Loss of confidence arising from serious financial misconduct warrants compensation instead of reinstatement.

Mahir Hussain, employed as a Peon with Union Bank of India, was suspended on 10 August 2009 and subsequently served with a chargesheet alleging that he facilitated the opening of a fictitious savings account through fabricated documents, enabled the fraudulent collection of a demand draft, and attempted fraudulent withdrawals, causing financial loss to the Bank.

The Enquiry Officer found the charges proved, and the Disciplinary Authority discharged him from service on 27 July 2010.

Hussain’s departmental appeal was not decided on merits, reportedly because it was treated as delayed. He thereafter raised an industrial dispute under Section 2A of the Industrial Disputes Act, 1947.

The Labour Court held that the enquiry was tainted because the statutory appeal had not been considered on merits, although it found that the Enquiry Officer’s conclusions were not perverse.

The Bank challenged that finding in W.P.(C) 4264/2014, but the challenge was dismissed on 31 October 2014, with the Court holding that the appeal ought to have been decided on merits. That order attained finality.

The Labour Court thereafter granted the Bank several opportunities to lead independent evidence to prove the charges, but the Bank adduced no such evidence. The Labour Court consequently set aside the discharge order and directed reinstatement with salary and consequential benefits.

Whether the Bank could rely upon the findings recorded in the departmental enquiry after the finding that the enquiry was procedurally tainted had attained finality?

Whether the Labour Court was justified in setting aside the discharge order when the Bank failed to lead independent evidence to prove the charges before it?

Whether reinstatement was an appropriate relief in view of the serious allegations of financial fraud and the employer’s loss of confidence in the employee?

He thereafter raised an industrial dispute under Section 2A of the Industrial Disputes Act, 1947.

The Labour Court thereafter granted the Bank several opportunities to lead independent evidence to prove the charges.

The Labour Court held that the enquiry was tainted because the statutory appeal had not been considered on merits, although it found that the Enquiry Officer’s conclusions were not perverse.

The Labour Court thereafter granted the Bank several opportunities to lead independent evidence to prove the charges, but the Bank adduced no such evidence.

That order attained finality.

Loss of confidence arising from serious financial misconduct warrants compensation instead of reinstatement.