The Chairman,Pandyan Grama Bank v. The Presiding Officer, Central Government Industrial Tribunal -cum-Labour Court

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 18..08..2010CORAMTHE HONOURABLE MR. JUSTICE S.NAGAMUTHUW.P.No.9814 of 2001The Chairman,Pandyan Grama Bank,No.2-70-1, Collectorate Complex,Virudhunagar 626 002..... Petitioner-Versus-1. The Presiding Officer, Central Government Industrial Tribunal -cum-Labour Court, I - Floor, Haddows Road, Shasthri Bhawan, Chennai 600 006.2. Pandyan Grama Bank Employees Association, Rep. by its General Secretary, No.6, Pitchai Street, Virudhunagar 626 002.... RespondentsPetition filed under Article 226 of the Constitution ofIndia, for issuance of a Writ of Certiorari calling for the recordsfrom the file of the 1st respondent Central Government IndustrialTribunal-cum-Labour Court, Madras – 600 006 relating to I.D.No.67of 2000 and quash the order dated 13.02.2001 passed therein.For petitioner : Mr.N.G.R.PrasadFor respondent(s): Mr.P.V.S.Giridharan for R2ORDER “Proof by preponderance of probabilities ”– What does thisphrase convey in the context of a Disciplinary Proceeding?Precisely, this question has come up for consideration in this writpetition.2. The 2nd respondent is a trade union and its members areemployees working in the petitioner bank. From 04.04.1994 onwardsone Mr.V.Naganathan [hereinafter referred to as "the employee"] wasworking as a Clerk-cum-Cashier in the petitioner bank. He is alsoa member of the 2nd respondent trade union. The petitioner bank on12.12.1995 issued a charge memorandum to the employee alleging thathe had demanded and accepted 10% of the loan amount as illegalgratification along with Field Officer - Sri N.Suruli Bommaiyanand the then Branch Manager - Sri O.Arumugam while disposing https://hcservices.ecourts.gov.in/hcservices/ five small loans and seventeen charcoal loans to differentborrowers during the period between December, 1993 and March, 1994.The employee denied the said charge by submitting a detailedexplanation dated 23.01.1996. Not satisfied with the saidexplanation, the petitioner Bank ordered for an enquiry.3. Before the enquiry officer one Mr.K.Balachandran, whoheld preliminary enquiry and recorded the statements of theloanees was examined as M.W.1 on the side of the management. Thesaid statements of the loanees were also marked. But, the personswho gave such statements before Mr.K.Balachandran were not examinedbefore the enquiry officer. However, relying on the saidstatements of the loanees and the evidence of Mr.K.Balachandran,the enquiry officer held that the charges were proved. A copy ofthe enquiry officer's report was furnished to the employee alongwith a show cause notice dated 16.10.1997. The employee submitted afurther explanation dated 01.11.1997. Rejecting the saidexplanation, the petitioner Bank by order dated 19.05.1998 imposeda penalty of stoppage of three annual increments with cumulativeeffect. Challenging the said punishment, the employee preferredan appeal and the same was also rejected by the Board of Directorsby proceedings dated 20.04.1999. It is against the saidpunishment, the 2nd respondent trade union raised an IndustrialDispute and the same was referred under Section 10 of theIndustrial Disputes Act, 1947 by the Central Government to theCentral Government Industrial Tribunal-cum-Labour Court, Chennai inI.D.No.67 of 2000. The order of reference of the Central Governmentis to the following effect:-"Whether the action of the Chairman,Pandyan Grama Bank, Virudhunagar in stoppingthree annual increments with cumulative effectto Shri V.Naganathan, Cashier of the Bank islegal and justified? If not, to what relief theconcerned workman is entitled to?"4. Before the Industrial Tribunal, a preliminary issue wasraised that the enquiry was not held fairly and properly. TheIndustrial Tribunal held that the enquiry was held fairly andproperly. Therefore, no fresh oral evidence was let in by eitherside and on the side of the workman as many as nine documents wereexhibited and on the side of the management four documents wereexhibited [all the documents had been exhibited earlier before theenquiry officer]. Having considered the above materials, theIndustrial Tribunal held that the punishment imposed on theemployee was unjustified and on that finding, the IndustrialTribunal set aside the order of punishment with a direction to themanagement to refund the sum deducted from the employee's pay andallowances, if any. Challenging the above award of the labourcourt, the petitioner bank is before this Court with this writpetition. 