Holding

The Supreme Court held that the Labour Court’s interference with the quantum of punishment under Section 11A was unwarranted; the termination of the conductor’s services was justified and the award of reinstatement was set aside.

Summary

Kamruddin, a bus conductor employed on probation by the Rajasthan State Road Transport Corporation, was caught five times for not issuing tickets to passengers. After a warning, a disciplinary enquiry was held, found him guilty, and terminated his services. The Labour Court, invoking Section 11A of the Industrial Disputes Act, reduced the punishment to stoppage of two grade increments and ordered his reinstatement without back wages. The High Court upheld this award. On appeal, the Supreme Court held that while the Labour Court’s power under Section 11A exists, it must be exercised judiciously; given the proven misconduct and a fair enquiry, the termination was appropriate and the award of reinstatement was set aside. The appeal was allowed, overturning the High Court’s decision.

Issues considered

The extent to which a Labour Court may interfere with the quantum of punishment under Section 11A of the Industrial Disputes Act when misconduct is proved and the enquiry is fair.
Whether the Certified Standing Order No. 36 prevails over departmental circulars and corrigenda in determining the nature and quantum of penalty.
Whether the award of reinstatement without back wages is sustainable in view of the proportionality of the punishment.

Legislation cited

Subjects

Industrial DisputesSection 11AQuantum of punishmentDisciplinary enquiryStanding OrdersTermination of serviceReinstatementProportionalityBus conductor misconduct

Judgment

[20091 8 S.C.R. 1180

A DIVISIONAL MANAGER, RAJASTHAN S.R.T.C.
v.
KAMRUDDIN
(Civil Appeal No. 3485 of 2009)
MAY 12, 2009
B
[S.B. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.]

Industrial Disputes Act, 1947:

c s. 11 A ·· Power of Labour Court to interfere with quantum
of punishment - Held: Should be exercised judiciously - In the
instant case, misconduct of the delinquent bus conductor
while on probation was proved - Disciplinary enquiry was
found to have been conducted in a fair manner - Award of
0 Labour Court directing reinstatement of delinquent cannot be
sustained, and is set aside.

Certified Standing Orders:

Standing Order No. 36 - Held: Would prevail over
E departmental circular.
The respondent, a bus conductor, while on probation
was caught on five occasions for having not issued
tickets to passengers. He was placed under suspension.
F The disciplinary enquiry initiated against him culminated
in an order of termination of his services. The Labour
Court, despite finding that the enquiry was fairly
conducted, held that the punishment was
disproportionate, and accordingly, passed an award
substituting the punishment by stoppage of two
G increments with cumulative effect and directed
reinstatement of the workman, but without back wages.
The Department having remained unsuccessful in the writ
petition as also in intra-court appeal before the High Court
filed the appeal.
H 1180
DIVISIONAL MANAGER, RAJASTHAN S.R.T.C. v. 1181
KAMRUDDIN

Allowing the appeal, the Court A
4
HELD: 1.1. The power of Labour Court and/or
Industrial Tribunal in terms of s.11A of the Industrial
Disputes Act, 1947 to interfere with the quantum of
punishment although cannot be denied, but it i$ !llso a
well settled principle of law-that the s~id power should
e
be exercised judiciously. [Para 1OJ [1189-C-D]

Kamataka State Road Transport Corporation vs. B.S.
Hulfikatti (2001) 2 SCC 574], Regional Manager, RSRTC vs.
Ghanshyam Sharma (2002) 10 SCC 330, Uttaranchal c
Transport Corporation vs. Sanjay Kumar Nautiya/ 2008 (12)
sec 131, relied on .
. ..
1.2. It is not a case where the misconduct against the
~
respondent had not been proved. It is also not a case D
where the domestic en..juiry was found of have been
conducted in an unfair manner or contrary to the
principles of natural justice. The services of the
respondent had been terminated while the period of
probation was not over. As a conductor, his performance E
~ during the period of probation was found to be
unsatisfactory. It is not in dispute that the disciplinary
.., proceeding were initiated against him while he was found
to have committed similar misconduct for the fifth time.
It is also beyond any doubt or dispute that he had also
F
been served with a letter or warning. [Para 9] [1188-H;
1189-A-D]

Rajasthan State Road Transport Corporation vs. Bhagyo
Mal & Ors. [1994] Supp 1 SCC 573, held inapplicable.
G

~ .. ,, -"
RSRTC vs. Shri Ram Yadav [1995 (3) WLC 16], cited.

