Full Judgment Text
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PETITIONER:
THE CHARTERED BANK, BOMBAY
Vs.
RESPONDENT:
THE CHARTERED BANK EMPLOYEES’ UNION.
DATE OF JUDGMENT:
04/04/1960
BENCH:
WANCHOO, K.N.
BENCH:
WANCHOO, K.N.
GAJENDRAGADKAR, P.B.
GUPTA, K.C. DAS
CITATION:
1960 AIR 919 1960 SCR (3) 441
CITATOR INFO :
R 1963 SC 411 (3)
R 1963 SC 601 (6)
R 1965 SC 917 (5)
APL 1965 SC1496 (5)
R 1966 SC1672 (6)
F 1972 SC1343 (11)
RF 1973 SC2634 (6)
RF 1975 SC 661 (13,15)
RF 1980 SC1896 (173)
ACT:
Industrial Dispute--Chief Cashier of Bank withdrawing
guarantee in respect of Assistant Cashier--Termination of
service of Assistant Cashier by Bank without holding
enquiry--Validity of--All India Industrial Tribunal (Bank
Disputes) Award, 1953, paras. 521, 522(1).
HEADNOTE:
The system of working in the cash department of the
appellant Bank was that there was a Chief Cashier and there
were about thirty Assistant Cashiers under him. The Chief
Cashier had to give security for the work of the cash
department; the Assistant Cashiers were employed upon being
introduced by the Chief Cashier who guaranteed each such
employee. There was long standing practice in the Bank that
at the end of the day when the cash was locked up under the
supervision of the Chief Cashier, all the assistant cashiers
had to be present so that the cash could be checked before
being locked up. In spite of reminders C, an Assistant
Cashier, had been leaving the Bank without the permission of
the Chief Cashier for some time before the cash was checked
and locked up. The Chief Cashier reported the matter to the
management, withdrew his guarantee in respect of C and
stated that unless the services of C were dispensed with his
conduct would affect the security of the cash department.
The Bank terminated the services of C in accordance with the
provisions of para. 522(1) of the All India Industrial
Tribunal (Bank Disputes) Award, 1953, without holding any
enquiry against C. The Industrial Tribunal to which the
dispute was referred held that this was in fact and in
reality a case of termination of services for misconduct and
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the Bank ought to have followed the procedure laid down in
para. 521 of the Bank Award for taking disciplinary action,
that the termination of service was illegal and improper and
that C was entitled to reinstatement with full back wages
and other benefits :
Held, that the services of the Assistant Cashier were
properly terminated by the Bank. There was no doubt that an
employer could not dispense with the services of a permanent
employee by mere notice and claim that the industrial
tribunal had no jurisdiction to inquire into the
circumstances of such termination. Even in a case of this
kind the requirement of bona fides was essential and if the
termination of service was a colourable exercise of the
power or as a result of victimisation or unfair labour
practice the tribunal had jurisdiction to interfere. Where
the termination of service was capricious, arbitrary or
unnecessarily harsh that may be cogent evidence of
victimisation or unfair labour practice. In the present
case the security of the
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Bank was involved and if the Bank decided that it would not
go into the squabble between the Chief Cashier and C and
would use para. 522(1) of the Bank Award to terminate the
services of C it could not be said the Bank was exercising
its power under para. 522(1) in a. colourable manner. It
was not necessary that in every case where there was an
allegation of misconduct the procedure under para. 521 for
taking disciplinary action should be followed.
Buckingham and Carnatic Company Ltd. v. Workers’ of the
COmpany, 1952 L.A.C. 490, approved.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 14 of 1959.
Appeal by special leave from the Award dated February 21,
1958, of the Central Government Industrial Tribunal, Nagpur
at Bombay, in Reference CGIT No. 12 of 1957.
Sachin Chaudhury, S. N. Andley, J. B. Dadachanji and,
Rameshwar Nath, for the appellant.
A. S. R. Chari and Y. Kumar, for the respondents. 1960.
April 4. The Judgment of the Court was delivered by
WANCHOO, J.-This is an appeal by special leave in an
industrial matter. The appellant is The Chartered Bank,
Bombay (hereinafter called the Bank). There was a dispute
between the Bank and its workmen regarding the termination
of the service, of one Colsavala (hereinafter called the
respondent) who was working as an assistant cashier in the
Bank. The system of working in the cash department of the
Bank is that there is a chief cashier and under him are
about thirty assistant cashiers. The Chief Cashier has to
give security for the work of the cash department.