5. In this writ petition, it is mainly contended by thepetitioner that the charge against the petitioner was duly provedby acceptable evidence, but the Industrial Tribunal has interfered https://hcservices.ecourts.gov.in/hcservices/ with the findings of the enquiry officer without having properappreciation of the materials available on record. 6. The learned counsel appearing for the petitioner wouldsubmit that the Industrial Tribunal has disagreed with the findingof the enquiry officer mainly on the ground that the loanees fromwhom illegal gratification was demanded and accepted had not beenexamined before the enquiry officer. He would further submit thatthe said conclusion arrived at by the Industrial Tribunal is not atall sustainable under law inasmuch as the statements recorded byMr.K.Balachandran during preliminary enquiry from the loanees aresubstantive evidences upon which reliance ought to have been madeby the Industrial Tribunal to come to an irresistible conclusionthat the employee is guilty under charge. He would further submitthat the evidence of Mr.K.Balachandran cannot be stated as hearsay.He would add that the evidence of Mr.K.Balachandran is assubstantive as any other substantive evidence and, therefore, theIndustrial Tribunal ought to have relied on the same to hold theemployee guilty of the charge. The learned counsel would furtheradd that the employee did not examine himself either before theenquiry officer or before the Industrial Tribunal out of which anadverse inference should have been drawn by the Industrial Tribunalagainst the employee. In order to substantiate the abovecontentions, the learned counsel has relied on two judgements ofthe Hon'ble Supreme Court about which I would make reference in thecourse of this order.7. Per contra, the learned counsel appearing for the 2ndrespondent would submit that the statements said to have beenrecorded from the loanees behind the back of the employee cannot betreated as substantive evidence at all to prove the allegationsmade therein. He would further submit that the evidence ofMr.K.Balachandran is hit by hearsay rule and, therefore, the samecannot be treated as substantive evidence. He would further submitthat since there is no acceptable evidence at all to prove thecharge levelled against the employee , there was no occasion forhim to get into the box to give any evidence in respect of theallegations made against him. He would add that even applying thetest of preponderance of probabilities, the charge levelled againstthe employee had not been proved. Thus, according to the learnedcounsel appearing for the 2nd respondent, the award of theIndustrial Tribunal does not require any interference at the handsof this Court. In order to substantiate the above contentions, thelearned counsel appearing for the 2nd respondent would also rely onfew judgements of the Hon'ble Supreme Court about which also Iwould make reference at the appropriate stages of this order.8. Let me, at the out set, recapitulate the broadprinciples propounded by the Hon'ble Supreme Court in respect ofthe nature and standard of proof required in disciplinaryproceedings. It is well settled that in a disciplinary proceeding,the standard of proof of the charges levelled against thedelinquent is not proof beyond doubt. Proof beyond all reasonabledoubts is a concept alien to the disciplinary proceedings. The https://hcservices.ecourts.gov.in/hcservices/ charges could be established by applying the test of preponderanceof probabilities. The concept of preponderance of probability doesnot mean that charges could be held to have been proved on meresurmises or conjunctures or speculations. Surmises, conjuncturesor speculations can never take the place of proof at all. Proofby means of preponderance of probability denotes the standard whichlies somewhere below the standard of proving criminal chargebeyond reasonable doubt and slightly different from the standard ofproof of any fact in any civil case applying the technical rulesof the Evidence Act. In this regard, useful reference may be had tothe judgement of the Hon'ble Supreme Court in Maharashtra StateBoard of Secondary and Higher Secondary Education v. K.S.Gandhi andothers, 1991 (2) SCC 716 wherein the Hon'ble Supreme Court in para37 has held as follows:- 37. .....In our considered