I.K.Lodi v. The Appellate Authority under Tamil Nadu Shops &Establishments Act

IN THE HIGH COURT OF JUDICATURE AT MADRASDated:- 22.01.2007Coram:-The Hon’ble Mr. JusticeP.SATHASIVAMandThe Hon’ble Mr. Justice N.PAUL VASANTHAKUMARWrit Appeal No.1781 of 2003I.K.Lodi… AppellantVs.1. The Appellate Authority under Tamil Nadu Shops &Establishments Act,D.M.S. Compound,Teynampet, Chennai-600 006.2. Bharat Overseas Bank Ltd.,rep. by its Deputy General Manager,Head Office, Anna Salai,Chennai-600 006.… RespondentsAppeal filed under clause 15 of Letters patent Act against theOrder of this Court, dated 01.04.2003, made in W.P. No.9537 of 1997to issue a writ of certiorari calling for the records of the firstrespondent relating to his order dated 24.2.97 made in TSE No.36/95 and quash the same.For Appellant: Mr.N.G.R. Prasad,for M/s.Row & Reddy.For R-2: Mr.T.K.Seshadri, Senior Counselfor Mr.T.K.BaskarFor R-1: Mr.K.Elango, Special Government Pleader https://hcservices.ecourts.gov.in/hcservices/ (Judgment of the Court, delivered by P.SATHASIVAM, J.)- - - - -The above Writ Appeal is directed against the Order ofthe learned single Judge, dated 01.04.2003, passed in W.P. No.9537of 1997, in and by which, the learned Judge set aside the order ofthe Appellate Authority under the Tamil Nadu Shops andEstablishments Act and allowed the Writ Petition filed by theManagement – Bharat Overseas Bank.2. According to the 2nd respondent/Bank, it is a bankingcompany incorporated under the provisions of the Companies Act,1956, and licenced to carry on business as a Banking Company underthe Banking Regulation Act, 1947. It has its Head Office atChennai-2. The appellant herein joined the services of the Bank asa Clerk and he was promoted in the year 1988 as an Officer. He waslater on transferred and posted as Accountant at Burra BazarBranch, Calcutta. One K.Raghunath was the Manager of the saidBranch from 31.07.1989 to 22.10.1990 while the appellant was theAccountant from 23.05.1988 to 03.11.1990. According to the Bank,during their tenure of office at Burra Bazar Branch, K.Raghunathand the appellant, acting in collusion and conspiracy with certainprivate parties, dishonestly misappropriated/defrauded the money ofthe Bank under the pretext of granting advance/credit facilities tocustomers causing heavy loss to the Bank. Criminal proceedings against the Manager and theappellant/accountant are still pending before appropriate court.Apart from the criminal proceedings, the Bank issued a charge sheetdated 08.11.1991. An enquiry officer was appointed, who, afterconducting the enquiry, submitted his report dated 03.07.1993 tothe Bank. The Disciplinary Authority, acting on the EnquiryOfficer's Report, ultimately passed an order dated 19.07.1993,dismissing the appellant from service. In terms of the Rules, theappellant preferred an Appeal to the Board of Directors of the Bankagainst the order dated 19.07.1993 of the Disciplinary Authority.The Board of Directors considered the appeal and, after finding noground to interfere, dismissed the same. Thereafter, the appellantpreferred an appeal before the Appellate Authority under Section 41(2) of the Tamil Nadu Shops and Establishments Act, 1947(hereinafter referred to as Act). The Appellate Authority, afterfinding that the order, dismissing the appellant from service, wasillegal and unjustified, by order dated 24.02.1997, set aside theorder of dismissal dated 19.07.1993. Aggrieved by the order dated24.02.1997 of the Appellate Authority under the Act, the Bank movedthis Court by way of W.P. No.9537 of 1997. https://hcservices.ecourts.gov.in/hcservices/

3. The learned Judge, disagreeing with the conclusionarrived at by the Appellate Authority and accepting the case of theBank, set aside the order of the Appellate Authority and confirmedthe order of dismissal dated 19.07.1993 passed by the DisciplinaryAuthority. Questioning the said order, the appellant has filed thepresent Appeal.4. Heard Mr. N.G.R.Prasad, learned counsel for theappellant, and Mr.T.K.Seshadri, learned Senior Counsel for theBank.5. The point for consideration in this Appeal is as towhether the learned Judge is justified in interfering with theorder of the Appellate Authority and whether the order of dismissalis sustainable in the facts and circumstances of the case.6. When the appellant was working as Accountant in BurraBazaar Branch, Calcutta, following 4 charges have been levelledagainst him,“ STATEMENT OF CHARGESCharge No.1:Mr.I.K.Lodi acted in violationof Advances Circular No.68/89 dated 23.5.1989 byfailing to report to the Head Office the huge amountof advances granted by Mr.K.Raghunath to (1) GanpatOil & Dall Mill, (ii) Park Mount Timbers, (iii)Shalimar