Icici Limited vs T.R.Shetty And Anr
2017 Latest Caselaw 7055 Bom

                Megha                                                          Bank.doc

           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                   CIVIL APPELLATE JURISDICTION

                        WRIT PETITION NO.4903 OF 1999

ICICI Limited                                           ...Petitioner
                    Versus 
1. T.R. Shetty 
a Citizen of India, residing at 
Sahajeevan Co-operative Housing 
Society, 53/1877 Tilak Nagar, 
Chembur, Mumbai 400 089.

2. C.V. Govardhan
Presiding Officer, First Central 
Government Industrial tribunal, 
having its Court at Sharmraksha 
Bhavan, Shivashrushti Road, Eastern 
Express Highway, Mumbai.                              ...Respondents

                                  .....
Mr. R.S. Pai, with Mr. Anand Pai and Mr. Netaji Gawadhe i/b. 
M/s. Sanjay Udeshi and Co. for the Petitioner.
Mr. Neel G. Helekar for the Respondent No.1.


                                 CORAM : SMT. ANUJA PRABHUDESSAI, J. 

JUDGMENT RESERVED ON: 8th June, 2017 JUDGMENT PRONOUNCED ON: 13th September, 2017

Judgment :-

Challenge in this Writ Petition is to the award dated 9 th July,

1999 in Reference No.35 of 1993 whereby the learned Presiding

Officer, Central Government, Industrial Tribunal No.1-Mumbai,

Megha 1/19

Megha Bank.doc

directed the Petitioner to reinstate the Respondent No.1 with back

wages and continuity in service w.e.f. 1.2.1990.

2. The Petitioner is a Finance Company. The Petitioner had

appointed the Respondent No.1 as a Junior Assistant w.e.f. 1.10.1988.

After completing the probation period the services of the Respondent

No.1 were confirmed w.e.f. 1.4.1989. By letter dated 31.1.1990 the

Petitioner terminated the services of the Respondent No.1 on the

ground of loss of confidence in view of questionable integrity and

loyalty.

3. The Respondent No.1 challenged the termination by filing a

complaint (ULP) No.117 of 1990 in the labour court at Mumbai. The

labour court held that the appropriate Government in respect of the

Finance Company was the Central Government and hence the

provisions of M.R.T.U. and P.U.L.P. Act were not applicable and

accordingly dismissed the complaint by judgment dated 14.3.1991.

4. The Respondent No.1 therefore raised an industrial dispute.

The appropriate Government referred the dispute for adjudication to

the Central Government Industrial Tribunal, Mumbai.

Megha                                                                                    2/19



                    Megha                                                               Bank.doc

5. The Respondent No.1 filed his statement of claim wherein

he alleged that the Petitioner had terminated his services without

following the due process of law. The Petitioner claimed that his

services have been terminated without conducting any enquiry and

that his termination is in total violation of principles of natural justice.

He further claimed that even if it is assumed that his services were

retrenched, the said retrenchment was illegal for want of compliance of

the provisions under Section 25 F of the Industrial Disputes Act

(hereinafter referred to as "the Act"). The Respondent No.1 therefore

claims that the termination of his services was illegal and hence, he is

entitled to be reinstated with full backwages.

6. The Petitioner claimed that it is engaged in financial

purchase and release of ships, fishing strollers etc. The transactions

are extremely confidential. The Petitioner claimed that Premchand, an

employee of the Petitioner, had complained that the Respondent No.1

was seen in the office on weekly holidays alongwith some strangers. It

was stated that the Respondent No.1 was seen taking photocopies of

some documents. The Petitioner suspected that the Respondent No.1

was involved in taking copies of some confidential documents from the

Megha 3/19

Megha Bank.doc

office. The Petitioner also alleged that the Respondent No.1 was

involved in submitting inflated vouchers and claiming exorbitant taxi

fares. The Petitioner claimed that the Respondent No.1-employee had

indulged in objectionable activities, which were against the interest of

the Petitioner-company. The Petitioner claimed that the integrity of the

Respondent No.1 was questionable and hence, they could no longer

repose confidence in him. Hence, by letter dated 31 st January, 1990

the Petitioner terminated the services of the Respondent No.1 on the

ground of loss of confidence.

7. The Petitioner claimed that it was not possible to conduct

an enquiry since such enquiry would adversely affect the long term

business relationship with its corporate clients. The Petitioner further

sought an opportunity to prove that the Respondent No.1 had indulged

in objectionable activities and thereby justify termination of the

services of the Respondent No.1.

