that he was paid gratuity and provident fund etc. without any deduction. In the above circumstances, the only relief that can be granted is conversion of dismissal from service to discharge from service on the date of dismissal so that he (now legal representatives) will be W.A.No. 142/2008 15 entitled to get all retirement benefits as if he was discharged from service instead of dismissed from service. J.B.Koshy Judge K. Hema Judge vaa W.A.No. 142/2008 16 J.B. KOSHY AND K.HEMA ,JJ. ------------------------------------- Writ Appeal No. 142 of 2008 ------------------------------------- Judgment Dated:23rd January, 2008