2. Standing Order No. 36 merely provides for
~
different nature of penalties which can be imposed on a
worker; and stating that penalties specified at Serial Nos.
5 to 7 therein would be appealable. A corrigendum H
-I
1182 SUPREME COURT REPORTS (2009] 8 S.C.R.

A thereto was issued on 24. 7.1982 by way of clarification
with regard to the full route fare as contained in Circular
No. 625 dated 5.6.1982. The said corrigendum has
nothing to do with the nature or quantum of penalty. The
same does not provide for a substitution of the penalty
B provided for in the Certified Standing Order. In any event,
Certified Standing Order would prevail over such
circulars. [Para 12] [1191-G-H; 1192-A-B]

3. It may be true that in execution of the award
passed by the Labour Court, for a short time respondent
c was put back in service. This Court, however, stayed the
operation of the judgment by reason whereof the award
as also the judgment of the High Court became non-
"'.
operational. In the circumstances, the judgments of the
High Court and the award of the Labour Court cannot be
D sustained and are set asidA. [Para 13 and 14] [1192-8-D]

Case Law Reference:

1995 (3) WLC 16 Cited Para 4

E 1994 (1) sec 573 held inapplicable Para 4 ..__
(2001) 2 sec 574 relied on Para 11

(2002) 1o sec 330 relied on Para 11

(2008) 12 sec 131 relied on Para 11
F
CIVIL AP PELLATE JURISDICTION : Civil Appeal No.
3485 of 2009.

From the Judgment & Order dated 16.11.2005 of the High
G Court of Judicature for Rajasthan, Jaipur Bench, Jaipur in D.B.
Special Appeal (writ) No. 416 of 2003.
~~
Sushi! Kumar Jain, Puneet Jain, Ashwin and V. Kotemath
for the Appellants. •
H ~'
~'

DIVISIONAL MANAGER, RAJASTHAN S.R.T.C. v. 1183
KAMRUDDIN

~ B.K. Satija for the Respondents. A
/
The Judgment of the Court was delivered by

5.8. SINHA, J. 1. Leave granted.

2. Extent of interference with the quantum of punishment B
imposed by an employer on a delinquent employee by the
Labour Court in exercise of its power under Section 11 A of the
Industrial Disputes Act, 1947 (for short, "the Act") is in question
in this appeal which arises out of a judgment and order dated
16.11.2005 passed by a Division Bench of the Rajasthan High c
Court, Jaipur Bench, Jaipur.
-, 3. The said question arises in the following factual matrix:

Respondent herein was appointed as a conductor by the
appellant - corporation on or about 6.8.1982 as a daily wager D
for-a specific period on the expiry whereof his services came
to an end.

He was, however, appointed as a conductor on probation
for a period of two years by an offer dated 26.3.1983, inter alia, E
on the terms and conditions laid down therein; the relevant
claim whereof reads as under:
-.J

"4. That on being caught by the inspection team and on
finding corruption their services could be terminated at any
time and the security amount would be seized." F

Within the aforementioned period of probation, inspections
were carried out in the buses in which he had been discharging
his duties as a conductor and on not less than five occasions,
i.e., on 4.4.1983, 11.5.1983, 23.9.1983, 21.11.1983 and G
~
_, 8.2.1984, he was found to have not issued tickets to the
' passengers. Indisputably, on or about 19.4.1993, in relation
to the incident which took place on 4.4.1983, a warning was
4 administered to him, stating:
- H
1184 SUPREME COURT REPORTS [2009] 8 S,C.R.

A "You were on duty on date 4.4.83 in the vehicle no.
~
6070 at the Vayavar Udaipur road. After the inspection of
the vehicle it was fownd that you were carrying 2 .....

passengers without tickets. The Checking staff collected
the fare from the same and issued the tickets.
B
Therefore, you are hereby warned to be careful in the
near future otherwise your probation period would be
terminated."

After he was found guilty of having not issued tickets to the
c two passengers and carrying 180 kilograms luggage without
a ticket, a disciplinary proceeding was initiated against him.
He was placed under suspension.

The fairness of the disciplinary enquiry is not in que~t!qn.
D By reason of an order dated 15.6.1984, the Divisional Manai;ier
of the Corporation being the Appointing Authority terminated
his services, stating:

"On the basis of the complaints received against Shri
Kamruddin S/o Shri Sikandar Khan, Conductor, Vayavar
E Depot he was suspended vide the Office Order No. 395
dated 13.2.84 and was issued the Charge sheet no. 404
dated 24.2.84. In respect of the inquiry of the imposed
charges the Divisional Depot Manager, Ajmer was
appointed the Inquiry Officer vide the Office order no. 581
F dated 3.3.84.