Consequently all assistant cashiers are employed upon the
introduction of the Chief Cashier who guarantees each such
employee. By virtue of this guarantee the Chief Cashier
alone is unconditionally responsible to the Bank for any
shortage which might occur in the cash department and no
security is taken from the assistant cashiers working
therein. In view of this guarantee by the Chief Cashier
there has been a longstanding practice in the Bank that at
the end of the day when the cash is locked up under the
supervision of the Chief Cashier, all the assistant cashiers
have to be present so that the cash may be checked before
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being locked up. Assistant Cashiers therefore can only
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leave the Bank before the locking up of the cash after
obtaining permission of the Chief Cashier.
On January 4, 1957, the Chief Cashier reported to the
management that the respondent had been leaving the Bank
without his permission for some time past before the cash
was checked and locked up in spite of the issue of a
departmental circular in that behalf on December 24, 1956,
by which all assistant cashiers (including the respondent)
were reminded of the longstanding practice that no assistant
cashier should leave the Bank without the permission of the
Chief Cashier before the cash was checked and locked tip.
The Chief Cashier therefore stated that he was unable to
continue to guarantee the respondent and that unless the
respondent’s service was dispensed with his conduct will
affect the security of the cash department. As the Bank
was- not prepared to change the system in force in the cash
department, the management decided to dispense with the
service of the respondent in accordance with the mode of
termination prescribed by paragraph 522(1) of the All India
Industrial Tribunal (Bank Disputes) Award of March, 1953
(hereinafter referred to as the Bank Award). The Bank was
also unable to employ the respondent in any other
department. It therefore informed the respondent on March
29, 1957, that as the guarantee covering his employment had
been withdrawn by the Chief Cashier the Bank was unable to
continue to employ him. The notice required under paragraph
522(1) was given and the amount due to the respondent
including retrenchment compensation was paid to him and his
service was terminated. Thereupon a dispute was raised by
the workmen of the Bank and a reference was made by the
Central Government to the Industrial Tribunal with respect
to the "alleged wrongful termination of the services of Shri
N. D. Colsavala by the Chartered Bank, Bombay, and the
relief, if any, to which he is entitled."
The case on behalf of the respondent was that he had been
working in the Bank since September 1, 1937, honestly and
efficiently as an assistant cashier in the cash department
The previous Chief Cashier who
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was the father of the present Chief Cashier however became
hostile to him since 1943, because he claimed his legitimate
dues for overtime work and leave which the then Chief
Cashier was not prepared to allow. Further the respondent’s
letter of appointment did not oblige him to give any
security or to procure any guarantee and if the Chief
Cashier had given any guarantee to the Bank, the respondent
was not concerned with it and had even no knowledge of it.
He was given no opportunity to contest the reasons for the
withdrawal of the guarantee by the Chief Cashier; nor was he
asked to furnish security or give a fidelity bond, even if
the Chief Cashier had withdrawn the guarantee. In
consequence the discharge of the respondent from service on
the ground given by the Bank was entirely illegal, wrongful
and unjustified and he was entitled to reinstatement or in
the alternative to full compensation for loss of employment.
The case of the Bank was that it was entitled to terminate
the service of the respondent under paragraph 522(1) of the
Bank Award and it was not incumbent on it to state the
reasons for such termination and the reasons could not be
inquired into or examined by the tribunal. In the
alternative it was submitted that if the tribunal was of the
opinion that it was open to it to inquire into the reasons,
the Bank’s case was that the respondent was not dismissed or
discharged by way of punishment for any misconduct and that
the Bank merely terminated his service under paragraph
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522(1) of the Bank Award, as his guarantee had been
withdrawn by the Chief Cashier and it was impossible to
continue to employ him in the circumstances, the Bank being.
unprepared to change its system of working which has already
been mentioned above. It was also said that the Bank was
not bound to transfer the respondent to another department
and in any case the respondent’s training, experience,
ability or record did not fit him for work in any other
department of the Bank.
The tribunal held that even though the Bank had chosen to
follow the procedure laid down in paragraph 522(1) of the
Bank Award which provides for termination of employment "in
cases not involving
445
disciplinary action for misconduct, by three months’ notice
or on payment of three months’ pay and allow. ances in lieu
of notice", this did not preclude it from inquiring into the
reasons for the termination of service and into the legality
and/or propriety of the action taken by the bank and that
paragraph 522(1) did not give a free hand to the Bank to
dispense with the service of a permanent employee at will.
It also held that it was always open to the tribunal to
inquire into the bona fides as well as justifiability of the
action taken. It then went into the circumstances in which
the termination of service took place and was of opinion
that this was in fact and in reality a case of termination
of service for misconduct, and that it was the duty of the
Bank to follow the procedure for taking disciplinary action
for the alleged insubordination and persistent disobedience
of the orders of the Chief Cashier by the respondent with
respect to leaving the Bank without his prior permission
before the cash was checked and looked up and inasmuch as
the Bank failed to follow the requisite procedure as was
laid down in paragraph 521 of the Bank Award, the
termination of the service of the respondent was illegal and
improper and he was entitled to reinstatement with full back
wages and other benefits. It is this order which is being
challenged before us by the Bank.
