Holding

The Tribunal erred in setting aside the dismissal; the evidence proved the employee’s misconduct and the dismissal was justified.

Summary

The appellant State Bank of India dismissed its Head Cashier, T. Arun Kumar Banerjee, after a domestic enquiry found him guilty of misappropriating Rs.1,000 received in excess from a customer. The Central Industrial Tribunal set aside the dismissal, relying on the non‑examination of the customer, non‑production of the money and the absence of a confessional statement. The High Court restored the Tribunal’s award, but the Supreme Court held that the evidence of two bank officers who witnessed the incident was sufficient to prove misconduct and that the Tribunal could not disregard such evidence. The Court explained that, under Section 11‑A of the Industrial Disputes Act, a tribunal may re‑appraise evidence only when the employer’s enquiry is defective or the evidence is insufficient, which was not the case here. Consequently, the Supreme Court set aside the High Court’s order and allowed the appeal, upholding the dismissal.

Issues considered

The propriety of the Central Industrial Tribunal setting aside the dismissal on the ground of non‑examination of the complainant and non‑production of money.
Whether under Section 11‑A of the Industrial Disputes Act, 1947 a tribunal can interfere with a dismissal when the domestic enquiry produced sufficient evidence of misconduct.
The sufficiency of the testimony of two bank officers to establish the employee’s misconduct.

Legislation cited

Industrial Disputes Act, 1947s. 11-A

Subjects

industrial disputedismissaldomestic enquirySection 11-Amisconductevidencetribunallabour lawbankmisappropriation

Judgment

.... STATE BANK OF INDIA A
v.
T ARUN KUMAR BANERJEE AND ORS.

SEPTEMBER 19, 2000

[S. RAJENDRA BABU AND D.P. MOHAPATRA, JJ.] B

Labour Laws:

Industrial Disputes Act, 1947-Charge sheet issued to a Bank employee
that he retained the excess amount tendered by a customer of the Bank to c
him in his capacity as Head Cashier, with a criminal intent to misappropriate
the same-Domestic enquiry-Show cause notice~ubsequent dismissal from
service-Industrial dispute-Reference to the Central Industrial Tribunal-
Tribunal setting aside the order of dismissal placing reliance on non-
examination of complainant, non-production of money, non-production of
confessional statements and non-production of any evidence which may have D
been available-Propriety of-Held, these circumstances are irrelevant and
the Tribunal could not have placed reliance on the same to reach the
conclusion it did-The charge of misconduct against the employee stood
proved to the hilt by the evidence tendered by the two witnesses who actually
saw the incident having taken place and the Tribunal could not have taken E
any other view.

Section 11 A-Reappraisal of evidence-Position explained

Respondent no. 1 in his capacity as Head Cashier in the appellant Bank,
received from a customer of the appellant Bank a sum of Rs. 3002.40 p.
F
along with two draft applications each for Rs. 1001.20 p. Even though
respondent no. 1 received excess amount of Rs. 1000 over Rs. 2002. 40p, he
did not refund the same and retained the said money with him with the
intention of misappropriating the same. Thereafter, when the said customer
returned in the afternoon on the same day and demanded the said amount of
Rs. 1000 handed over to respondent no.I in excess, he flatly denied. On a G
report being made by the said customer to the Branch Manager, the matter
was enquired into. However, a preliminary search failed to trace the amount
When a physical search of all the employees was being conducted, the
respondent no.l threw away the said amount of Rs. 1000 on the floor which
was witnessed by the Accountant of the appellant Bank. The possession of
313 H
""'

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314 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

·A the said amount was taken by the Accounti,mt and he questioned respondent
no. 1 about the same. Subsequently, a statement in writing duly signed by
the first respondent was taken and the matter reported to the Head Office,
Respondent no. 1 was thereafter put under suspension under instructions
from Head Office. A charge-sheet was issued to respondent no.I but he denied
. '·
all the charges levelled against him and claimed to be innocent.
B
A domestic enquiry was held against him and three witnesses were
examined. Respondent no. 1 did not adduce any evidence nor examined himself.
On the basis of the evidence recorded in the domestic enquiry he was found
guilty of the charges and was asked to show cause as to why an appropriate
c punishment should not be imposed upon him ; he was also heard. Subsequently
he was dismissed from service.