After completing the inquiry by the Inquiry Officer the
enquiry report was produced. I have carefully gone through
the same along with the available record. The Inquiry
G Officer has found the conductor guilty of the imposed
charges. I fully agree with the view of the Inquiry Officer.
"- ~
\
Therefore, I, Divisional Manager, RSRTC, Ajmer,
impose the following punishment under Section 36(5) and
(7) of the Standing Orders on Shri Kamruddin s/o Shri >
H ·-
DIVISIONAL MANAGER, RAJASTHAN S.R.T.C. v. 1185
KAMRUDDIN [S.B. SINHA, J.]

;( Sikandar Khan, Conductor, Vayavar Depot after finding A
him guilty in the aforesaid case.

1. I seize the remaining salary of the suspension
period in the interest of the Corporation.

2. I terminate his probation period after removing him B
from the services of the Corporation with immediate
'I effect."

4. Respondent raised an industrial dispute. By reason of
an Award dated 16.7.1996, the Labour Court despite finding c
that the enquiry was fairly conducted opined that the punishment
.... inflicted on the respondent was disproportionate to the gravity
of the misconduct committed by him, stating:

J
"Therefore, it would not be just and proper to impose the
severe punishment of the termination from the service but D
keeping in view the proved misconduct on the part of the
applicant this court could amend the penalty keeping in
view the provisions of Section 11 (A) of the Industrial
Disputes Act and as per the facts and circumstances of
the case it would be just and proper that the punishment E
of the stoppage of two grade increments with cumulative
.. effect be awarded and the same would be made effective
from the date of inspection i.e. 8.2.84 and further that the
applicant would not be entitled of the back wages. That
he would be reinstated in the service in continuation of his F
service as if he has not been terminated from the service
of the corporation. Accordingly, the Award is passed."

I In support of its aforementioned finding, the Tribunal relied
upon a decision of the Rajasthan High Court in RSRTC vs. Shri G
---> ~
_, Ram Yadav (1995 (3) WLC 16] as also the decision of this
Court in Rajasthan State Road Transport Corporation vs.
Bhagyo Mal & Ors. [1994 Supp (1) SCC 573].

'' 5. A writ petition preferred thereagainst by the Corporation
H
1186 SUPREME COURT REPORTS [2009] 8 S.C.R.

A has been dismissed both by a learned single judge. A Division
Bench of the High Court by reason of the impugned judgment
dismissed an intra-court appeal preferred by the appellant.

6. Mr. Sushil Kumar Jain, learned counsel appearing on
behalf of the appellant would contend that in a case of this
8
nature where the respondent has been found guilty of
commission of a misconduct of misappropriation, no
interference with the quantum of punishment was warranted. '(

7. Mr. 13.K. Satija, learned counsel appearing on behalf of
C the respondent, on the other hand, would contend that this Court
should not interfere with the impugned judgment as imposition
of the punishment of dismissal from service having regard to
the guidelines issued by the Corporation itself was wholly
disproportionate to the charges of misconduct framed against
D the respondent. Learned counsel in this connection would draw
our attention to the statement made in the counter affidavit,
which reads as under:

"It is respectfully submitted that the Corporation in number
of standing orders has taken decision in regard to
E
awarding financial punishment, where the Conductor is
carrying the passengers without ticket. Operative Portion
of Section 36 of standing order is reproduced hereunder
for ready reference:
--
F '36. One or more of the following penalties may, for
good and sufficient reasons, be imposed on a worker by
a competent authority; penalties from (v) to (vii) shall be
appealable-

G (i) Censure:-Three censures in a period of one year
will involve withholding of one increment.
'- -
(ii) Withholding of increments or promotion.

(iii) Recovery from pay/wages of the whole or part of
H any pecuniary loss caused to the employer by
DIVISIONAL MANAGER, RAJASTHAN S.R.T.C. v. 1187
KAMRUDDIN [S.B. SINHA, J.]
negligence or breach of any law. A

(iv) Fine upto 2% of worker's wages.

(v) Forfeiture of wages during the period or of
suspension.
B
(vi) Reduction to a lower post or grade.

(vii) Termination of service, which shall not be a
disqualification for future employment.

(viii) Dismissal from service which shall be C
disqualification for future employment.'

