Service-rule action against a POSH complainant must be bona fide, independent, and non-retaliatory.

The Respondent joined IDBI Bank in 2011 and was promoted as Manager in 2016. Between 2017 and 2018, she was allegedly absent from duty on several occasions and disciplinary action was taken against her.

In October 2018, she complained of sexually coloured remarks and a hostile work environment against a senior Bank official. Her initial complaint was rejected, following which she filed a complaint under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”) before the Internal Complaints Committee (“ICC”).

She withdrew the complaint in February 2019 pursuant to an alleged settlement, but subsequently sought to reopen it, alleging continuing harassment and victimisation. The ICC repeatedly declined to reopen the matter and ultimately dismissed it by order dated 16 March 2020.

The Appellate Tribunal, by order dated 9 December 2024, set aside the ICC order on the ground that the inquiry violated natural justice, was unreasoned, and had not been conducted by a properly constituted ICC under Section 4 of the POSH Act. The Appellate Tribunal directed constitution of a fresh ICC. That order was not challenged by the Bank.

Meanwhile, the Respondent remained absent from duty from 28 October 2020. The Bank issued a Voluntary Cessation of Service (“VCS”) notice in August 2021, but kept the proceedings in abeyance during the pendency of the Respondent’s writ proceedings. After the writ petition and appeal were dismissed, the Bank issued a second VCS notice on 30 July 2024 and, on 2 September 2024, treated the Respondent as having voluntarily ceased from service under Clause 25(A), Chapter V of the IDBI Officers’ Service Rules, 2006.

The learned Single Judge set aside the VCS order, directed reinstatement with full back wages from October 2020, awarded ₹5,00,000 as compensation, and directed the Respondent to participate in a fresh ICC inquiry. The Bank preferred the present appeal.

1. Whether the Service Rules are subordinate to the provisions of the POSH Act?

2. Whether the Respondent’s continued absence from work during the pendency of the proceedings challenging the ICC order was justified in view of the alleged hostile work environment and the absence of a duly constituted ICC?

3. Whether the Bank was justified in treating the Respondent’s absence as deemed voluntary cessation of service despite the pending POSH-related proceedings and her allegations of sexual harassment and hostile work environment?

The Court applied Section 28 of the POSH Act, which provides that the Act operates “in addition to” and not in derogation of other laws; consequently, service rules continue to govern suspension, discipline, attendance and termination.

However, action under service rules against a POSH complainant must be bona fide, independently justified, wholly unconnected with the complaint or pending proceedings, and cannot be retaliatory or punitive for invoking the POSH Act.

The Court also considered Sections 4 and 11(4) of the POSH Act, requiring a properly constituted ICC and completion of inquiry within the prescribed period, and Section 12, under which leave or other interim relief may be recommended during a pending inquiry.

Clause 25(A), Chapter V of the IDBI Service Rules, requiring adherence to the prescribed procedure for voluntary cessation notices, was also applied.

The Court further applied the principles of natural justice, protection against retaliation, and the requirement that service action be assessed in its surrounding factual context rather than mechanically.

The Court held that the Appellate Tribunal’s findings—that the ICC inquiry was procedurally defective, violated natural justice, and was conducted without a duly constituted ICC—had attained finality because the Bank did not challenge them.

Although the Bank was legally entitled to enforce its Service Rules, the Respondent’s absence could not be examined in isolation from the unresolved POSH complaint and the alleged hostile work environment. Since the Bank had failed to provide an effective fact-finding mechanism, the Respondent could not meaningfully seek interim protection under Section 12 of the POSH Act.

In the Court’s view, the absence was connected with the Bank’s failure to address her grievances, and the principle of “no work, no pay” could not automatically apply where the alleged absence was attributable to the employer’s own statutory default.

The timing and conduct of the VCS proceedings further undermined the Bank’s position. The Bank had kept the first VCS proceedings in abeyance during the earlier litigation but issued the second notice soon after the writ proceedings ended, while the statutory appeal under Section 18 of the POSH Act remained pending.

The Bank also failed to follow the procedure under Clause 25(A), including by not communicating whether the Respondent’s explanation to the first notice was unsatisfactory and by issuing the second notice nearly three years later.

In these circumstances, the VCS order could not be treated as an independent and unconnected service action; it was inextricably linked with the pending POSH proceedings and the unresolved workplace grievance.

On the facts, the Bank was not justified in treating the Respondent’s absence as deemed voluntary cessation because the absence was directly connected with the unresolved POSH complaint, the alleged hostile work environment, and the Bank’s failure to conduct a lawful ICC inquiry.

The Single Judge’s directions for setting aside the VCS order, reinstatement, payment of full back wages from October 2020, compensation of ₹5,00,000, and continuation of proceedings before the newly constituted ICC were upheld, but the costs imposed by the Single Judge were waived.

The fresh ICC was directed to proceed independently and expeditiously, without being influenced by observations in the judgment or the Single Judge’s order.