8. The records reveal that the learned Presiding Officer of the

Industrial Tribunal had given an opportunity to the Petitioner to prove

the allegations levelled against the Respondent No.1. Accordingly the

Respondent No.1 examined four witnesses. The Respondent No.1

Megha 4/19

Megha Bank.doc

examined himself. The learned Presiding Officer, after considering the

material produced by the respective parties, held that the allegations of

loss of confidence attaches a stigma on the character of the workman

and that his services could not be terminated without any enquiry or

compliance of Section 25 F of the Industrial Disputes Act. The learned

Judge further held that the Petitioner had failed to prove that the

conduct of the Respondent No.1 was objectionable or that there was

any reason to doubt his integrity and to terminate his services on the

ground of loss of confidence. The learned Judge therefore held that

the termination was illegal and ordered reinstatement with back wages

and continuity of service w.e.f. 1.2.1990. Being aggrieved by this

award, the Petitioner has filed the present Petition.

9. Mr. Pai, the learned counsel for the Petitioner has submitted

that the learned Judge has traversed beyond the terms of reference.

He has submitted that the services of the Respondent No.1 were

terminated for loss of confidence. Such termination does not amount

to retrenchment within the meaning of Section 2 (oo) of the Industrial

Disputes Act and hence, the termination was not vitiated for non

compliance of Section 25 F of the Industrial Disputes Act.

Megha                                                                                      5/19



                 Megha                                                              Bank.doc

10. Mr. Pai the learned counsel for the Petitioner has further

submitted that the Petitioner could not hold an enquiry as it would

jeopardise the business relations with its clients. Neverthless, the

Petitioner had justified the termination before the Tribunal. The

objectionable conduct of the Respondent No.1 as proved by the

Petitioner before the Tribunal justified termination on the ground of

loss of confidence. He, therefore, claims that the learned Judge has

erred in ordering reinstatement of the Respondent No.1. The learned

counsel for the Petitioner has further submitted that the Respondent

No.1 has not stated that he was unemployed since the date of his

termination. On the contrary he has admitted in his evidence that he

has been doing accounting work of two companies. In the light of the

said admission, the learned Judge was not justified in ordering

payment of full backwages.

11. He has relied upon Kamal Kishor Lakshman V/s. The

Management of M/s. Pan Americal World Airways and Ors.1987 (1)

LLJ 107 SC, West Coast Paper Mills Employees' Union, Bombay V/s.

A.B.M. Shaikh & Ors. 1999 1 CLR 759, Bharat Heavy Electricals

Ltd. Vs. Chandrasekhar Reddy and Ors. (2005) 2 SCC 481,

Telegraph Dept. V/s. Santosh Kumar Seal (2010) 6 SCC 773,

Megha 6/19

Megha Bank.doc

Haryan State Electronics Dept.Corporation Ltd. V/s. Mamni (2006)

9 SCC 4343, General Secretary, Coal Washeries Workers Union,

Dhanbad Vs. Employers in relation to the Management of Dugda

Washery of M/s. BCCL, 2016 III CLR 737 SCC, Hotel Horizon (Pvt)

Ltd. Vs. Bhartiya Kamgar Karmachari Mahasangh and Another

2002 (1) LLJ 216.

12. Mr. Neel Helekar, the learned counsel for the Respondent

has refuted that the Judge has traversed beyond the scope of the

reference. He has submitted that Sub Section 4 of Section 10 of the

Industrial Disputes Act empowers the Tribunal to adjudicate not only

the dispute referred to it but it also empowers it to adjudicate all the

powers and matters which are incidental thereto. He therefore, claims

that there is no illegality or irregularity in the proceedings.

13. Mr. Neel Helekar, the learned counsel for the Respondent

further claims that the termination was stigmatic and was in violation

of the principles of natural justice. He further claims that even before

the Tribunal, the Petitioner has not been able to justify the termination

of the Respondent No.1 on the ground of loss of confidence. He

further claims that the termination is only on the basis of suspicion.

Megha                                                                                    7/19



                  Megha                                                                 Bank.doc

He therefore, claims that the learned Judge was perfectly justified in

ordering reinstatement with back wages and continuity of service.

14. I have perused the records and considered the submissions

advanced by the learned counsels for the respective parties.