It is respectfully submitted that the petitioner Corporation
has issued number of semi Government order, where the
decision to impose financial punishment was decided by D
the Corporation and the cases pertaining to traveling
without ticket were settled imposing financial punishment
upon the employee/workman."

8. Our attention was also drawn to a corrigendum issued
on 24. 7.1982, the relevant portion whereof reads as under: E

" Recently circular No. 625 dt.05.06.1982 was issued by
the General Manager for charge of full route fare from the
without ticket passengers, because correct information
i regarding journey undertaken was not being provided by F
(
the passengers as well as by the conductors to conceal
fraudulent activities.

During the last meeting of the Divisional Managers,
clarification was sought with regard to certain points to G

- _,..·
enable the officers and inspectorial staff to implement the
directions imparted in the circular under reference. Further,
instructions in this regard are imparted as under:-

1. The cases where the conductor has realized fare, but
'· H
1188 SUPREME COURT REPORTS [2009) 8 S.C.R. ....
A has not issued tickets, it shall be presumed that the ,..
passenger had been undertaking journey from the
originating point of the bus to the terminal poi(lt and the
conductor had realized fare for the journey being
undertaken by the passenger. Hence, full fare of the route
B along with equal penalty or Rs.5/- whichever is more, shall
be chargeable from the conductor."

Our attention was also drawn to the Office Order dated
12.01.2006, the relevant portion whereof reads as under:-
c "Nigam has decided to prefer a Special Leave Petition
before the Hon'ble Supreme Court against order dt.
16.11.2005 passed by Hon'ble High Court of Rajasthan
Bench at Jaipur and it has also been decided that Sh.
Kamruddin S/o Sh. Sikandar Khan, Ex-Conductor, Vyavar
D Depot be reinstated subject to the outcome of Special
Leave Petition.

Therefore, Kamruddin S/o Sh. Sikandar Khan, Ex-
Conductor, Vyavar Depot in pursuance of order dt.
04.02.2003 passed by learned Single Judge of the Hon'ble
E
High Court Bench at Jaipur and order dt. 16.11.2005
passed by Division Bench of the High Court of Rajasthan
at Jaipur and compliance of Award dt. 16.07.1996 passed
by Labour and Industrial Tribunal Ajmer in LCR No. 24196
(26:3/90) is hereby reinstated and posted at Vyavar Depot
F subject to the decision of Special Leave Petition."

Learned counsel furthermore urged that as in
implementation of the said Award passed by the Labour Court
as affirmed by the High Court, respondent had been reinstated
-G in service by an office order dated 12.1.2006 and his services
having been terminated again by an order dated 2.6.2006 in .... . -
view of the order of stay granted this Court, this Court may
restore the order passed by the Labour Court.
9. It is not a case where the misconduct against the f

H
DIVISIONAL MANAGER, RAJASTHAN S.R.T.C. v. 1189
KAMRUDDIN [S.B. SINHA, J.]
respondent had not been proved. It is also not a case where A
the domestic enquiry was found to have been conducted in an
unfair manner or contrary to the principles of natural justice. The
services of the respondent had been terminated while the
period of probation was not over. As a conductor, his
performance during the period of probation was found to be B
unsatisfactory. It is not in dispute that a disciplinary proceeding
was initiated against him while he was found to have committed
similar misconduct for the fifth time. It is also beyond ahy doubt
or dispute that he had also been served with a letter of warning.

10. The power of Labour Court and/or Industrial Tribunal C
in terms of Section 11A of the Industrial Disputes Act, 1947 to
interfere with the quantum of punishment although cannot be
denied, but it is also a well settled principle of law that the said
power should be exercised judiciously.
D
The Labour Court relied upon the decision of this Court in
Bhagyo Mal (supra) wherein the High Court allowed back
wages to the workman concerned. This Court in the facts and
circumstances of the case found the order of the High Court to
be self-contradictory, stating: E

"When the High Court had found that the respondent -
employee deserved punishment on account of his
'misconduct, the High Court could not have rewarded the
employee by granting him the back wages particularly
when the Tribunal had converted the order of dismissal Into F
that of the stoppage of two increments with cumulative
effect. We, therefore, allow the appeal and set aside that
part of the order of the High Court whereby the respondent
- employee has been given the benefit of back wages.
The rest of the order is maintained." G

We fail to understand as to how the said decision
advanced the case of the respondent.