Fastenings, (iv) R.K.Enterprises, (v)SureshMittal, (vi) Veekay Industries, (vii) Muli DeviAgarwal and (viii) Jhunjhunwala Industries.Charge No.2: Mr.I.K.Lodi granted advances to(i)Suresh Mittal, (ii) Veekay Industries and (iii)R.K.Enterprises in the absence of any power orauthority vested in him by the bank.Charge No.3(a): Mr.I.K. Lodi signed thedocuments execution register in the case of theaccounts of (i) Muli Devi Agarwal, (ii) JhunjhunwalaIndustries, (iii) Ganpat Oil & Dall Mill and (iv)Park Mount Timbers without verifying whether or notthe securities and the documents specified thereinwere actually obtained. Charge No.3(b): In the case of Park MountTimbers, Mr.I.K. Lodi, signed the documentsexecution register as if the relative entry was madeon 23.4.90 while as a matter of fact he was on leaveon that day.Charge No.4: Mr.I.K. Lodi has failed todischarge his duties with utmost care, caution,diligence and honesty expected of an officer of theBank as a result of which the Bank is facing an https://hcservices.ecourts.gov.in/hcservices/ actual loss of Rs.42,42,086.03 plus the interestaccruals.” Based on the above charges, the enquiry was conducted. It was truethat the appellant participated in the enquiry and got examinedhimself. The Enquiry Officer, after affording opportunity to bothsides, based on the materials placed, found charge Nos.1, 2 and 3(a) partly proved; and charge Nos.3(b) and 4 proved in toto. TheDisciplinary authority, after considering the Enquiry Report,agreed with the findings of the Enquiry Officer and, by holdingthat the charges proved against appellant/I.K. Lodi are seriousenough to merit the imposition of the extreme penalty, passed anorder dismissing him from service of the Bank with immediate effectin terms of Rule 37(ii)(i) of the Bharat Overseas Bank LimitedOfficers Conduct, Discipline & Appeal Rules, 1990.7. As said earlier, though the appellant preferred anappeal to the Board of Directors, the same was dismissed. It isnot in dispute that Section 41(2) of the Act enables the employeeto challenge the order of dismissal before the Appellate Authority.It is useful to refer to the relevant provision,“ 41. Notice of dismissal.—(1) Noemployer shall dispense with the services of aperson employed continuously for a period of notless than six months, except for a reasonablecause and without giving such person at leastone month’s notice or wages in lieu of suchnotice, provided however, that such notice shallnot be necessary where the services of suchperson are dispensed with on a charge ofmisconduct supported by satisfactory evidencerecorded at an enquiry held for the purpose.(2) The person employed shall have aright to appeal to such authority and withinsuch time as may prescribed either on the groundthat there was no reasonable cause fordispensing with his services or on the groundthat he had not been guilty of misconduct asheld by the employer.(3) The decision of the appellateauthority shall be final and binding on both theemployer and the person employed. “It is clear from sub-Section(2) that, if there was no reasonablecause for dispensing with the services of a person employed or hehad not been guilty of misconduct as held by the employer, theAppellate Authority is free to interfere with the order ofdismissal. Sub-section(3) makes it clear that the decision of the https://hcservices.ecourts.gov.in/hcservices/ Appellate Authority shall be final and binding on both the employerand the person employed. It is settled law that normally the HighCourt and even the Supreme Court would not interfere with thefindings of fact recorded at the domestic enquiry, but, if thefinding of ‘guilt’ is based on no evidence, it would be perversefinding and would be amenable to judicial scrutiny, vide KuldeepSingh vs. Commissioner of Police (1992 (2) SCC 10).8. With reference to the issue involved, we perused eachcharge, materials placed by the Management/Bank, plea of theappellant and the conclusion arrived at by the Enquiry Officer aswell as the Appellate Authority. It is also relevant to mentionthat the Appellate Authority under the Act considered each of thecharges in detail, examined the evidence both documentary and oraland arrived at the conclusion that the charges against theappellant/employee had not been established. 