The Management of North ArcotDistrict Co-operative Central Bank Ltd.Vellore v. The Presiding Officer

IN THE HIGH COURT OF JUDICATURE AT MADRASDated 09..7..2008Coram:The Hon'ble Mr. Justice K.CHANDRUW.P. Nos. 746 and 747 of 1999The Management of North ArcotDistrict Co-operative Central Bank Ltd.Vellore .. Petitioner in both W.Ps. vs.1.The Presiding Officer .. 1st Respondent in both the Labour Court PetitionsVellore2.R. Jyothiramalingam .. 2nd Respondent in W.P. No. 746/99 3.M. Munusamy .. 2nd Respondent in W.P. No. 747/99Petitions filed under Article 226 of the Constitution of Indiaseeking for issuance of writ of Certiorari calling for the recordsof the first respondent in awards dated 20.3.1998 and made in I.D.Nos. 840 of 1993 and 7 of 1994 respectively and quash the same.For Petitioner : Mrs. Narmada Sampath for Mr. R. ParthibanFor R2 in W.P. No.746/99: Mr. Ajay KhoseFor R2 in W.P. No.747/99 : Mr. J. SaravanavelC O M M O N O R D E RBoth the writ petitions have been filed by the Management ofthe North ArcotDistrict Co-operative Central Bank Ltd.,Vellore. W.P. No. 746 of 1999 is filed challenging the Awarddated 20.3.1998 passed by the first respondent Labour Court inI.D. No. 840 of 1993. By the aforesaid Award, the Labour Courtdirected reinstatement of the second respondent therein, with fullbackwages, continuity of service and other attendant benefits.In W.P. No. 747 of 1999, the challenge is to the Award dated20.3.1998 made in I.D. No. 7 of 1994 granting the benefit ofreinstatement with backwages, continuity of service and otherattendant benefits to the second respondent. 2.Pending the writ petitions, in W.P. No. 746 of 1999,interim stay was granted on 22.01.1999 and it was continued untilfurther orders by an order dated 04.3.1999 and further modified byan order dated 16.10.2000. In W.P. No. 747 of 1999, this Court, https://hcservices.ecourts.gov.in/hcservices/ by an order dated 04.3.1999, granted interim stay. Subsequently,on an application taken by the workman, wages at the rate of Rs.2800/- per month under Section 17B of the Industrial Disputes Act,1947 [for short, 'I.D. Act'] was directed to be made and also theManagement was directed to deposit Rs.3 lakhs to the credit of I.D.No. 840 of 1993. On such deposit, the second respondent in thatcase was directed to withdraw Rs. 1 lakh and the balance amount ofRs. 2 lakhs was directed to be reinvested for a period of fouryears and quarterly interest was also directed to be paid.3.In W.P. No. 746 of 1999, the second respondent wasworking as a Cashier and the cash chest was under double locksystem with one key being retained by the second respondent and theother key with the Branch Manager and unless both keys are used,the chest cannot be opened. It was submitted that without the co-operation and collusion between the Cashier and the Manager, thesafe room and the respective cash chests cannot be handled. 4.During May 1989, the second respondent was the Cashierfor the second shift. But on that day, he worked for both theshifts since the other Cashier had gone on leave. On 20.5.1989which happened to be a Saturday, he handled the cash chest of boththe shifts and also the keys including that of the Manager. Thethen Branch Manager was in the habit of coming late to the branchand he always used to attest the signature of the staff withoutverifying the same and he left the place even before the closing ofthe shift at 4.00 pm. Since Sunday happened to be a holiday, onMonday, i.e., on 22.5.1989, when the Bank was opened, it was foundthough it was properly sealed, but a sum of Rs. 4.35 lakhs wasfound to be short in the cash chest. Thereafter, a departmentalenquiry was held against the second respondent, the Branch managerand the peon and in the separate domestic enquiries held, thesecond respondent was dismissed from service. As against thesame, the second respondent raised an industrial dispute before theLabour Court and it was taken on file as I.D. No. 840 of 1993. 5.A counter statement has been filed seeking permission tosubstantiate the charges in case the Labour Court holds that theenquiry conducted by the Management was vitiated. 6.Before the Labour Court, in I.D. No. 840 of 1993, entireenquiry proceedings were filed and marked as Exs. M1 to M.7. TheLabour Court, without framing an issue as to whether the enquirywas fair and proper, held that the charges were not proved. Inparagraph 6, it held that the charge of theft was not proved bysupporting evidence both oral and documentary. In paragraph 7,the Labour Court also held that mere production of document isinconsistent and Exs. M.1 to M.7 are nothing but documents relatingto domestic enquiry. In that view of the matter, it grantedrelief to the second respondent. https://hcservices.ecourts.gov.in/hcservices/