view inferencefrom the evidence and circumstances must becarefully distinguished from conjectures orspeculation. The mind is prone to take pleasureto adapt circumstances to one another and evenin straining them a little to force them toform parts of one connected whole. There mustbe evidence direct or circumstantial to deducenecessary inference in proof of the facts inissue. There can be no inferences unless thereare objective facts, direct or circumstantialfrom which to infer the other fact which it issought to establish. In some cases the otherfacts can be inferred, as much practical as ispractical, as if they had been actuallyobserved. In other cases the inferences do notgo beyond reasonable probability. If there areno positive proved facts, oral, documentary orcircumstantial from which the inferences can bemade the method of inference fails and what isleft is mere speculation on conjecture.Therefore, when an inference of proof that afact in dispute has been held established theremust be some material facts or circumstances onrecord from which such an inference could bedrawn. The standard of proof is not proofbeyond reasonable doubt "but" the preponderanceof probabilities tending to draw an inferencethat the fact must be more probable. Standardof proof cannot be put in a straight Jacketformula. No mathematical formula could be laidon degree of proof. The probative value couldbe gauged from facts and circumstances in agiven case. The standard of proof is the sameboth in civil cases and domestic enquiries."9. As held in the above case, the technical rules ofEvidence Act are not applicable to the disciplinary proceedings. https://hcservices.ecourts.gov.in/hcservices/ But, at the same time, the basic principles of Evidence Act cannotbe altogether brushed aside. They are very much applicable to thedisciplinary proceedings.There can be no second opinionthat even hearsay evidence is admissible in disciplinaryproceeding but it cannot be disputed that such hearsay evidence cannever take the place of substantive evidence. At the most, suchhearsay evidence may either be a corroborative piece of evidence ormay be one of the circumstances to form the basis for the probableconclusion. A statement recorded from a person during preliminaryenquiry is surely admissible in evidence before the enquiryofficer during the disciplinary proceeding unlike the same is notadmitted in criminal cases. If the maker of the said statement isalso examined before the enquiry officer, surely, the statementmade by him earlier and accepted as evidence during the enquirybefore the enquiry officer can be used to strengthen / corroboratethe evidence of the maker of the said statement. If the maker ofthe statement himself is not examined and only the statement saidto have been recorded from him alone is marked in evidence, suchstatement can never be treated as substantive evidence to prove thecontents / allegations made in the said statement. 10. A person who recorded such a statement duringpreliminary enquiry is competent to speak about the said statementbefore the enquiry officer. The said statement can surely be markedthrough him. But, mere marking of the said statement alone will notprove the contents of the said statement. Here, it cannot beconfused as though I am applying the technical rules of EvidenceAct relating to the proof of the contents of the said statement. Itneeds to be correctly understood that as per the basic principlesof the Evidence Act which are applicable to disciplinaryproceedings, the evidence of a person who recorded the statementduring preliminary enquiry [Mr.K.Balchandran in this case] issurely hearsay in respect of the contents of the statement made bythe maker of the statement [loanee]. This evidence is admissiblethough it is hearsay. But, what all that I state is that hisevidence is not substantive to prove the contents of the statementrecorded by him. 11. Now, coming to the judgement of the Hon'ble SupremeCourt in Central Bank of India v. Prakash Chand Jain, AIR 1969 SC983 [relied on by the 2nd respondent] wherein the Hon'ble Supremecourt in para 8 & 11 has reiterated the law as follows:- "8. ......Those statements made byNand Kishore to Vazifdar could not, however,become substantive evidence to prove thecorrectness of these elements forming partof the charge. It is in this connectionthat importance attaches to the viewsexpressed by this Court in the cases citedabove where it was pointed out