Judgment Case ID: 2260

Judgment:
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. L.P. 123 of 1962. H. R. Gokhale	 C. A.	Chopra	 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 33(2)(b)	 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 13/14	 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 13/14	 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 3.30 p.m. 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. 87	000. 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. 472.70 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 33(2) 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 33(2)(b) of the Act	 as interpreted	 by this Court	 in its decision in Strawboard Manufacturing Co. vs Gobind(1). 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 S.C.R. 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 Workmen(1) 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. G.C. 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 33(2)(b) 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 S.C.R. 618	 referred to.251 252