The main contention on behalf the Bank is that the view
taken by the tribunal that in every case where there may be
some misconduct the Bank is bound to take disciplinary
action under paragraph 521 of the Bank Award makes paragraph
522(1) completely otiose and is erroneous. Further it is
contended that in the peculiar position obtaining in the
cash department of the Bank whereby the Chief Cashier
guarantees all the assistant cashiers working under him, the
Bank did not want to go into the squabble between the Chief
Cashier and the respondent and as the Chief Cashier had
withdrawn the guarantee of the respondent, the Bank decided
without apportioning any blame between the Chief Cashier and
the respondent to act under paragraph 522(1) of the Bank
Award. It is urged that paragraph 522(1) of the Bank Award
is
57
446
particularly meant to meet situation,,; like this which may
arise in a banking concern.
The first question that arises therefore is the scope of the
power of the Bank to act under paragraph 522(1) of the Bank
Award, particularly in the peculiar situation prevailing in
the cash department of the Bank. The position in the cash
department of the banks was considered by the Bank Award in
Chapter XXI with respect to giving of security. In para-
graphs 417 and 418, the existing practice in various banks
is summarised and it takes one of three forms, namely--(i)
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every member of the staff is to give security, (ii) the head
cashier gives a guarantee on behalf of all the cashiers
working under him, and (iii) where the treasurer system
prevails, the treasurer enters into a contract with the bank
and recommends the employees for employment in the cash
department and guarantees their fidelity and they are
thereupon appointed by the bank. The tribunal was not right
in saying that the system which was prevailing in the Bank
was peculiar to it and was not mentioned in the Bank Award.
It will be seen that the system in the Bank is of the second
kind noticed in the Bank Award where the Chief Cashier
guarantees all those working under him. It is also
mentioned in the Bank Award that the Chief Cashier generally
takes security deposits from persons working under him but
that did not appear to be the invariable rule, and in the
Bank the Chief Cashier does not take any security from his
subordinates. In such a system the Bank has to depend upon
the security given by the Chief Cashier and his guarantee of
the employees working under him. It is impossible to accept
that this way of working was not known to the respondent.
The Bank has produced the respondent’s application for
employment and it is significant that it is addressed to the
Chief Cashier and not to the management of the Bank and this
bears out the contention of the Bank that the subordinates
in the cash department are employed on the recommendation of
the Chief Cashier who gives guarantee for them. Nor does
the Bank’s contention that no one employed in the cash
department leaves without permission till the cash is
checked and locked up appears
447
improbable, for the practice seems necessary for the
security of the cash department. Therefore when the Bank
was faced with the report of the Chief Cashier dated 4-1-
1957, it had to decide in the special circumstances of this
case what action should be taken on that report. Two
courses were open to it: it could have taken disciplinary
action under paragraph 521 of the Bank Award or it could
have acted under paragraph 522(1). The submission on behalf
of the Bank is that it did not want to go into the squabble
between the Chief Cashier and the respondent and as the
Chief Cashier had withdrawn his guarantee with respect to
the respondent it acted bona fide in proceeding under
paragraph 522(1) and thus no question arose of its taking
disciplinary action against the respondent.
There is no doubt that an employer cannot dispense with the
services of a permanent employee by mere notice and claim
that the industrial tribunal has no jurisdiction to inquire
into the circumstances in which such termination of service
simpliciter took place. Many standing orders have
provisions similar to paragraph 522(1) of the Bank Award,
and the scope of the power of the employer to act under such
provisions has come up for consideration before labour
tribunals many a time. In Buckingham and Carnatic Company
Ltd., Etc., v. Workers of the Company, etc. (1), the Labour
Appellate Tribunal had occasion to consider this matter
relating to discharge by notice or in lieu thereof by
payment of wages for a certain period without assigning any
reason. It was of opinion that even in a case of this kind
the requirement of bona fides is essential and if the
termination of service is a colourable exercise of the power
or as a result of victimisation or unfair labour practice
the industrial tribunal would have the jurisdiction to
intervene and set aside such termination. Further it held
that where the termination of services is capricious,
arbitrary or unnecessarily harsh on the part of the employer
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judged by normal standards of a reasonable man that may be
cogent evidence of victimisation or unfair labour practice.
We are of opinion that this correctly lays down the scope of
the power of the tribunal to
(1) [1952] L.A.C. 490.