15. At the outset it may be mentioned that the learned Judge

has held that the termination is illegal for want of compliance of

Section 25 F of the Act. It is to be noted that the restrictions imposed

on the employer under Section 25 F of the Act are applicable only in

the case of retrenchment. The term "retrenchment" as defined under

Section 2(oo) of the Act excludes termination of service by way of

punishment and the other exceptions stated in clauses (a) to (c) of

Section 2 (oo) of the Act. In the instant case the services of the

Respondent No.1 were terminated on the ground of loss of confidence.

In Chandu Lal Vs. Management of Pan America World, AIR 1985 SC

1128, the Apex Court has held :-

" 7. It is difficult to agree with the finding of the Labour Court that when service is terminated on the basis of loss of confidence the order does not amount to one with stigma and does not warrant a proceeding contemplated by law preceding termina- tion. Want of confidence in an employee does point out to an adverse facet in his character as the true meaning of the allega-

tion is that the employee has failed to behave up to the expected

Megha 8/19

Megha Bank.doc

standard of conduct which has given rise to a situation involv- ing loss of confidence. In any view of the matter this amounts to a dereliction on the part of the workman and, therefore, the stand taken by the management that termination for loss of confidence does not amount to a stigma has to be repelled. In our opinion it is not necessary to support our conclusion by ref- erence to precedents or textual opinion as a common-sense as- sessment of the matter is sufficient to dispose of this aspect. 'Re- trenchment' is defined in Section 2(oo) of the Industrial Dis- putes Act and excludes termination of service by the employer as a punishment inflicted by way of disciplinary action. If the ter- mination in the instant case is held to be grounded upon con- duct attaching stigma to the appellant, disciplinary proceedings were necessary as a condition precedent to infliction of termina- tion as a measure of punishment. Admittedly this has not been done. Therefore, the order of termination is vitiated in law and cannot be sustained."

16. In Kamal Kishore Laxman (supra) the Apex Court while

reiterating the said principles has held that loss of confidence by the

employer in the employee is a feature which certainly affects the

character or reputation of the employer and therefore amounts to a

stigma.

17. Reverting to the case in hand, the services of the

Respondent No.1 were terminated by letter dated 13.1.1990. By the

said letter the Respondent No.1 was informed that "the Management of

the company has been watching your performance continuously and

Megha 9/19

Megha Bank.doc

find that you have completely lost our trust and confidence". The said

letter indicates that the services of the Respondent no.1 were

summarily discharged for loss of confidence. The said termination

letter does not spell out the incident or the activities of Respondent

No.1, which led to the loss of confidence. Neverthless in the statement

filed before the Tribunal the Petitioner had averred that the

Respondent No.1 had violated the terms and conditions of fidelity cum

secrecy declaration signed by him at the time of the appointment. It

was alleged that Respondent No.1 was found entertaining some

strangers and attending the office on weekly holidays. The Petitioner

Bank had also averred that the Respondent No.1 had suruptiously

taken photocopies of confidential documents viz. final draft of a lease

agreement, which was to be executed between the Petitioner-Bank and

one of its clients. It was alleged that the said confidential document

was found on the file of another client even before the execution of the

said document. The Petitioner Bank had also alleged that the

Respondent No.1 had usurped an amount of Rs.6,000/- alleging to be

taxi fares. He had stopped maintaining long book wherein he was

required to note his outdoor work. The Petitioner claimed that all the

above actions clearly indicated that the Respondent No.1 was a person

with a very questionable integrity and loyalty.

Megha                                                                                10/19



                  Megha                                                                Bank.doc

18. The aforesaid allegations are nothing short of casting

aspersions on the character, reputation and integrity of the Respondent

No.1. The termination was not simplicitor discharge of services but was

stigmatic and punitive. Hence, the termination of services of the

respondent no.1 was not "retrenchment" within the meaning of Section

2(oo) of the Act.

19. The services of the respondent no.1 were sought to be

terminated on grounds which were stigmatic, affecting his character

and reputation. Needless to state that the action of infliction of

punishment by way of termination of service had to be necessarily

preceded by disciplinary proceedings, which in the instant case was

admittedly not done. In Kamal Kishor (supra) the Apex Court has

held that -"If disciplinary enquiry has not preceded the prejudicial order

in the case of a Governemnt servant the action would be bad while in the

case of a workman the order could be justified even in the case of

adjudication before appropriate tribunal under the Industrial Disputes

Act even though no enquiry had been undertaken earlier."

