Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 13
PETITIONER:
STATE BANK OF INDIA
Vs.
RESPONDENT:
WORKMEN OF STATE BANK OF INDIA AND ANR.
DATE OF JUDGMENT24/08/1990
BENCH:
SAWANT, P.B.
BENCH:
SAWANT, P.B.
RAMASWAMY, K.
CITATION:
1990 AIR 2034 1990 SCR Supl. (1) 11
1991 SCC (1) 13 JT 1990 (3) 589
1990 SCALE (2)428
ACT:
Industrial Disputes Act, 1947: Sections 2(00) and
25F--Bank clerk--Charged with misconduct--Issued notice and
enquiry held-Para 521(10)(a) Shastri Award--Discharged on
payment of one month’s pay in lieu of notice--Held dis-
charge--Punitive in character-Not amounting to ’retrench-
ment’.
All India Tribunal (Bank Disputes) Award--Shastri
Award-Paragraphs 521(5)(c) and 521 (10)(c)--Punitive dis-
charge and discharge simpliciter--Distinction
between--Predominant object of the Award-- To protect em-
ployees.
HEADNOTE:
The appellant Bank instituted a departmental inquiry
against one of its employees, a clerk in one of its branch-
es. The departmental inquiry was held for four acts of
misconduct and the inquiry officer came to the conclusion
that two of the charges were fully proved, while one charge
was proved to a limited extent, and the fourth charge was
not established. On the basis of the report of the inquiry
officer, the competent authority decided to dismiss the
employee from service, and issued a notice to him under
paragraph 521(10)(a) of the Award of the All India Industri-
al Tribunal popularly known as the Shastri Award, requiring
him to show-cause as to why the said punishment should not
be imposed on him. He was also given a hearing as required
by the said provision, and thereafter an order was passed to
the effect: that the established charges viz. uttering
indecent words, threatening the agent, and failure to do the
work allotted are quite serious and would warrant dismissal,
though he may not be dismissed, in view of the extenuating
circumstances, but that at the same time it would not be
desirable to retain him in the Bank’s service, and that as
such, "he be discharged on payment of one month’s pay and
allowances in lieu of notice. In terms of para 521(10)(c) of
the Shastri Award this would not amount to disciplinary
action."
An industrial dispute was raised by the first respond-
ent-Uuion, and it was referred to the Central Government
Labour Court, for adjudication and by its award the Labour
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 13
Court upheld the order of dismissal.
12
The first respondent-Union preferred a writ petition to
the High Court and raised several contentions, but the High
Court confined its decision only to one point, viz. whether
the termination of the service was retrenchment, and whether
it was made in accordance with the provisions of Section 25F
of the Industrial Disputes Act, 1947; held that the termina-
tion of the service of the second respondent was retrench-
ment within the meaning of section 2(00), and was made in
breach of the statutory provision contained in Section 25F
in as much as no retrenchment compensation was paid to the
employee, and set aside, the order of termination of serv-
ice.
In the appeal by the Bank to this Court, the question
for consideration was: whether the order of termination of
service served on the employee, amounts to punishment or
not.
Allowing the appeal, this Court,
HELD: 1. It is not possible to sustain the view taken by
the High Court since it proceeds on too literal an interpre-
tation of the provisions of paragraphs 521(5)(e) and
521(10)(c) of the Award and ignoring their context. [17B]
2. The termination of service of the employee in the
instant case under paragraph 521(10)(c) of the Award is as a
result of the disciplinary proceedings, and is punitive. It
is, therefore, not "retrenchment" within the meaning of
Section 2(00) of the Industrial Disputes Act, 1947. Hence,
there was no question of complying with the provisions of
Section 25F of the Act. The decision of the High Court has,
therefore, to be set aside. [25G-H; 26A]
3. It is clear from the context in which sub-clause (e)
of sub-para (5) occurs that the entire expression, namely,
"have his misconduct condoned and he merely discharged" has
nothing but penal implications, and the measure mentioned
therein is a sequal to the disciplinary action taken for one
of the gross misconducts mentioned in sub-para (4). It is
not possible to arrive at any other conclusion on a reading
of the sub-paragraph as a whole. The discharge spoken of
there is nothing but a punishment for a gross misconduct.
This is so not only because it is enumerated as one of the
punishments along with others but also because firstly there
is a provision of simple discharge elsewhere in paragraph
522 of the Award. and when the Award intended to provide for
it, it has done so in sub-paras (2)(c), (2)(d) and (3).