448
interfere where service is terminated simpliciter under the
provisions of a contract or of standing orders or of some
award like the Bank Award. In order to judge this, the
tribunal will have to go into all the circumstances which
led to the termination simpliciter and an employer cannot
say that it is not bound to disclose the circumstances
before the tribunal. The form of the order of termination
is not conclusive of the true nature of the order, for it is
possible that the form may be merely a camouflage for an
order of dismissal for misconduct. It is therefore always
open to the tribunal to go behind the form and look at the
substance; and if it comes to the conclusion, for example,
that though in form the order amounts to termination
simpliciter it in reality cloaks a dismissal for misconduct
it will be open to it to set it aside as a colourable
exercise of the power.
It is on these principles therefore that we have to judge
the action taken by the Bank in this case. In the statement
of claim put in by the workmen there was no allegation of
victimisation or unfair labour practice. An affidavit was
filed by the respondent later before the tribunal in which
it was said that the Bank had acted mala fide in removing
him from service. But in this affidavit nothing was said as
to how the management of the Bank as distinct from the Chief
Cashier had any reason to act mala fide against the
respondent. The tribunal also has not recorded any finding
that the action of the Bank in terminating the service of
the respondent was mala fide or amounted to unfair labour
practice or was a case of victimisation. It ordered
reinstatement on the ground that this was a case where
disciplinary action must and should have been taken and that
was not done. In one part of the award the tribunal has
remarked that if it is found that the Bank has merely in
colourable exercise of the power made the order under
paragraph 522(1) of the Bank Award, the order would not be
sustainable. But there is no finding that the action taken
in this case was a colourable exercise of the power under
paragraph 522(1). It is, however, urged on behalf of the
respondent that even though there is no such finding by the
tribunal a perusal of the entire award seems
449
to show that this was what the tribunal thought inasmuch as
it has said that this was a case in which disciplinary
action must and should have been taken. However, as we read
the award of the tribunal, the impression that we get is
that its view was that where there is an allegation which
may amount to misconduct against an employee of a bank, the
procedure under paragraph 521 must always be followed and
that the procedure under paragraph 522(1) can never be
followed; and that is why the tribunal did not give any
finding that the action of the Bank was a colourable
exercise of the power under paragraph 522(1). But as
learned counsel for the respondents has urged before us that
the action in this case is in any case a colourable exercise
of the power under paragraph 522(1) we propose to look into
this aspect of the matter ourselves.
It is true that there was some kind of allegation by the
Chief Cashier which may amount to misconduct in this case
and if we were satisfied that the termination of service of
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the respondent was due to that misconduct and that the form
of the order was merely a cloak to avoid holding a proper
enquiry under paragraph 521, no doubt there would have been
no case for interference with the order of the tribunal.
But this is a peculiar case depending upon a peculiar system
prevalent in the cash department of the Bank. That system
is that the Chief Cashier gives security for the entire
working of the cash department and is unconditionally
responsible for any loss that might be occasioned to the
Bank in that department. The appointments in that
department are made on the recommendation of the Chief
Cashier and he gives a guarantee about each employee and is
unconditionally responsible to the Bank for any shortage
which might occur. It is in these circumstances that the
Bank was faced with the report of the Chief Cashier by which
for the reason given by him he withdrew the guarantee so far
as the respondent was concerned. The security of the cash
department was thus involved and if the Bank decided as it
seems to have done in this case that it would not go into
the squabble between the Chief Cashier and the respondent
and would use paragraph 522(1) of the
450
Bank Award to terminate the service of the respondent it
cannot be said that the Bank was exercising its power under
paragraph 522(1) in a colourable manner. It may have
honestly come to the conclusion that in this situation, as
it was not possible for it to change its system in the cash
department, there was no option for it but to dispense with
the service of the respondent under paragraph 522(1) of the
Bank Award without going into the rights and wrongs of the
dispute between the Chief Cashier and the respondent. In
the peculiar circumstances therefore obtaining in the cash
department of the Bank it cannot in our opinion be said that
the use of the power under paragraph 522(1) by the Bank in
the present case was a colourable exercise of that power.
Nor do we think that the failure of the Bank to provide
alternative employment for the respondent would lead to any
such inference,, for the Bank may very well be right when it
says that it is a specialised institution and considering
that the respondent has been working in one department for
the last twenty years he was not fit to be absorbed in
another department. In the circumstances of this case
therefore we are not prepared to hold that the termination
of the service of the respondent was a colourable exercise
of the power under paragraph 522(1) of the Bank Award. The
mention of the fact that the service was being terminated
because the Chief Cashier had withdrawn the guarantee of the
respondent in the notice of. discharge will not change the
nature of the termination, for the reason was given
obviously to avoid the charge that the termination was
entirely capricious or arbitrary, and therefore not bona
fide.
We therefore allow the appeal and set aside the order of the
tribunal by which the respondent was ordered to be
reinstated with full back wages and other benefits. In the
circumstances we pass no order as to costs.
Appeal allowed.
451