On this, an industrial dispute was raised which was referred to the
' Central Industrial Tribunal and it held that the domestic enquiry conducted .
~as just, fair and proper. However, on examination of the material on record,
D the Industrial Tribunal came to the conclusion that the finding of guilt against
the first respondent was not just on the evidence on record and, therefore,
set aside the same. This was challenged in a writ petition which was allowed
by a Single Judge of the High Court. On a further appeal, Division Bench
of the High Coui:t held that the Single Judge could not have interfered with
the award made by the Tribunal and set aside the order of the Single Judge
E restoring the award made by the Tribunal. Hence the present appeal:

On behalf of the appellant, it was contended that the evidence of three
witnesses recorded at enquiry being sufficient to record the guilt of
respondent no.I, other evidence was ignored and irrelevant considerations
such as non-examination of complainant-customer, non-production of money
F
and non-availability of other evidence not on record was taken note of by the
Tribunal. Therefore, the award of the Tribunal was vitiated and that the Division
Bench of High Court too fell in the same error.

On behalf of the 1st respondent, it was contended that holding the
G conclusion of the inquiry officer to be correct even if evidence was withheld,
was a perverse approach.

Allowing the appeal, the Court

HELD : 1. The evidence in the present case, is given by three witnesses
H who are the officers of the appellant-Bank. As far as the evidence tendered

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STATE BANK OF INDIA"· TAR UN KUMAR BANERJEE 315

- by the two witnesses is concerned who actually saw the incident having taken
place, the charge of misconduct against the first respondent stood proved to
the hilt. In these circumstances, the Tribunal could not have taken any other
A

view by placing heavy reliance on non-examination of complainant, non-
.... , production _of money, non-production of so-called statements of confession
and non-production of any evidence which may have been available. A customer B
of the Bank need not be involved in a domestic enquiry conducted, as such
a course would not be conducive to proper Banker-customer relationship
and, therefore, would not be in the interest of the Bank. Further, when money
was secured a prudent banker would deposit the same in the account of the
customer complaining of loss of money and, therefore, non-production of
money also would not be of much materiality. When in the course of the C
domestic enquiry no reliance was placed on the so-called confessional
statement made by the first respondent, then non-production of the same is
also of no significance. Thus, these circumstances are irrelevant and th~
Tribunal could not have placed reliance on the same to reach the conclusion

--
it did. When sufficient evidence was produced to conclude one way or the
other, the evidence not produced will nc;>t be of any significance unless there D
was such evidence which was withheld would have titled the evidence adduced
in the course of domestic enquiry. No such evidence is forthcoming in this
case. [320-B-H]

Workmen of Messrs. Firestone Tyre & Rubber Company of India (P) E
Ltd v. Management & Ors., [1973] 3 SCR 587, relied on.

2. Prior to the insertion of Section 11-A in the Industrial Disputes Act,
1947 the conduct of the disciplinary proceedings and imposition of the
punishment were all considered to be managerial functions with which the
Tribunal had no power to interfere unless the findings were perverse or the F
punishment was so harsh as to lead to an inference ofvictimisation or unfair
labour practice. Now, the position is different. In the course of adjudication
proceedings if the Tribunal is satisfied that the order of discharge or dismissal
was not justified, it can reappraise the evidence adduced in the domestic
enquiry and satisfy itself whether the evidence relied upon by the employer
establishes the misconduct alleged against the workman. [319-B-D] G'"
Indian Iron & Steel Co. Ltd & Anr. v. Their Workmen, [1958) SCR 667,
referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3151 of
l
1997. H
316 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A From the Judgment and Order dated 13.8.96 of the Calcutta High Court
in A. No. 268 of 1986. -
Gopal Subramanium, Sanjay Kapur, Rajiv Kapur and Gopal Jain for the
Appellant.