that afinding of a domestic tribunal may beperverse if it is not supported by anylegal evidence. It is true that , in https://hcservices.ecourts.gov.in/hcservices/ numerous cases, it has been held thatdomestic tribunals, like an Enquiry Officer,are not bound by the technical rules aboutevidence contained in the Indian EvidenceAct; but it has nowhere been laid down thateven substantive rules, which would formpart of principles of natural justice, alsocan be ignored by the domestic tribunals.The principle that a fact sought to beproved must be supported by statements madein the presence of the person against whomthe enquiry is held and that statementsmade behind the back of the person chargedare not to be treated as substantiveevidence, is one of the basic principleswhich cannot be ignored on the mere groundthat domestic tribunals are not bound by thetechnical rules of procedure contained inthe Evidence Act. In fact, learned counselfor the appellant Bank was unable to pointout any case at all where it may have beenheld by this Court or by any other Courtthat a domestic tribunal will be justifiedin recording its findings on the basis ofhearsay evidence without having any director circumstantial evidence in support ofthose findings.".........."11. ......... These views expressedby this Court, in our opinion, bring outwhat was meant when this Court held thatfindings recorded by an Enquiry Officer mustbe supported by legal evidence. The evidenceas indicated in these cases, should consistof statements made in the presence of theworkman charged. An exception was envisagedwhere the previous statement could be usedafter giving copies of that statement wellin advance to the workman charged, but withthe further qualification that that previousstatement must be affirmed as truthful in ageneral way when the witness is actuallyexamined in the presence of the workman."[Emphasis supplied]12. At this Juncture it may be useful to refer to yetanother judgement of the Hon'ble Supreme Court in Union of India v.Gyan Chand Chattar , [2009] 12 SCC 78 wherein the Hon'ble SupremeCourt in para 20 & 21 has held as follows:- "20. So far as Charge 6 i.e. asking for 1%commission for making the payment of payallowances is concerned, the learned Single Judgehas appreciated the evidence of all the witnesses https://hcservices.ecourts.gov.in/hcservices/ examined in this regard and came to theconclusion that not a single person had deposedbefore the enquiry officer that the respondentemployee had asked any person to pay 1%commission for making payment of theirallowances. It was based on hearsay statements.All the witnesses stated that this could be themotive / reason for not making the payment. 21. Such a serious charge of corruptionrequires to be proved to the hilt as it bringscivil and criminal consequences upon the employeeconcerned. He would be liable to be prosecutedand would also be liable to suffer severestpenalty awardable in such cases. Therefore, sucha grave charge of quasi-criminal nature wasrequired to be proved beyond any shadow of doubtand to the hilt. It cannot be proved on mereprobabilities." [Emphasis supplied]13. A perusal of the above two judgements of the Hon'bleSupreme Court would go to clearly indicate that it is the wellsettled law that a statement recorded behind the back of theemployee cannot be treated as substantive evidence by the enquiryofficer during the disciplinary enquiry and that such a seriouscharge of corruption, as it is a quasi criminal proceeding, shouldbe proved beyond any shadow of doubt and to the hilt. 14. But, the learned counsel appearing for the petitionerwould rely on a judgement of the Hon'ble Supreme Court in State ofHaryana and another v. Rattan Singh, (1977) 2 SCC 491 wherein theHon'ble Supreme Court in para 5 has held as follows:- "5. ....... Reliance was placed, asearlier stated, on the non-compliance with thedepartmental instruction that statements ofpassengers should be recorded by inspectors.These are instructions of prudence, not rulesthat bind or vitiate in the violation. In thiscase, the Inspector tried to get the statementsbut the passengers declined, the psychology ofthe latter in such circumstances beingunderstandable, although may not be approved.We cannot hold that merely because statementsof passengers were not recorded the order thatfollowed was invalid.........."15. Relying on the above, the learned counsel for thepetitioner would point out that in that case, the