[20G-H; 21A-B]
13
4. Sub-paras (9) and (10) of paragraph 521 lay down the
procedure for taking disciplinary action as well as for
awarding punishment following such action. Sub-paras (9),
10(a), 10(b) would indicate that discharge under sub-paras
(2)(c), (3), (5) and (10)(c) is also a punishment, for when
the employee is discharged under the said provisions after
the inquiry, under the provisions of sub-paras (9) and (10),
there is no provision made for treating either the whole or
part of the period of suspension during the inquiry, as on
duty. [21D & G-H]
5. In view of the fact that sub-clause (a) requires that
a hearing should be given to the employee against the pro-
posed punishment, the authority is enjoined under sub-clause
(c) to take into account the gravity of the mis-conduct, the
previous record of the employee and any other aggravating or
extenuating circumstances that may exist and may be brought
on record "while awarding punishment by way of disciplinary
action". The sub-clause then provides for discharge with or
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 13
without notice or on payment of a month’s pay and allow-
ances, in lieu of notice. The punishment of discharge is to
be awarded in two circumstances. The first circumstance is
when there are sufficiently extenuating circumstances but
the mis-conduct is of a "gross" type. The second circum-
stance is when the charge is such that the Bank does not for
some reason or other think it expedient to retain the em-
ployee any longer in service but the evidence is insuffi-
cient to prove the charge. [22D-E]
6. Read with sub-para (5)(e), the provisions of sub-
clause (c) of sub-para (10) become more clear that if a
mis-conduct is not of a "gross" type, it may be merely
condoned without any further action. But when it is of
"gross" type, the authority has no option but to condone and
to proceed to discharge the employee. The expressions used
both in sub-para (5)(e) and sub-para 10(c) in that respect
are identical. Similar is the action contemplated for the
second circumstance referred to in sub-para 10(c), namely
when the charge though unsustainable for want of evidence is
such that it is considered inexpedient to retain the employ-
ee in service. [23D-E]
7. Since in the context, such a discharge is by way of
punishment, the relevant provisions give a discretionary
power to the authority to convert, what would otherwise be a
dismissal into a mere discharge. This is for the benefit of
the employee. It protects him from the banefull consequences
of dismissal. At the same time, it relieves the management
of the burden of retaining him in service when it has become
inexpedient to do so. Thus the provision of such discharge
works to the advantage of both. At the same time, it cannot
be gainsaid that the said
14
discharge is as a result of the disciplinary proceeding.
Although in form it may not, and in the peculiar circum-
stances, it is intended that it should not look like a
disciplinary action, it cannot be denied that it flows from
and is a result of the disciplinary proceedings. To make
clear, however, that the action, though spawned by the
disciplinary proceedings should not prejudice the employee,
the last sentence viz: "Discharge in such cases shall not be
deemed to amount to disciplinary action", has been added by
way of abundant precaution. [23F-H; 24A]
8. That this is not a discharge simpliciter or a simple
termination of service becomes clear when it is compared
both with the provisions of para 522(1), and with those of
sub-paras (2)(c), (2)(d) and (3) of paragraph 521 itself.
The distinction between discharge contemplated under para-
graph 521(10)(c) and discharge simpliciter or simple termi-
nation of employment under the other provisions is clear
enough. This will also show that the two belong to different
categories and are not the same. While the former is intend-
ed to be punitive, the latter is not. As is further clear
from the provisions of paragraphs 521(2)(c), (2)(d) and (3),
the discharge contemplated there, as against simple termina-
tion, is in proceedings under "sub-paragraphs (9) and (10)
infra relating to discharge". In other words, it is as a
result of a disciplinary proceeding. [24B; 25C-D]
9. To construe the discharge under paragraphs 521(5)(e)
and 521(10)(c) as a simple discharge not flowing from disci-
plinary proceedings will deprive an employee of a valuable
advantage, viz. that of challenging the legality and propri-
ety of the disciplinary action taken against him, whatever
the form of the order, by showing that he was either not
guilty of any misconduct or that the misconduct was not of a
"gross" type or that the punishment meted out to him by way
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 13
of discharge was not warranted in the circumstances etc. It
is not, therefore, in the interests of the employees to
construe the provisions as the High Court has done. The
predominant object of the Award is to protect the interests
of the employees. [25E-F]
10. Remanding the matter to the High Court for deciding
the other contentions raised in the writ petition, is not
advisable for various reasons. The misconducts complained of
against the employee are of 1966. He was charge-sheeted in
January 1968 and removed from service on April 9, 1970. The
Court proceedings have been pending for more than about 23
years. In the meanwhile, the respondent No. 2 who was a
clerk on the date he was charge-sheeted, has become a lawyer
and has been practicing as such. Further, the mis-conducts,
which are held
15
proved by the Labour Court are of "gross" type within the
meaning of paragraph 521(4) of the Award. The Labour Court
is the final fact finding forum. The High Court while
setting aside the order of the Labour Court has granted
reinstatement in service and back wages and pursuant to the
said order, the employee has already received an amount of
Rs.93,000. The effect of decision would be to set aside not
only the order of reinstatement but also of the back-wages
which would require the employee to refund the said amount.