20. It is not in dispute that, the Petitioner had sought an

Megha 11/19

Megha Bank.doc

opportunity before the Tribunal to adduce evidence to justify the

termination of services of the Respondent No.1. The Tribunal had in

fact given such an opportunity and accordingly, the Petitioner had

examined three witnesses to substantiate the charges levelled against

the Respondent No.1 viz. attending the office on holidays, taking

photocopies of confidential documents, submitting inflated taxi bills.

21. MW1- S. Parthsarthi, who was the Executive Director of the

Petitioner-Bank, had produced the confidential report dated

18.12.1989 (Exh.-E) submitted by him to the Managing Director, N.S.

Singhal regarding the questionable and suspicious activities of the

Respondent No.1. In his evidence before the Tribunal as well as in the

confidential report at Exhibit-E, MW1- S. Parthsarathi had alleged that

the Respondent No.1 was seen entertaining strangers in the office on

weekly holidays. The Respondent No.1 had also taken photocopies of

important documents. He has deposed that the Respondent No.1 had

easy access to the important and confidential documents involving

major corporate clients and that it would be risky to continue him in

service.

22. The evidence of this witness indicates that he had no

Megha 12/19

Megha Bank.doc

personal knowledge about the objectionable conduct of the Respondent

No.1 and that the confidential report submitted by him to the

Executive Director was based on the report of Premchand as well as

Yogesh Shah. He claims that said Premchand and Yogesh Shah are

loyal, upright and sincere employees and that there are no reasons to

disbelieve the reports submitted by them. MW1-S. Parthsarthi has

stated in his cross examination that Premchand had told him that the

Respondent No.1 had taken photocopy of one document and further

that he had seized the said copy from the possession of the Respondent

No.1.

23. MW2- Yogesh Shah has claimed that the Respondent No.1

was seen indulging in objectionable activities prejudicial to the interest

of the Petitioner. He claims that on 9.12.1989 at about 8.30 a.m.

Premchand had seen the Respondent No.1 entertaining some strangers

in the Office. Said Premchand had also seen the Respondent No.1

taking photocopies of some important confidential documents of the

Petitioner. He had submitted a report at Exhibit E-1 to the Executive

Director-MW1-S. PArthasarthi. In the said report dated 12.12.1989

MW3 Y.S. Shah had stated that the Law Officer Sudhendranath had

mentioned that one draft lease agreement which was to be signed with

Megha 13/19

Megha Bank.doc

S.R. Shipping was identical to the lease agreement signed with GESCO.

MW3 Y.S. Shah further stated that when he had enquired about the

said matter, Premchand had informed him that he had seen the

Respondent No.1 taking copies of some document. MW2 therefore,

suspected that the Respondent No.1 had taken the copy of the lease

agreement. In his cross-examination, he has stated that he had no

personal knowledge about the said objectionable activities of the

Respondent.

24. The evidence of MW1- S. Parthsarthi and MW2-Yogesh

clearly indicates that they had no personal knowledge about the said

objectionable conduct of the Respondent No.1 and that they had

levelled serious allegations against the Respondent No.1 solely on the

basis of the information given by the co-employee Premchand. It is

therefore necessary to consider the evidence of MW3-Premchand, who

had stated in his affidavit in evidence that he had seen the Respondent

No.1 taking photo copies of certain documents of the Company. In his

cross examination he has stated that the Respondent No.1 had told him

that he was taking photocopies of some school certificate of his child.

He has stated that he did not go near the Respondent No.1 to check the

document, which was being photocopied. He has stated that he had

Megha 14/19

Megha Bank.doc

neither verified nor seized the said photocopies. He had stated that his

statement that the Respondent No.1 was seen taking photocopies of

the documents of the Company was merely a suspicion. Thus the very

foundation of the report and the consequent termination was based on

suspicion.

25. It is also to be noted that the management witnesses have

admitted that there was no segregation of confidential files and the

other regular files. They have stated that the files were kept in open

racks in a separate room. Apart from the Respondent No.1 some other

staff members also had keys of the said room and that they used to

open the room in the absence of the Respondent No.1 and that the

other staff members also had access to the said room. The evidence of

these witnesses does not indicate that the Respondent No.1 was in

exclusive charge of confidential files.