7.In W.P. No. 747 of 1999, the second respondent was theBranch Manager and he was dismissed for the theft in the cashchest and a criminal case was also filed against him. He raisedan industrial dispute, which was taken on file as I.D. No. 7 of1994. In the statement dated 06.6.1989 given to the Bank, he hadadmitted his negligence of not maintaining the records properly.8.In the counter statement filed in I.D. No. 7 of 1994, aspecific stand was taken by the Management that he being theManager of the Bazaar Branch, Vellore, is not a "workman" withinthe meaning of Section 2(j) of the I.D. Act and, therefore, theindustrial dispute is not maintainable. In paragraph 12 of thecounter, an opportunity was also sought for adducing fresh evidenceand it reads as follows:-"The respondent submits that by way of abundantcaution that if for any reason, this Hon'ble courtfinds that the enquiry conducted against thepetitioner was vitiated in any manner or in anydetail, the respondent craves leave to adduceevidence afresh and examine all witnesses afresh toprove the charges and substantiate and justify thepunishment imposed on the petitioner."9.Before the Labour Court, in I.D. No. 7 of 1994, 13documents were filed on the side of the second respondent whichwere marked as Exs. W.1 to W.13 and on the side of the Management,10 documents were filed and they were marked as Exs. M.1 to M.10.They were marked through the evidence of M.W.1 Venkatesan. TheLabour Court in paragraph 8 of the Award held that mere productionof document is inconsistent and, therefore, the second respondentis not responsible for the loss. In that view of the matter, ithad granted the relief to him as noted already.10.Mrs. Narmada Sampath, learned counsel for the petitionerplaced reliance upon the judgment of a Constitution Bench of theSupreme Court in Karnataka State Road Transport Corporation v.Lakshmidevamma [2001 (5) SCC 433] wherein it was held that once anopportunity is sought for to lead fresh evidence, it should befurnished to the Management. She relied upon the followingpassages found in paragraphs 18 to 20 of the said judgment:-Para 18:"There is one other reason why we should accept theprocedure laid down by this Court in Shambhu NathGoyal case. It is to be noted that this judgment wasdelivered on 27-9-1983. It has taken note of almostall the earlier judgments of this Court and has laiddown the procedure for exercising the right ofleading evidence by the management which we haveheld is neither oppressive nor contrary to theobject and scheme of the Act. This judgment having https://hcservices.ecourts.gov.in/hcservices/ held the field for nearly 18 years, in our opinion,the doctrine of stare decisis requires us to approvethe said judgment to see that a long-standingdecision is not unsettled without a strong cause.Para 19:For the reasons stated above, we are of the opinionthat the law laid down by this Court in the case ofShambhu Nath Goyal v. Bank of Baroda is the correctlaw on the point.Para 20:In the present case, the appellant employer did notseek permission to lead evidence until after theLabour Court had held that its domestic enquiry wasvitiated. Applying the aforestated principles tothese facts, we are of the opinion that the HighCourt has rightly dismissed the writ petition of theappellant, hence, this appeal has to fail. The sameis dismissed with costs."11.Learned counsel also submitted that the Labour Court,without deciding the validity of the enquiry, held that the enquirywas not fair and proper. This approach of the labour Court iscompletely erroneous and it is incumbent upon the Labour Court toframe a preliminary issue with reference to the enquiry conductedby the Management. 12.The Supreme Court vide its judgment in Union Bank ofIndia v. Tamil Nadu Banks Deposit Collectors Union and another[2008 AIR SCW 642] reviewed the previous case laws relating toSection 11-A of the I.D. Act and observed in paragraphs 8 to 10 asfollows:-Para 8:"In Workmen of Motipur Sugar Factory (Private)Limited v. Motipur Sugar Factory [(1965) 3 SCR 588]it was observed as follows:"It is now well-settled by a number of decisionsof this Court that where an employer has failed tomake an enquiry before dismissing or discharging aworkman it is open to him to justify the actionbefore the tribunal by leading all relevant evidencebefore it. In such a case the employer would nothave the benefit which he had in cases wheredomestic inquiries have been held. The entire matterwould be open before the tribunal which will havejurisdiction not only to go into the limitedquestions open to a tribunal where