Even though the employee was prepared to refund the amount
and to contest the petition on other grounds, at present,
the employee is in his fifties. Taking into consideration
all these facts the interests of justice would be served if
the order of the High Court is set aside and the order of
the Labour Court is restored without requiring the employee
to refund the amount he has already received. [26E-G; 27C-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4381 of
1990.
From the Judgment and Order dated 23.8.1989 of the
Bombay High Court in W.P. No. 494 of 1982.
Ashok H. Desai, Solicitor General, Shishir Sharma and
P.H. Parekh for the Appellant.
Vinod Bobde, S.V. Deshpande and P.S. Sadavartey for the
Respondents.
The Judgment of the Court was delivered by
SAWANT, J. Special leave granted. The appeal is set down
for hearing by consent of both the parties.
2. This appeal involves a question of interpretation of
paragraphs 521(5)(e) and 521(10)(c) of the Award of the All
India Industrial Tribunal (Bank Disputes) which is popularly
known as the Shastri Award, (hereinafter referred to as the
Award) and is important for the entire banking industry in
the country covered by the Award.
3. In order to appreciate the significance of the ques-
tion, it is necessary to narrate the facts leading to this
appeal. The employee concerned was working as a clerk in the
Gadchiroli branch of the appellant State Bank of India at
the relevant time. A departmental inquiry was held against
him for four acts of misconduct and the
16
inquiry officer came to the conclusion that two of the
charges were fully proved while one charge was proved to a
limited extent and the fourth charge was not established. On
the basis of the report of the inquiry officer, the compe-
tent authority tentatively decided to dismiss the employee
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 13
from service, and issued a notice to him under paragraph 52
1(10)(a) of the Award, to show cause as to why the said
punishment should not be imposed on him. The competent
authority also gave him a hearing as required by the said
provision, and thereafter passed an order, the operative and
relevant part of which is as follows:
"Looking at the entire case I find that the established
charges, viz., uttering indecent word, threatening the Agent
and failure to do the work allotted are quite serious
charges and would warrant dismissal. However, the employee
has had the benefit of a very tenacious defence from the
date of the issue of the show cause notice for dismissal and
various arguments have been raised with a view to evade the
punishment which would normally follow out of the serious-
ness of the offences. Taking note of them, even though I do
not quite find them tenable, as indicated in my detailed
observations thereon, and of the extenuating circumstances
(most important of which is the comparatively young age of
the employee) I have decided not to impose the punishment of
dismissal. At the same time I am of the opinion that it
would not be desirable to retain Shri Sadavarte in the
Bank’s service and accordingly I order that he be discharged
on payment of one month’s pay and allowances in lieu of
notice. In terms of para 521(10)(c) of the Sastry Award,
this would not amount to disciplinary action."
4. An industrial dispute was raised by the first
respondent Union, and in due course it was referred to the
Central Govt. Labour Court, Bombay for adjudication. By its
award of March 2, 1981, the Labour Court held that the order
of dismissal of the petitioner was proper. Against the said
decision, the respondent-Union preferred a writ petition
before the High Court raising several contentions. The High
Court confined its decision only to one point, viz., whether
the termination of the service was retrenchment, and if so,
whether it was made in accordance with the provisions of
Section 25F of the Industrial Disputes Act, 1947 (hereinaf-
ter referred to as the Act). The Court held that the termi-
nation of the services was retrenchment and was made in
breach of the said provisions in as much as no retrenchment
17
compensation was paid to the employee. The termination of
the services was, therefore, set aside.
5. It is not possible to sustain the view taken by the
High Court since it proceeds on too literal an interpreta-
tion of the provisions of paragraphs 521(5)(e) and 52
1(10)(c) of the Award and ignoring their context. We may
first refer to the provisions with regard to retrenchment
under the Act. Section 2(00) of the Act defines retrenchment
as follows:
"Retrenchment" means the termination by the em-
ployer of the service of a workman for any reason whatsoev-
er, otherwise than as a punishment inflicted by way of
disciplinary action, but does not include--
(a) voluntary retirement of the workman; or
"Compensation in cases of retrenchment".