26. The evidence of MW2-Yogesh Shah reveals that the

employees as well as some officers used to work on Saturdays in view

of heavy work load. MW3-Premchand has stated that the Respondent

No.1 had told him that the person, who had accompanied him was his

friend. He has admitted that very often the friends of the members of

Megha 15/19

Megha Bank.doc

the staff used to visit the office premises of the Petitioner. In the light

of the above evidence, the fact that the Respondent No.1 had attended

the office on weekly off days or that he had come to the office with

some strangers would also not per se be a ground to cast aspersions on

his integrity. It is also pertinent to note that though the Petitioner had

alleged that the Respondent No.1 had submitted inflated bills, there is

absolutely no material to substantiate the said charge.

27. It is a trite proposition of law that in departmental

proceedings facts constituting misconduct are not required to be

proved beyond reasonable doubt but have to be established on the

basis of preponderance of probabilities. Neverthless, finding of guilt

can never be based on surmises, conjectures and mere suspicion. In

the instant case there is absolutely no material on record to indicate

that the Respondent No.1 had indulged in any such activities, which

were prejudicial to the interest of the Petitioner. The services of the

Respondent No.1 were terminated solely on the basis of suspicion. The

learned Judge has considered all these aspects and has rightly held that

the misconduct was not proved and the termination was illegal and not

justified. There is also no merit in the contention that the learned

Judge has traversed beyond the reference. The findings of the learned

Megha 16/19

Megha Bank.doc

Judge are based on evidence on record and do not warrant any

interference.

28. Generally quashing of the order of termination would result

in reinstatement with full backwages except in exceptional and suitable

cases, where it is not expedient to grant a relief of reinstatement. In

the instant case more than 27 years have lapsed since the date of

termination of the services of the Respondent No.1. It is submitted

that during the pendency of this Petition, the Respondent No.1 has

already attained the age of superannuation. Under such

circumstances, the order of reinstatement has rendered infructuous.

29. As regards grant of full backwages from the date of

termination, till the date of suspension, the quantum of compensation,

the records reveal that the Respondent No.1 was appointed as a Junior

Assistant w.e.f. 1.10.1988. He was confirmed w.e.f. 1.4.1989 and his

services were terminated on 31.1.1990. It is thus evident that the

Respondent No.1 was in service barely for a period 1 year and three

months. The Respondent No.1 had been out of service for last over 27

years. The Respondent No.1 has not averred that he was not gainfully

employed from the date of his termination. On the contrary, he has

Megha 17/19

Megha Bank.doc

admitted in his cross examination that he has been writing accounts of

two companies. He has stated that he has been maintaining accounts

of a firm-Rajendra Chemicals situated at Masjid Bunder. He has also

admitted that he has been writing accounts of National Health Leage,

Opp. Capital Cinema. He has stated that these companies used to

make payment in cash. He has further stated that the said amount was

paid to him through his friend. He has stated that he does not recollect

the total amount paid to him by the said companies. The evidence of

this witness clearly indicates that he was gainfully employed during the

interregnum period. Under such circumstances, the Respondent no.1

is not entitled for full back wages and the ends of justice would be met

by grant of reasonable compensation.

30. As regards the quantum of compensation, the records

indicate that by order dated 17.12.1999 in LPA 349 of 1999 filed by

the Respondent No.1 against the Petitioner, this Court while admitting

the LPA had directed the Respondent No.1 to deposit an amount of

Rs.10,000/- p.m. during the pendency of the writ petition. The

learned counsels for the Petitioner and the Respondent No.1 have

stated that till June-2017 i.e. the date of superannuation, the Petitioner

has been paid amount of Rs.2,156,677.00 at the rate of Rs.10,000/-

Megha                                                                                 18/19



                 Megha                                                            Bank.doc

per month. Considering the above fact, so also the length of service as

well as gainful employment of Respondent No.1 during the

interregnum period, in my considered view Rs.10,00,000/- would be

just and fair compensation which would be inclusive of full backwages

and other consequential benefits. Hence, the following order :-

a) The impugned award to the extent of the order of

reinstatement with continuity in service and full

backwages is hereby quashed and set aside. In lieu,

the Petitioner is directed to pay to the Respondent

No.1 compensation of Rs.10,00,000/- within a

period of two months from the date of this order.

31. The Writ Petition stands disposed of accordingly.

                                         (ANUJA PRABHUDESSAI, J.)




Megha                                                                                 19/19