domestic inquiryhas been properly held (see Indian Iron & Steel Co.v. Their workmen [[1958] S.C.R. 667] but also tosatisfy itself on the facts adduced before it by theemployer whether the dismissal or https://hcservices.ecourts.gov.in/hcservices/ discharge was justified. We may in this connectionrefer to M/s Sasa Musa Sugar Works (P) Limited v.Shobrati Khan [[1959] Supp. S.C.R. 836], PhulbariTea Estate v. Its Workmen and Punjab National BankLimited v. Its Workmen. There three cases werefurther considered by this court in Bharat SugarMills Limited. v. Shri Jai Singh, and reference wasalso made to the decision of the Labour AppellateTribunal in Shri Ram Swarath Sinha v. Belaund SugarCo. [[1954] L.A.C. 697]. It was pointed out that"the import effect of commission to hold an enquirywas merely this : that the tribunal would not haveto consider only whether there was a prima faciecase but would decide for itself on the evidenceadduced whether the charges have really been madeout". It is true that three of these cases, exceptPhulbari Tea Estate's case were on applicationsunder Section 33 of the Industrial Disputes Act,1947. But in principle we see no difference whetherthe matter comes before the tribunal for approvalunder Section 33 or on a reference under Section 10of the Industrial Disputes Act, 1947. In either caseif the enquiry is defective or if no enquiry hasbeen held as required by Standing Orders, the entirecase would be open before the tribunal and theemployer would have to justify on facts as well thatits order of dismissal or discharge was proper.Phulbari Tea Estate's was on a reference under s.10, and the same principle was applied there also,the only difference being that in that case, therewas an enquiry though it was defective. A defectiveenquiry in our opinion stands on the same footing asno enquiry and in either case the tribunal wouldhave jurisdiction to go into the facts and theemployer would have to satisfy the tribunal that onfacts the order of dismissal or discharge wasproper.Para 9:Again in Delhi Cloth and General Mills Co.Vs. LudhBudh Singh [1973(3) SCR 29] this Court held asfollows:"When a domestic enquiry has been held by themanagement and the management relies on the same, itis open to the latter to request the Tribunal to trythe validity of the domestic enquiry as apreliminary issue and also ask for an opportunity toadduce evidence before the Tribunal, if the findingon the preliminary issue is against the management.However elaborate and cumbersome the procedure maybe, under such circumstances, it is open to the https://hcservices.ecourts.gov.in/hcservices/ Tribunal to deal, in the first instance, as apreliminary issue the validity of the domesticenquiry. If its finding on the preliminary issue isin favour of the management, then no additionalevidence need be cited by the management. But. ifthe finding on the preliminary issue is against themanagement, the Tribunal will have to give theemployer an opportunity to cite additional evidenceand also give a similar opportunity to the employeeto lead evidence contra, as the request to adduceevidence had been made by the management to theTribunal during the course of the proceedings andbefore the trial has come to an end. When thepreliminary issue is decided against the managementand the latter leads evidence before the Tribunal,the position, under such circumstances, will be,that the management is deprived of the benefit ofhaving the finding of the domestic Tribunal beingaccepted as prima facie proof of the allegedmisconduct. On the other hand, the management willhave to prove, by adducing proper evidence, that theworkman is guilty of misconduct and that the actiontaken by it is proper. It will not be just and faireither to the management or to the workman that theTribunal should refuse to take evidence and therebyas the management to make a further application,after holding a proper enquiry, and deprive theworkman of the benefit of the Tribunal itself beingsatisfied, on evidence adduced before it, that hewas or was not guilty of the alleged misconduct."Para 10:In Workmen of Fire Stone Tyre Rubber Company v.Management [1973(1)LLJ 78] it was inter alia held asfollows:"4.Even if no enquiry has been held by anemployer or if the enquiry held by him is found tobe defective, the Tribunal in order to satisfyitself about the legality and validity of the order,had to give an opportunity to the employer andemployee to adduce evidence before it. It is opento the employer to adduce evidence for the firsttime justifying his action, and it is open to theemployee to adduce evidence contra.