6. As pointed out above, paragraph 521 is in Section 111
which contains the only other paragraph, namely, paragraph
520. That paragraph is a prologue to Section III and to
paragraph 521, which both deal with procedure for taking
disciplinary action. Para 520 reads as follows:
"Under the subject of disciplinary action we deal
with dismissal, suspension, warning or censure, fine, the
making of adverse remarks and the stoppage of an increment."
It is, therefore, clear both from the heading of Section 111
as well as from the contents of para 520 that the provisions
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 13
of para 521 deal with nothing but disciplinary action and
tile procedure for taking such action.
7. Paragraph 521 which is a self-contained code of
disciplinary action and of the procedure for taking it,
begins with the following statement:
"A person against whom disciplinary action is
proposed or likely to be taken should, in the first in-
stance, be informed of the particulars of the charge against
him; he should have a proper opportunity to give his expla-
nation as to such particulars. Final orders should be passed
after due
18
consideration of all the relevant facts and circumstances.
With this object in view we give the following directions:
..........
It classifies delinquencies into three categories, namely,
(i) offences (ii) gross-misconduct and (iii) minor-miscon-
duct and prescribes procedure to deal with each of them.
Sub-paragraph (1) to (3) deal with the cases of of-
fences. Sub-para (1) defines offence to mean any act involv-
ing moral turpitude and for which an employee is liable to
conviction and sentence under the provisions of law. Sub-
para 2(a) states that when in the opinion of the management,
the employee has committed an offence and he is not prose-
cuted by the prosecuting agency, the bank may take steps to
prosecute him or get him prosecuted. The bank is also empow-
ered to suspend the employee in such circumstances. Sub-
paragraph 2(b) states that if the employee is convicted in
such prosecution, he may either be dismissed or "be given
any lesser form of punishment as mentioned in sub-para 5
below". However, if he is acquitted with or without the
benefit of doubt, sub-para 2(c) lays down two different
procedures to meet the two situations. It states that even
if an employee is given a clean acquittal, it is open to the
management to proceed against him under the provisions set
out in sub-paras (9) and (10) "relating to discharges". It
may be mentioned here that the provisions with regard to the
discharges in sub-paras (9) and (10) referred to here, are
contained only in sub-para 10(c) and they come into play
only when the management decides under sub-para (9) to take
a disciplinary action and the action is taken after the
procedure for the same as laid down in sub-para (10) is
followed. But with that, we may deal with a little later.
In cases of clean acquittal and a departmental inquiry
held thereafter, the management is given yet another option.
Instead of the discharge as provided under sub-para 10(c),
the management may only terminate the services of the em-
ployee with three months’ pay and allowances in lieu of
notice, if it comes to the decision not to continue the
employee in service. In such cases, he shall be deemed to
have been on duty during the entire period of suspension, if
any, and therefore shall be entitled to the full pay and
allowances minus the subsistence allowances he had drawn and
also to all other privileges for the period of suspension.
Such simple termination of service is not provided for
either in sub-para (5) or in sub-para (10). Thus it is
obvious from sub-paragraph 2(c) that when a departmental
inquiry is held or
19
when disciplinary action is taken in case of a clean acquit-
tal. two options are given to the management, namely. (i) to
discharge the employee under sub-paragraph 10(c) with or
without notice or on payment of only a month’s pay and
allowances, in lieu of notice but without the benefit of the
suspension being converted into a period of duty or (ii) to
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 13
terminate the services with three months’ pay and allow-
ances, in lieu of notice and also with the further benefit
of converting the period of suspension into a period of
duty. However, when the acquittal is with the benefit of
doubt and the management does not proceed to discharge the
employee under sub-para 10(c) but wants to resort to the
second option of the termination of service with three
months’ pay and allowances in lieu of notice, it is left to
the discretion of the management to pay the employee such
portion of the pay and allowances for the period of suspen-
sion as the management may deem proper, and unless the
management so directs, the period of suspension is not to be
treated as the period spent on duty. It should, however. be
remembered that the course of action open to the management
under sub-paragraph 2(c) is in the alternative to and not in
negation of the other modes of punishment, namely, to dis-
miss etc. the employee. What is, however, necessary to note
is the distinction between an action of discharge following
the disciplinary proceedings under sub-paras (9) and (10)
and that of simple termination of service under sub-para
2(c). The same distinction is also maintained in sub-para
2(d).