B Raj Kumar Gupta, Mritunjay Kumar Singh, H.V.P. Sharma and A.N.
Bardaiyar for the Respondents.

The Judgment of the Court was delivered by

C RAJENDRA BABU, J. A charge-sheet issued to respondent no. 1 reads ·
thatat about 11 a.m. on June 23, 1973 Smt. Parul Rani Chowdhury, a customer
of the appellant-Bank, handed over to respondent no.I a sum of Rs. 3,002.40p
along with two draft applications each for Rs. 1,00 l.20p that even though
respondent no. l received excess amount of Rs. 1,000 over Rs. 2,002.40p, he
neither refunded the same nor asked the customer as to the matter in which
D the said amount was to be disposited either by depositing the same in the
savings bank account or deposit the same in the Sunday deposits account;
that instead he retained the said money with him with intention of
misappropriating the same; that thereafter Smt. Parul Rani Chowdhury returned
at about 1.30 p.m. on the same day and demanded the said amount of Rs.
E 1,000 handed over to respondent no. I in excess, which he flatly denied; that
on a report being made to the Branch Manager by Smt. Parul Rani C]lowdhury
he inquired about the matter; that when a preliminary search failed to trace
the amount and a physical search of all the employees was being ccnducted,
respondent no.1 threw away the said amount of Rs. 1,000 on the floor that
thereby he retained the amount with him with a criminal intent to misappropriate
F the same and. thus lowered the image of the appellant-Bank and thus acted
in a manner highly prejudicial to the interest of the appellant-Bank. Respondent
No. I replied to the said charge-sheet by stating that on a memorandum being
issued to him directly involving him in an alleged misappropriation of the said
sum on June 23, 1973 he was compelled to sign a statement which he was not
G allowed to go through even. Thereafter, he was placed under suspension. He
alleged that he is a victim of serious conspiracy specially while after his recent
promotion from Messenger to Cashier he has looking forward for a bright
future and he denied all the charges levelled against him and he claimed to
be innocent.

H A domestic enquiry was held against him and three witnesses were

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STA TE BANK OF INDIA v. T ARUN KUMAR BANERJEE [RAJENDRA BABU, J .] 317
examined. Respondent No. 1 did not adduce any evidence nor he examined A
himself. On the basis of the evidence recorded in the domestic enquiry by a
report made finding him guilty of charges against him, on January 27, 1976
respondent no. I was asked to show cause as to why an appropriate punishment
should not be imposed upon him and he was heard in the matter. The
Regional Manager thereafter communicated to the respondent No. 1 the
decision to dismiss him. On dismissal being made an industrial dispute was B
raised which was referred to the Central Industrial Tribunal (hereinafter referred
to as 'the Tribunal'). The Presiding Officer held that the domestic enquiry
conducted was just, fair and proper. However, on examination of the material
on record the Presiding officer came to the conclusion that the finding of
guilt against the first respondent was not just on the evidence on record and, C
therefore, he set aside the same. This award was challenged by a writ petition
which was allowed by learned single Judge of the High Court and the award
given by the Presiding Officer was quashed. On a further appeal the Division
Bench of the High Court held that the learned single Judge could not have
interfered with the award made by the Tribunal and set aside the same and
restored the award made by the Tribunal. Hence this appeal by special leave. D
The Tribunal having held that the domestic enquiry was fair and valid
the scope of interference was very limited. This Court in Workmen of Messrs.
Firestone Tyre & Rubber Company of India (P) Ltd v. Management & Ors.,
(1973] 3 SCR 587, stated the law as follows.
E
"(I) The right to take disciplinary action and to decide upon the
quantum of punishment are mainly managerial functions, but if a
dispute is referred to a Tribunal, the latter has power to see if action
of the employer is justified.

(2) Before imposing the punishment, an employer is expected to conduct F
a proper enquiry in accordance with the provision of the Standing
Orders, if applicable, and principles of natural' justice. The enquiry
should not be an empty formality.