passengers didnot come forward to give any statement. The passengers were neitherexamined during enquiry also. But, however, relying on the personwho heard the statement and the other persons in whose presence thestatements were made by the passengers, the Hon'ble Supreme Court https://hcservices.ecourts.gov.in/hcservices/ has held that the charges were proved. Though this argument, at thefirst blush, may appear to be reasonable, a deep look into thesame would expose the hollowness of the said argument. On facts,in that case, a Checking Inspector of a Transport Corporation Bus,checked the passengers when they were alighting the bus. Somepassengers did not possess travel tickets. He could not record thestatements of those persons. Thereafter, during enquiry, theChecking Inspector was examined. He also deposed about the oralstatements of the passengers. In those circumstances, the Hon'bleSupreme court held that the evidence of the Checking Inspector issubstantive. If one assimilates the facts of the case thoroughly,it would leave no doubt in his mind to reach the conclusion thatthe evidence of the Checking Inspector had been treated assubstantive because he was an eye-witness to the fact that threepassengers were alighting from the bus and on checking they werefound not possessing the travel tickets. In that case, the oralstatements of passengers spoken to by the checking inspector wasnot treated as substantive evidence, but only as a circumstance tostrengthen the substantive evidence of the Checking Inspector. Aclose reading of the entire judgement of the Hon'ble Supreme Courtwould go to reveal that the Hon'ble Supreme Court never said thatthe oral statements of the passengers made to the CheckingInspector were substantive in nature. Therefore, the facts of thesaid case are clearly distinguishable and, as a matter of fact,the principles stated in the said case are also very muchapplicable to the facts of the present case. In the instant case,Mr.K.Balachandran was not an eye-witness in respect of theallegations contained in the statement recorded from the loanee.Therefore, his evidence cannot be substantive in respect of theallegations made in the statement of the loanee. To put itdifferently, he is not a competent witness to speak about thedemand and acceptance of the alleged commission by the employee.Absolutely, I find no conflict between this judgement and the othertwo judgements referred to above. A conjoint reading of all thethree judgements of the Hon'ble Supreme Court would make itabundantly clear that the statement recorded from the loanee in theabsence of the employee is not substantive evidence and if only themaker of the statement is examined before the enquiry officer andsubjected to cross examination, the said oral evidence will besubstantive.16. The Rattan Singh's case referred to above came to beconsidered by the Hon'ble Supreme Court again in Cholan RoadwaysLimited v. G.Thirugnanasambandam, 2005 (2) LLN 663 wherein theHon'ble Supreme Court held that the principles of res ipsaliquitur" is very much applicable to disciplinary proceedings. Inpara 34 of the judgement, the Hon'ble Supreme Court has held asfollows:- "34. In this case, further more, themisdirection in law committed by the IndustrialTribunal was apparent insofar as it did notapply the principle of res ipsa loquitur whichwas relevant for the purpose of this case and,thus, failed to take into consideration a https://hcservices.ecourts.gov.in/hcservices/ relevant factor and furthermore took intoconsideration an irrelevant fact not germanefor determining the issue, namely, thepassengers of the bus were mandatorily requiredto be examined. The Industrial Tribunal furtherfailed to apply the correct standard of proofin relation to a domestic enquiry, which is"preponderance of probability" and applied thestandard of proof required for a criminaltrial. A case for judicial review was, thus,clearly made out."17. A close reading of the above judgement would go toshow that the principles stated therein do not in any manner cometo the help of the petitioner. As held by the Hon'ble SupremeCourt, though strict rule of the Evidence Act cannot be madeapplicable and that finding can be arrived at on the basis of thecircumstances, it cannot be forgotten that such conclusions cannotbe arrived at on the basis of mere surmises or speculations. Inthis regard we may have a glance through Rattan Singh's case citedsupra, wherein the Hon'ble