Sub-para (3) throws yet more light on the subject. It
states that where an employee is guilty of an offence but he
is not put on trial within a year of the commission of the
offence, the management may deal with him as if he had
committed an act of "gross misconduct", or "minor miscon-
duct" as the case may be. The employee may not be put on
trial within an year, either because the prosecuting author-
ity refuses to do so, or because it comes to the conclusion
that there is no case for prosecution. Hence although the
management is empowered to proceed against the employee
under the provisions set out in sub-paras (9) and (lO)
relating to discharge, he has to be given the benefit of
being treated on duty for the period he was under
suspension, if any, and he is entitled to all the further
benefits accruing on that account. In the departmental
inquiry following such non-prosecution, the management may
also come to the decision not to continue the employee in
service. In that case instead of proceeding against him.
under the provisions relating to discharge in sub-paras (9)
and (10), the management is empowered to terminate his
services with three months’ pay and allowances in lieu of
notice as provided in sub-para
20
(2). Thus sub-paragraph (3) like sub-para (2) also makes a
distinction between discharge under sub-paragraph (10)(c)
and a mere termination of service with three months’ pay and
allowances, in lieu of notice. It is the latter action which
amounts to the simple discharge and for it, a separate
provision is made in paragraph 522 in Section IV. We will
refer to that provision at a later stage. What is necessary,
to bear in mind at this stage is the distinction made be-
tween the discharge under sub-paragraph (10) and simple
termination of service in sub-paras 2(c), 2(d) and (3).
8. Sub-para (4) of paragraph 52 1 defines "gross miscon-
duct" and sub-para (5) prescribes punishment for "gross
misconduct". Sub-para (6) defines "Minor misconduct" and
sub-para (7) prescribes punishment for such misconduct.
Sub-para (8) then states the manner in which the record is
to be kept when action is taken under sub-paras (3), (5) or
(7) which deal with the punishment for "gross misconduct" or
"minor misconduct" as the case may be.
Sub-para (5) as stated above, follows on the heels of
the enumeration of gross misconducts in sub-para (4), and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 13
reads as follows:
"(5) An employee found guilty of gross misconduct may:
(a) be dismissed without notice, or
(b) be warned or censured, or have an adverse remark entered
against him, or
(c) be fined, or
(d) have his increment stopped, or
(e) have his misconduct condoned and be merely discharged".
It should be clear from the context in which sub-clause (e)
of subparagraph (5) occurs that the entire expression,
namely, "have his misconduct condoned and be merely dis-
charged" has nothing but penal implications, and the measure
mentioned therein is a sequel to the disciplinary action
taken for one of the gross misconducts mentioned in sub-para
(4). It is not possible to arrive at any other conclusion on
a reading of the sub-paragraph as a whole. The discharge
spoken of there is nothing-but a punishment for a gross
miscon-
21
duct. This is so not only because it is enumerated as one of
the punishments along with others but also because firstly
there is a provision of simple discharge elsewhere in para-
graph 522 of the Award, as pointed earlier, and when the
Award intended to provide for it, it has done so in sub-
paras (2)(c), (2)(d) and (3). If it was intended to provide
for a discharge simpliciter there, which was not meant to be
penal, there was no need to enumerate it in sub-para (5)
which specifically enumerates punishments for acts of
gross-misconduct. Secondly, nothing prevented the authors of
the Award in stating in the said sub-clause (e) that the
discharge simpliciter was in terms of paragraph 522. We have
pointed out earlier the distinction made by the Award in
sub-paragraphs (2)(c), (2)(d) and (3) between the discharge
following proceedings under paras (9) and (10) and the
simple termination of service or discharge simpliciter as
contemplated by paragraph 522.
9. Sub-paragraphs (9) and (10) of paragraphs 521 lay
down the procedure for taking disciplinary action as well as
for awarding punishment following such action. Sub-para (9)
says that when it is decided to take a disciplinary action
against an employee, such decision shall be communicated to
him within three days thereof. Sub-Para (10)(a) then lays
down the procedure to be followed while conducting the
disciplinary proceedings. It also enjoins upon the manage-
ment to give the employee a hearing with regard to the
nature of the proposed punishment. The latter provision has
also bearing on the construction of sub-clause (c) thereof.
We will advert to it instantly.