9. Learned counsel appearing for the appellant hasbrought to our notice that, as per Bharat Overseas Bank LimitedOfficers Conduct, Discipline & Appeal Rules, 1990, every officershall at all times take all possible steps to ensure and protectthe interests of the Bank and discharge his duties with utmostintegrity, honesty, devotion and diligence and do nothing which isunbecoming of a Bank Officer. The Rules also make it clear thatevery officer shall observe, comply with and obey all orders anddirections which may from time to time be given by any person orpersons under whose superintendence or control he may for the timebeing be placed.10. In the light of the provisions of the Act andDisciplinary Rules, let us consider the findings of the EnquiryOfficer, conclusion of the Disciplinary Authority as well as theorder passed by the Appellate Authority and the order of thelearned Judge. 11. Charge No.1 was that the advances granted to theparties were not brought to the notice of the Head Office. Withregard to the said charge, apart from the statement of theappellant, Ex.D.10 was produced before the Enquiry Officer toestablish that the Branch Manager had brought to the notice of theHead Office the advances so made, and therefore, no lapse could beattributed to the appellant.In this regard, it is relevant to refer to AdvancesCircular No.68/89, dated 23.05.1989, issued by Bharat Overseas BankLimited. Clause-3 of the said Circular reads as under:-“ 3. Incidentally, we also wish to add thatwherever it is noticed that matters of the above https://hcservices.ecourts.gov.in/hcservices/ nature are not reported to Head Office for a periodof over say 7 days by the Manager, it will be theresponsibility of the branch Accountants to bringsuch instances to the notice of the Head Office inwriting failing which, branch Accountants will beheld personally accountable for not reporting thematter to Head Office. …” It is clear that, in respect of grant of excess drawings as well asomission, at the first instance, it is obligatory on the part ofthe Manager to intimate such aspects to the Head Office and if nosuch intimation was passed on by the Manager within a period of 7days, then, it would be the responsibility of the Branch Accountantto bring such instances to the notice of the Head Office inwriting, failing which, the Branch Accountant will be heldpersonally responsible for not reporting the matter to the HeadOffice. As said earlier, Ex.D.10, produced by the appellantbefore the Enquiry Officer, clearly shows that the Branch Managerhad brought to the notice of the Head Office of the advances somade and in view of the said fact there was no lapse as alleged onthe part of the appellant. To put it clear, only in the absence offormal intimation by the Manager, duty is cast on the Accountant tointimate the details to the Head Office. The Appellate Authority,after considering this aspect in detail, rightly disagreed with thefindings of the Enquiry Officer. It is also useful to mention thatthe Circular does not make it obligatory that each and everytransaction is to be brought to the notice of the Head Office. Ongoing through the relevant details, particularly Ex.D.10, and thestatement of the appellant as well as the Circular, which we havereferred to, we are in entire agreement with the conclusion arrivedat by the Appellate Authority in respect of charge No.1. 12. Coming to Charge No.2 with regard to passing ofcheque for Rs.5,00,000/- to one Suresh Mittal, it is the case ofthe appellant that it was done under the instructions of the BranchManager and, admittedly, on the same day, the party had brought ina fixed deposit receipt from third parties to the tune ofRs.10,00,000/-, whereupon, the Branch Manager had sanctioned a loanof Rs.7,50,000/- on 28.06.1990 itself, in such circumstances, theallegation relating to Suresh Mittal cannot be sustained. The appellant, apart from his oral evidence, alsoproduced Exs.D-16 and M-3. Ex.D-16, which is filed in the typedset of papers, clearly shows that, on the very same day, the partyhad brought the required security viz., F.D. receipt from thirdparties to the tune of Rs.10,00,000/-, and, in fact, based on thesame, the Branch Manager had sanctioned a loan of Rs.7,50,000/-. https://hcservices.ecourts.gov.in/hcservices/ This is evident from Ex.D-16 and M-3 as well as the oral evidenceof the appellant. All these material aspects have been rightlyconsidered; hence, we are in entire agreement with the conclusionarrived by the Appellate Authority. It is also brought to our notice that the cheque waspassed not only by the appellant but also by one Kanwal Chopra,Current Accounts Officer, as could be seen from Ex.D1, however, noaction was taken against him. 13. With regard to passing a cheque for Rs.2,00,000/- infavour of Veekay Industries on 05.06.1990, here again, apart fromthe oral evidence of the appellant, there is documentary evidencein the form of Ex.D13, which amply shows that the amount had comein on 05.06.1990 itself, and there was also an explanation that,since it was after the cash transaction for the