11. The question with regard to imposition of appropriate H
1190 SUPREME COURT REPORTS (2009) 8 S.C.R.

A punishment upon a conductor of a bus belonging to a
corporation constituted under the Road Transport Corporation
Act, 1950 came up for consideration before this Court in
Karnataka State Road Transport Corporation vs. 8. S.
Hulfikatti [(2001) 2 SCC 574), wherein it was held:
B
"5. On the facts as found by the Labour Court and the High
Court, it is evident that there was a short-charging of the
fare by the respondent from as many as 35 passengers.
We are informed that the respondent had been in service
as a Conductor for nearly 22 years. It is difficult to believe
c that he did not know what was the correct fare which was
to be charged. Furthermore, the appellant had during the
disciplinary proceedings taken into account the fact that
the respondent had been found guilty for as many as 36
times on different dates. Be that as it may, the principle of
D res ipsa loquitur, namely, the facts speak for themselves,
is clearly applicable in the instant case. Charging 50 paise
per ticket less from as many as 35 passengers could only
be to get financial benefit by the Conductor. This act was
either dishonest or was so grossly negligent that the
E respondent was not fit to be retained as a Conductor
because such action or inaction of his is bound to result
in financial loss to the appellant-Corporation.

6. It is misplaced sympathy by the Labour Courts in such
F cases when on checking it is found that the Bus
Conductors have either not issued tickets to a large
number of passengers, though they should have, or have
issued tickets of a lower denomination knowing fully well
the correct fare to be charged. It is the responsibility of the
Bus Conductors to collect the correct fare from the
G
passengers and deposit the same with the Company. They
act in a fiduciary capacity and it would be a case of gross
misconduct if knowingly they do not collect any fare or the
correct amount of fare."
H
DIVISIONAL MANAGER, RAJASTHAN S.R.T.C. v. 1191
KAMRUDDIN [S.S. SINHA, J.]

.. -4 A three judge Bench of this Court in Regional Manager,
RSRTC vs. Ghanshyam Sharma [(2002) 10 SCC 330],
A

reiterated the said principle, stating:

"4. This Court in Kamataka SRTC v. B.S. Hullikatti has
held that in such cases where the bus conductors carry
B
passengers without ticket or issue tickets at a less rate
than the proper rate, the said acts would inter alia amount
y
to either being a case of dishonesty or of gross negligence
and such conductors were not fit to be retained in service
because such inaction or action on the part of the
conductors results in financial loss to the Road Transport
c
Corporation. This Court was firmly of the opinion that in
cases like the present, orders of dismissal should not be
set aside.

5. Furthermore, we agree with the observations of the D
Single Judge in the present case that the Labour Court
was not justified in interfering with the punishment of
dismissal. Though under Section 11-A the Labour Court
has jurisdiction and powers to interfere with the quantum
of punishment, however the discretion has to be used E
judiciously. When the main duty or function of the
conductor is to issue tickets and collect fare and then
deposit the same with the Road Transport Corporation
and when a conductor fails to do so, then it will be
misplaced sympathy to order his reinstatement instead of F
dismissal."

Recently in Uttaranchal Transport Corporation vs. Sanjay
Kumar Nautiyal (2008 (12) SCC 131], Hullikatti (supra) has
been followed.
G
12. Standing Order No. 36 whereto our attention has been
drawn merely provides for different nature of penalties which
can be imposed on a worker stating that penalties specified
at Serial Nos.5 to 7 therein would be appealable. A
H
1192 SUPREME COURT REPORTS [2009) 8 S.C.R.

A corrigendum thereto was issued on 24.7.1982 by way of .,. .
clarification with regard to the full route fare as contained in
Circular No. 625 dated 5.6.1982. The said corrigendum has
nothing to do with the nature or quantum of penalty. The same
does not provide for a substitution of the penalty provided for
s in the Certified Standing Order. In any event, Certified Standing
Order would prevail over such circulars.
' <(

13. It may be true that in execution of the Award passed
by the Labour Court, for a short time respondent was put back
in service. This Court, however, as indicated hereinbefore,
C stayed the operation of the judgment by reason whereof Award
as also the judgment of the High Court became non-
operational. We are, therefore, of the opinion that by itself that
may not be a ground to refrain ourselves from following the
authoritative binding precedents.
D
14. For the aforementioned reasons, the impugned
judgment cannot be sustained. It is set aside accordingly. The
appeal is allowed. However, in the facts and circumstances
of the case, there shall be no order as to costs.
E
R.P. Appeal allowed.