Sub-clause (b) of sub-para (10) gives power to the
management to suspend the employee pending inquiry. Its
other provisions also throw light on the construction of
sub-clause (c) thereof. These provisions state that although
the employee is suspended during the inquiry, if on the
conclusion of the inquiry it is decided to take no action
whatsoever against him, he shall be deemed to have been on
duty throughout the period of suspension and would accord-
ingly, be entitled to the full wages and allowances and all
other privileges for the said period. On the other hand "if
some punishment other than dismissal" is inflicted, it is
left to the discretion of the management to treat either the
whole or a part of the period of suspension as on duty with
the right to corresponding portion of the wages, allowances,
etc. These provisions would indicate that discharge under
sub-paras (2)(c), (3), (5) and (10)(c) is also a punishment,
for when the employee is discharged under the said provi-
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 13
sions after inquiry, under the provisions of sub-paras (9)
and (10), there is no provision made for treating either the
whole or part of the period of suspension during the in-
quiry, as on duty.
22
Then follows the provision of sub-clause (c) which is
crucial for our purpose. The said sub-clause reads as fol-
lows:
"In awarding punishment by way of disciplinary
action the authority concerned shall take into account the
gravity of the misconduct, the previous record, if any, of
the employee and any other aggravating or extenuating cir-
cumstances that may exist. Where sufficiently extenuating
circumstances exist the misconduct may be condoned and in
case such misconduct is of the "gross" type he may be merely
discharged, with or without notice or on payment of a
month’s pay and allowances, in lieu of notice. Such dis-
charge may also be given where the evidence is found to be
insufficient to sustain the charge and where the bank does
not, for some reason or other, think it expedient to retain
the employee in question any longer in service. Discharge in
such cases shall not be deemed to amount to disciplinary
action."
In view of the fact that sub clause (a) requires that a
hearing should be given to the employee against the proposed
punishment, the authority is enjoined under sub-clause (c)
to take into account the gravity of the mis-conduct, the
previous record of the employee and any other aggravating or
extenuating circumstances that may exist and may be brought
on record "while awarding punishment by way of disciplinary
action". The sub-clause then provides for discharge with or
without notice or on payment of a month’s pay and allow-
ances, in lieu of notice. The punishment of discharge is to
be awarded in two circumstances. The first circumstance is
when there are sufficiently extenuating circumstances but
the misconduct is of a "gross" type. In other words, where
the misconduct is not of a "gross" type and there are exten-
uating circumstances, the misconduct may merely be condoned
without the authority proceeding to inflict the punishment
of discharge. That is made clear by stating thus--"and in
case such misconduct is of the gross type he may be merely
discharged" etc. The second circumstance in which the au-
thority is given power to inflict such discharge is when the
charge is such that the Bank does not for some reason or
other think it expedient to retain the employee any longer
in service but the evidence is insufficient to prove the
charge. Read in the context, therefore, the discharge given
under sub-clause (c) can hardly be doubted as being a pun-
ishment. However, as was sought to be contended on behalf of
the respondent-Union and certainly with some force, the last
sentence of the said clause is couched in
23
a language which is calculated to create considerable doubt
and confusion with regard to the true nature of the action
of discharge spoken of there. The said sentence states in so
many words that the discharge effected under both the cir-
cumstances shall not be "deemed" to amount to "disciplinary
action". Read in isolation, the said sentence does purport
to convey that the discharge is not by way of a punishment
and on that score we may not find any fault with the reason-
ing of the High Court. But as stated at the very outset, we
have to read this sentence also in its proper context and in
the light of the other provisions of the Award.
As pointed out earlier, one of the two circumstances in
which such discharge is to be effected is when the miscon-
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 13
duct is of a "gross" type and even if there are extenuating
circumstances. It is to provide a punishment precisely for
misconducts of gross type that a provision for such dis-
charge is made in sub-clause (e) of sub-para (5) to which we
have already made a reference. Read with the said sub-para
(5)(e), the provision of the present sub-clause (c) of sub-
para (10) becomes more clear. If a misconduct is not of a
"gross" type, it may be merely condoned without any further
action. But when it is of "gross" type, the authority has no
option but to condone and to proceed to discharge the em-
ployee. The expressions used both in sub-para 5(e) and
sub-para 10(c) in that respect are identical. Similar is the
action contemplated for the second circumstances referred to
in sub-para 10(c), namely, when the charge though unsustain-
able for want of evidence is such that it is considered
inexpedient to retain the employee in service.