day was closed, theamount was kept in the Bank and taken up as the first item on thenext day. Mr.N.G.R.Prasad, learned counsel appearing for theappellant, has brought to our notice the relevant entries in Ex.D-13, in those circumstances, the Appellate Authority rightlyaccepted the evidence of the appellant, finding that the chargerelating to Veekay Industries was not established. As rightlypointed out, there was no contra evidence on the side of the Bank. 14. With regard to passing of cheque of Rs.3,00,000/-, itis the assertion of the appellant that he had passed the same onlyunder the instructions of the Branch Manager. Admittedly, theBranch Manager was not examined on the side of the Management andno contra evidence was available. Further, the said amount wasalso mentioned in the cheque referred register viz., Ex.M3, whichamply shows that it was done under the instructions of the Branchmanager. A copy of M3 is available in the typed set of paperswhich substantiates the above stand. In addition to the same,Rs.1,00,000/- was transferred from the S.B. Account of the party onthe same day and Rs.2,00,000/- was brought on the next day. Allthese details are available in the documents which are in thecustody of the Bank. In those circumstances, the AppellateAuthority is perfectly right in concluding that it was a businesstransaction done under the instructions of the Branch Manager and,in fact, there was no loss to the Bank or anyone. We concur withthe said conclusion.15. Coming to Charge No.3(a), as rightly pointed out bythe Appellate Authority, the Enquiry Officer himself, in hisfindings, had stated that there was absolutely no evidence tosupport the charge that the appellant did not verify the existenceof the document. As rightly pointed out by the learned counsel forthe appellant, the Enquiry Officer, having said so, is notjustified in finding the appellant guilty of the said charge. On https://hcservices.ecourts.gov.in/hcservices/ the other hand, the Appellate Authority, after finding that thereis no contra evidence, accepted the appellant’s evidence that, onlyafter verifying the documents, he had signed the Register. Thereis no reason to reject the said conclusion. Further, as rightly observed by the authority, the twowitnesses examined by the Bank, viz., V.R.Sridhar and A.Sadagopal,were not competent to testify the allegations, because V.R.Sridharworked in Burra Bazaar Branch for just two months after the allegedincident and A.Sadagopal was an officer of the Advance Departmentin the Head Office, in those circumstances, as correctly observedby the Appellate Authority, reliance placed on the evidence ofthose two witnesses is not proper and relevant to the issue inquestion. We are in agreement with the observation and conclusionarrived at by the Appellate Authority.16. With regard to charge No.3(b), it is the case of theappellant that, though he was on leave on 23.04.1990, he had signedthe Documents Execution Register on the next day under theinstructions of the Branch Manager that too after verifying thedocuments. As rightly observed by the Appellate Authority, thesaid act did not mean that he signed it deliberately as if it wason 23.04.1990. Further, the entire evidence of the appellant inrespect of the said charge makes it clear that he has simply obeyedthe instructions of his Master, ie., Branch Manager. Further, ifthe then Manager K.Raghunath was enquired as a witness, he wouldhave thrown more light on the issue, which exercise the Bank has,for the reasons best known to them, failed to take upon. Though theAccountant owes independent responsibility, at the same time,necessarily, he has to implement the directions and orders of theBranch Manager. In those circumstances, it is but proper on thepart of the Bank to have examined the Manager. It is true that theBranch Manager was also charge sheeted. That being so, failure toexamine him before the Enquiry Officer is fatal to the chargeslevelled against the appellant.17. Insofar as charge No.4 is concerned, it is nothingbut summarising charge Nos.