Supreme Court in para 4 has held asfollows:- "4. It is well settled that in a domesticenquiry the strict and sophisticated rules ofevidence under the Indian Evidence Act may notapply. All materials which are logicallyprobative for a prudent mind are permissible.There is no allergy to hearsay evidenceprovided it has reasonable nexus andcredibility. It is true that departmentalauthorities and administrative tribunals mustbe careful in evaluating such material andshould not glibly swallow what is strictlyspeaking not relevant under the Indian EvidenceAct. For this proposition it is not necessaryto cite decisions nor text books, although wehave been taken through case law and otherauthorities by counsel on both sides. Theessence of a judicial approach is objectivity,exclusion of extraneous materials orconsiderations and observance of rules ofnatural justice. Of course, fair play is thebasis and if perversity or arbitrariness, biasor surrender of independence of judgementvitiate the conclusions reached, such finding,even though of a domestic tribunal, cannot beheld good."18. Keeping in mind all the broad principles hithertodiscussed, if the facts of the instant case are analysed, I findthat the enquiry officer had treated the statement of the loanee assubstantive evidence to hold that the employee demanded illegal https://hcservices.ecourts.gov.in/hcservices/ gratification from the loanee and received the same, which isobviously not in accordance with law. That is the reason why, theIndustrial Tribunal disagreed with the findings of the enquiryofficer and held that the same are perverse inasmuch as it wasbased on no evidence. Thus, the Industrial Tribunal was right insetting aside the order of punishment. 19. The learned counsel appearing for the petitioner wouldpoint out that in respect of the same allegations, a similarcharge memorandum was issued against the then Manager of the Bank.In the enquiry held against the Manager, the loanee was notexamined but Mr.K.Balachandran alone was examined. There also,relying on the statement of the loanee, the enquiry officer heldthat the charge of demand of illegal gratification and acceptancewas proved and ultimately, the Manager was dismissed from servicebased on the said finding of the enquiry officer. The same waschallenged in W.P.No.19708 of 1999 before this Court. A learnedsingle Judge of this Court , by order dated 04.12.2009 dismissedthe writ petition thereby declining to interfere with the order ofpunishment.20. Relying on the said judgement, the learned counsel forthe petitioner would submit that the facts of the present case arealso similar and, therefore, the order of punishment should nothave been interfered with by the Industrial Tribunal. With greatrespect, I am unable to subscribe to the said view taken by thelearned Judge in the judgement in W.P.No.19708 of 1999. Theprinciples stated in the judgements of the Hon'ble Supreme Courtwhich I have relied on in the previous paragraphs were not broughtto the notice of the learned Judge of this Court. Further, beforethe learned Judge, the question whether the statement of a personcan be treated as substantive evidence to prove the allegationsmade in the statement without examining him before the enquiryofficer was not at all canvassed and so the learned Judge had nooccasion to examine the same. When the Hon'ble Supreme Court hasclearly held that the statements recorded in the absence of theemployee cannot be treated as substantive evidence, I am bound bythe said law laid down by the Hon'ble Supreme Court and,therefore, I am unable to follow the judgement of the learnedsingle Judge.21. In view of all the above, I hold that the IndustrialTribunal was right in interfering with the order of punishmentand I do not find any infirmity in the award of the IndustrialTribunal warranting interference at the hands of this Court. https://hcservices.ecourts.gov.in/hcservices/

22. In the result, the writ petition fails and the same isaccordingly dismissed. No costs. Sd/- Assistant Registrar /True Coy/ Sub Assistant RegistrarkmkTo1.The Presiding Officer, Central Government Industrial Tribunal- cum-Labour Court, I - Floor, Haddows Road, Shasthri Bhawan, Chennai 600 006.2. The Section Officer, VR Section, High Court, Madras +1 CC to M/s.P.V.S.Giridhar Advocate Sr.No.60830+1 CC to Mr.N.G.R.Prasad, Advocate Sr.No.59742W.P.No.9814 of 2001 AKR(CO)03/09/201018..08..2010 https://hcservices.ecourts.gov.in/hcservices/