10. If our reading of the provisions is correct, then it
needs no elaborate explanation as to why the punishment of
discharge both in sub-para 5(e) and 10(c) has been worded as
it is and why further it became necessary to add the last
sentence to sub-para 10(c). Since in the context, such a
discharge is by way of punishment, the relevant provisions
give a discretionary power to the authority to convert, what
would otherwise be a dismissal into a mere discharge. This
is for the benefit of the employee. It protects him from the
baneful consequences of dismissal. At the same time, it
relieves the management of the burden of retaining him in
service when it has become inexpedient to do so. Thus the
provision of such discharge works to the advantage of both.
At the same time, it cannot be gainsaid that the said dis-
charge is as a result of the disciplinary proceeding. Al-
though in form it may not, and for the reasons stated above
in the peculiar circumstances, it is intended that it should
not look like a disciplinary action, it cannot be denied
that it flows from and is a result of the disciplinary
proceed-
24
ings. To make clear. however, that the action, though
spawned by the disciplinary proceedings should not prejudice
the employee, the last sentence in question has been added
by way of an abundant precaution.
11. That this is not a discharge simpliciter or a simple
termination of service becomes clear when it is compared
both with the provisions of paragraph 522(1), and with those
of sub-paras (2)(c), (2)(d) and (3) of paragraph 521 itself.
Paragraph 522 as stated earlier is in section IV and is
entitled "procedure for termination of employment" as dis-
tinct from the title of section III, namely, "procedure for
taking disciplinary action" in which paragraph 521 occurs.
Paragraph 522 begins by saying "We now proceed to the sub-
ject of termination of employment. We give the following
directions: .......... "Thereafter in sub-paragraph (1)
thereof, it speaks of a simple termination of service of a
permanent employee and in sub-paragraph (4), talks of simi-
lar discharge simpliciter of employees other than permanent
employees. But what is important to note is that the dis-
charge simpliciter or simple termination of service which is
provided for here, has two distinguishing features. Firstly,
it is effected in cases not involving disciplinary action
for mis-conduct and secondly, it is to be effected by giving
three months’ notice or of payment of three months’ pay and
allowances in lieu of notice, in the case of permanent
employees and by giving one month’s notice or on payment of
one month’s pay and allowances, in lieu of notice in case of
probationers. There is some apparent conflict in the provi-
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 13
sions of sub-clause (1) and sub-clause (4) with regard to
the period of notice in case of an employee other than a
permanent employee. It is, however, immaterial for our
purpose. There are yet other conditions imposed by sub-para
(6) of paragraph 522 when the termination of the service of
the employees is on account of the closing down of the
establishment or when retrenchment of more than 5 employees
is to be effected. But those conditions again do not oblit-
erate the distinction between discharge simpliciter or
simple termination of service other than as a result of a
disciplinary proceeding, and discharge effected under sub-
paras 5(e) and 10(c) as a result of such proceedings. As
stated earlier, the termination of employment other than
discharge provided for in sub-paras 2(c), 2(d) and 3 of
paragraph 521 also requires three months’ pay and allow-
ances, in lieu of notice as do the provisions of paragraph
522(1). But unlike the provisions of paragraph 522(1) which
require three months’ notice or payment of three months’ pay
and allowances only in case of permanent employees and one
month’s notice or one month’s pay and allowances, in lieu of
notice in case of employees other than per-
25
manent employees, the relevant provisions of paragraphs
521(2)(c) and 521(3) require, a notice of three months’ or
pay and allowances for three months’ in lieu of notice, in
respect of all employees. Further, what is equally important
to note is that whereas para 522(1) and 521(2)(c) and (3)
relating to simple termination of service, require the
requisite notice to be given or the payment of salary allow-
ances in lieu thereof. the provisions of discharge contained
in the sub-paras (2)(c) and (3) and (10)(c) of para 521 do
not in all cases require notice or pay and allowances, in
lieu of notice. The discharge may also be affected under the
said provisions without any notice or pay and allowances in
lieu of it. Thus the distinction between the discharge
contemplated under paragraph 521(10)(c) and discharge sim-
pliciter or simple termination of employment under the other
provisions is clear enough. This will also show that the two
belong to different categories and are not the same. While
the former is intended to be punitive. the latter is not. As
is further clear from the provisions of paragraphs
521(2)(c). (2)(d) and (3). the discharge contemplated there.
as against simple termination. is in proceedings under
"sub-paragraphs (9) and (10) infra relating to discharge".
In other words. it is as a result of a disciplinary proceed-
ing.