(5)The effect of an employer not holding anenquiry is that the Tribunal would not have toconsider only whether there was a prima facie case.On the other hand, the issue about the merits of theimpugned order of dismissal or discharge is at largebefore the Tribunal and the latter, on the evidence https://hcservices.ecourts.gov.in/hcservices/ adduced before it, has to decide for itself whetherthe misconduct alleged is proved. In such cases, thepoint about the exercise of managerial functionsdoes not arise at all. A case of defective enquirystands on the same footing as no enquiry.(6) The Tribunal gets jurisdiction to considerthe evidence placed before it for the first time injustification of the action taken only, if noenquiry has been held or after the enquiry conductedby an employer is found to be defective.(7) It has never been recognised that theTribunal should straightaway, without anything more,direct reinstatement of a dismissed or dischargedemployee, once it is found that no domestic enquiryhas been held or the said enquiry is found to bedefective. (8) An employer, who wants to avail himself ofthe opportunity of adducing evidence for the firsttime before the Tribunal to justify his action,should ask for it at the appropriate stage. If suchan opportunity is asked for, the Tribunal has nopower to refuse. The giving an opportunity to anemployer to adduce evidence for the first timebefore the Tribunal is in the interest of both themanagement and the employee and to enable theTribunal itself to be satisfied about the allegedmisconduct.(9)Once the misconduct is proved either inthe enquiry conducted by an employer or by theevidence placed before a Tribunal for the firsttime, punishment imposed cannot be interfered withby the Tribunal except in cases where the punishmentis so harsh as to suggest victimization."[Emphasis added]13.Mrs. Narmada Sampath also submitted that in W.P. No. 747of 1999, a further issue has already been raised regarding thestatus of the second respondent as to whether he is a workman ornot.14.In this context, a reference was made to VallamalaiEstate, Valparai v. Workers of Vallamalai Estate, Valparai andanother [1973 (1) L.L.J. 273]. In that case, this Court heldthat if a joint reference is made under Section 10(2) of the I.D.Act by consent, even then the Labour Court will have to decidewhether a particular person is a 'workman', under the I.D. Act so https://hcservices.ecourts.gov.in/hcservices/ as to have jurisdiction over the said issue. The followingpassage found in paragraph 4 of the said judgment may be usefullyextracted: Para 4:"We are clear, therefore, that the presidingofficer's jurisdiction being entire basicallydependant on an existing or an apprehendedindustrial dispute, the appellant was not estoppedin this case from contending lack of jurisdiction inthe presiding officer notwithstanding that thereference was made on a joint application under S.10(2) of the Industrial Disputes Act."15.In this case, the Labour Court had committed ajurisdictional error by not deciding the issue relating to validityof the domestic enquiry as well as the status of the secondrespondent in W.P. No. 747 of 1999.16.In the light of the above, both the writ petitions willstand allowed and the respective Awards will stand set aside.The matter is remitted to the Labour Court for fresh disposal.However, there will be no order as to costs. The Labour Courtshall dispose of the same within a period of twelve weeks from thedate of receipt of a copy of this order after giving opportunity toboth sides. The Labour Court shall first decide the validity ofthe enquiry and in case it decides that the enquiry is invalid, itshall give opportunity to both sides to lead evidence tosubstantiate the charge. 17.In addition to it, in I.D. No. 7 of 1994, the LabourCourt will decide whether the second respondent is a workman withinthe meaning of Section 2(s) of the I.D. Act. In case, it decidesthat he is not a workman, the Industrial Dispute will have to benecessarily rejected without going into other issues.18.Since the Management had deposited amounts in I.D. No.840 of 1993 pending W.P. No. 746 of 1999, the same shall becontinued to be in deposit. Depending upon the outcome of theIndustrial Dispute, the amount can be withdrawn by the party whichsucceeds in the Industrial Dispute. Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.gri https://hcservices.ecourts.gov.in/hcservices/ To1. The Presiding Officer Labour Court Vellore2. The Section Officer, Writ Section, High Court, Madras-104. (For despatch Labour Court Records)+ 1 CC To Mr.R.Parthiban, Advocate SR NO.36370+ 1 CC To Mr.D.Hariparanthaman, Advocate SR NO.35734+ 1 CC To Mr.J.Saravana Vel, Advocate SR NO.36306W.P. Nos. 746 & 747 of 1999VM {CO}TP/30.7.08