-1 to 3. In view of the conclusion thatCharge Nos.1 to 3 were not proved by satisfactory evidence, thesame conclusion is applicable to charge No.4.18. The order of the Appellate Authority makes it clearthat it has analysed all the materials including oral anddocumentary evidence and came to the conclusion that all the fourcharges levelled against the appellant have not been proved throughsatisfactory evidence. Yet another reason pointed out by theAppellate Authority is that the Bank has not furnished a copy ofthe findings of the Enquiry Officer to the appellant beforeeffecting dismissal which the Bank has also not denied. It is not https://hcservices.ecourts.gov.in/hcservices/ in dispute that the appellant is entitled to a copy of the entireReport before being inflicted with any punishment. As rightlypointed out by the Authority, had the findings of the EnquiryOfficer been furnished to the appellant, he would have been in abetter position to furnish his detailed explanation as to theproposed punishment. Inasmuch as the findings of the EnquiryOfficer were furnished only after the order of dismissal, we holdthat it has prejudiced the appellant in rendering an effectiveexplanation. This aspect was also considered by the AppellateAuthority to hold against the bank.19. Though the learned Judge has referred to all thedetails, viz., charges, explanation of the appellant, and findingsof the Enquiry Officer, as rightly pointed by the Mr.NGR.Prasad,learned counsel for the appellant, he has failed to advert to thevital aspects, viz., assertion of the appellant in the form of oralevidence and documents, which are all in the custody of the bank,and other relevant factors depicting his innocence. 20. The learned Judge proceeded on the basis that theappellant, being a responsible officer of the Bank, owes moreresponsibility to the Bank and merely accepted the action taken bythe Disciplinary Authority. On the other hand, the AppellateAuthority went into all the aspects, viz., oral and documentaryevidence, analysed the same with reference to each charge and foundthat there was no lapse on the part of the appellant. It is alsoclear from the factual findings that the appellant, beingAccountant, was bound to act on the instructions of the BranchManager. In fact, he acted on his oral instructions and, even ifthere was any flaw or deviation, as seen from the documentaryevidence, the same was either rectified on the same or on the nextday. Thus, we are in entire agreement with the conclusion of theAuthority and unable to accept the contrary conclusion of thelearned Judge. 21. We have already pointed out that sub-Section 3 ofSection 41 of the Act makes it clear that the decision of theAppellate Authority shall be final and binding on both the parties.Further, it is not the case of the Bank that the AppellateAuthority has not looked into the oral and documentary evidence, onthe other hand, the authority considered each charge with referenceto the oral and documentary evidence let in by both sides and onproper appreciation of the materials, arrived at a specificconclusion, in such circumstances, as observed in the decisionreported in 1992 (2) SCC 10 (cited supra), it is not a case of ‘noevidence’ or ‘perverse finding’ for interference by the learnedJudge, exercising jurisdiction under Article 226 of theConstitution of India. https://hcservices.ecourts.gov.in/hcservices/

22. We are unable to endorse the views expressed by thelearned Judge in para No.8.11 that the order of the Authority isnot supported with any reason, on the other hand, as observedearlier, the Appellate Authority considered the case of both sides,and only after analysing the materials, arrived at the conclusionthat the charges have not been established. The AppellateAuthority has also taken note of the fact that the limits that weresanctioned on the very day or the amounts that had come in on thevery day for the transactions were based on business prudence bythe Branch Manager. Further, as rightly pointed out, the learnedJudge has not considered the material fact that the appellant wasnot supplied with a copy of the Enquiry Officer’s Report beforepassing an order dismissing him from service. If the report hadbeen given, he would have been able to show that the chargeslevelled against him were baseless and that he had acted only onthe instructions of the Branch Manger by pinpointing the relevantdocuments. It is also relevant to mention that the AppellateAuthority had taken note of non-examination of the Branch Manger asone of the relevant factors to set aside the order of dismissal.All these relevant and vital aspects have not been properlyappreciated by the learned Judge.23. In these circumstances, the order of the learnedJudge dated 01.04.2003 is set aside and the order of the AppellateAuthority dated 24.02.1997 is confirmed. Writ Appeal is allowed.No costs. JI.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarTo1. The Appellate Authority,under Tamil Nadu Shops &Establishments Act,D.M.S. Compound,Teynampet, Chennai-600 006.2. The Deputy General Manager,Bharat Overseas Bank Ltd.,Head Office, Anna Salai,Chennai-600 006. https://hcservices.ecourts.gov.in/hcservices/ + 1 cc to Mr. T. K. Bhaskar, Advocate SR No. 3819+ 1 cc to M/s. Row & Reddy, Advocate SR No. 3803SSV(CO)SR/1.2.2007 Judt. in WA.1781/2003.