12. Apart from it, we find that to construe the dis-
charge under 521(5)(e) and 521(10)(c) as a simple discharge
not flowing from disciplinary proceedings will deprive an
employee of a valuable advantage. viz.. that of challenging
the legality and propriety of the disciplinary action taken
against him. whatever the form of the order, by showing that
he was either not guilty of any misconduct or that the
misconduct was not of a "gross" type or that the punishment
meted out to him by way of discharge was not warranted in
the circumstances etc. It is not. therefore. in the inter-
ests of the employees to construe the provisions as the High
Court has done. The predominant object of the Award is to
protect the interests of the employees.
It is for all these reasons that we are unable to accept
the very able arguments advanced by Mr. Bobde on behalf of
the respondent Union to support the reasoning of the High
Court.
13. The result to our aforesaid discussion is that the
termination of service of the employee in the present case
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 13
under paragraph 521(10)(c) of the Award is as a result of
the disciplinary proceedings and is punitive. It is, there-
fore. not "retrenchment" within the meaning of Section 2(00)
of the Act. Hence, there was no question of complying with
the provisions of Section 25F of the Act. The decision
26
of the High Court has. therefore to be set aside.
14. In view of the interpretation placed by us on the
provisions of paragraph 521(5)(e) and 521(10)(c), there is a
queer situation in which both the appellant--Bank and the
respondent--Union would find themselves. The Bank has been
supporting the interpretation which we have placed and the
respondent-Union has been opposing it. but both not looking
beyond their immediate interest involved in the present
case, which is qua an individual employee. We are happy that
the Bank has canvassed the view that it has done in this
case. For that view is calculated to benefit the employees
at large and in the long run though, it may be to its advan-
tage and to the disadvantage of the individual employee in
this case. The respondent-Union, however, by pressing the
proposition to the contrary, was supporting a view which was
not in the interests of the employee at all. Though, there-
fore, it may be a loser in the present case, it should thank
itself that the interpretation is not in accordance with the
submissions made on its behalf.
15. This leaves us with the question of the relief to be
granted in the present case. Shri Bobde. submitted that if
we are not to accept the interpretation placed by the High
Court on the provisions in question, we should remand the
matter to the High Court for deciding the other contentions
raised in the writ petition, since the court had not gone
into the same and had allowed the petition only on the basis
of its interpretation of the said provisions. We find that
this course is not advisable in the present case for various
reasons. The mis-conducts complained of against the employee
are of 1966. He was chargesheeted in January 1968 and re-
moved from service on April 9, 1970. The Court-proceedings
have been pending since then till today, i.e., for more than
about 23 years now. In the meanwhile, we are informed that
the appellant who was a clerk on the date he was charge-
sheeted, has become a lawyer and has been practicing as
such. We, further, find that the mis-conducts which are held
proved by the Labour Court are of "gross" type within the
meaning of paragraph 521(4) of the Award. The Labour Court
is the final fact-finding forum. Further. while setting
aside the order of the Labour Court, the High Court has
granted re-instatement in service and back wages as follows:
(i) 50 per cent of the back wages from 9.4.70 to 24.11.75,
(which is the date of the reference for adjudication to the
Labour Court) on the ground that the damages for the delay
in making should be shared by both the parties equally, and
(ii) full back wages
27
from 25.11.75 till 31.5.79 on the ground that though the
employee started his practice as a lawyer in June 1978, he
was not well-settled in practice for the first year, and
(iii) no back wages for the period from 1.6.79 till the date
of his re-instatement which is the date of the High Court’s
judgment. i.e., August 23, 1989.
Shri Desai. the learned Solicitor General appearing for
the Bank wanted to produce before us a letter from the
Maharashtra State Electricity Board to show that in fact the
employee was in gainful employment with the said Board for
about six years. Although we have not taken the said letter
on record, there is no denial of such employment from the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 13
side of the employee. We are further informed that pursuant
to the order of the High Court, the employee has already
received an amount of Rs.93,000. The effect of our decision
would be to set aside not only the order of re-instatement
but also of the back wages which would require the employee
to refund the said amount of Rs.93,000. Of course, Shri
Bobde stated that the employee was prepared to refund the
said amount and to contest the petition on other grounds. At
present. the employee is in his fifties. Taking into consid-
eration all the facts, we are of the view that it would
serve the interests of justice if we set aside the order of
the High Court and restore that of the Labour Court without
requiring the employee to refund the amount which he has
already received.
16. The appeal is allowed. accordingly. There will be no
order as to costs.
N. V. K. Appeal allowed.
28