(3) When a proper enquiry has been held by an employer, and the
finding of misconduct is a plausible conclusion flowing from the G
evidence adduced at the said enquiry, the Tribunal has no jurisdiction
to sit in judgment over the decision of the employer as an appellate
body. The interference with the decision of the employer will be
justified only when the findings arrived at in the enquiry are perverse
or the management is guilty of victimisation, unfair labour practice or H
318 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A malafides.

(4) Even if no enquiry has been held by an employer or if the enquiry
held by him is found to be defective, the Tribunal in order to satisfy
itself about the legality and validity of the order, has to give an
opportunity to the employer and the employee to adduce evidence
B before it. It is open to the employer to adduce evidence for the first
time justifying his action; and it is open to the employee to adduce
evidence contra.

(5) The effect of an employer not holding an enquiry is that the
Tribunal would not have to consider only whether there was a prima
c facie case. On the other hand, the issue about the merits of the
impugned order of dismissal or discharge is at large before the Tribunal,
and the latter, on the evidence adduced before it, has to decide for
itself whether the misconduct alleged is proved. In such cases, the
point about the exercise of managerial functions does not arise at all.
A case of defective enqufry stands on the same footing as no enquiry.
D
(6) The Tribunal gets jurisdiction to consider the evidence placed
before it for the first time in justification of the· action taken only if
no enquiry has been held or after the enquiry conducted by an
employer is found to be defective.
E (7) It has never been recognised that the Tribunal should straightaway,
without anything more, direct reinstatement of a dismissed or
discharged employee, once it is found that no domestic enquiry has
been held or the said enquiry is found to be defective.

(8) An employer, who wants to avail himself of the opportunity of
F adducing evidence for the first time before the Tribunal to justify his
action, should ask for it at the appropriate stage. If such an opportunity
is asked for, the Tribunal has no power to refuse. The giving of an
opportunity to an employer to adduce evidence for the first time
before the Tribunal is in the interest of both the management and the
G · employee and to enable the Tribunal itself to be satisfied about the
alleged misconduct.

(9) Once the misconduct is proved either in the enquiry conducted by
an employer or by the evidence placed before a Tribunal for the fjrst
time, punishment imposed cannot be interfered with by the Tribunal
H except in cases where the punishment is so harsh as to suggest
STATE BANK OF INDIA v. TARUN KUMAR BANERJEE [RAJENDRA BABU, J.] 319
victimisation. A
(10) In a particular case, after setting aside the order of dismissal,
whether a workman should be reinstated or paid compensation is, as
held by this Court in The Management of Panitole Tea Estate v. The
Workmen, [ 1971] 1 SCR 742, within the judicial discretion of a Labour
Court or Tribunal. The above was the Jaw as laid down by this Court B
as on 15 .12.1971 applicable to all industrial adjudication arising out of
orders of dismissal or discharge."

Prior to the insertion of Section 11-A where a proper domestic enquiry
had been held before the passing of the order of punishment, the Tribunal
had no power to interfere with its findings on the misconduct recorded in the C
domestic enquiry unless it was vitiated by one or other infirmities pointed out
in Indian Iron & Steel Co. Ltd. & Anr. v. Their Workmen, [1958] SCR 667,
case. The conduct of the disciplinary proceedings and imposition of the
punishment were all considered to be managerial functions with which the
Tribunal had no power to interfere unless the findings were perverse or the D
punishment was so harsh as to lead to an inference of victimisation or unfair
labour practice. Now, the position is different. In the course of adjudication
proceedings if the Tribunal is satisfied that the order of discharge or dismissal
was not justified, it can reappraise the evidence adduced in the domestic
enquiry and satisfy itself whether the evidence relied upon by the employer
establishes the misconduct alleged against the workman. The criticism E
advanced against the award of the Tribunal is that evidence of three witnesses
recorded at enquiry being sufficient to record the guilt of respondent No. 1,
that evidence has been ignored and irrelevant considerations such as non-
examination of complainant Smt. Parul Rani Chowdhury, non-production of
money and non-availability of other evidence not on record is taken note of
and, therefore, its award is vitiated. The Division Bench too fell in the same F
error, it is contended.

If we look at the evidence adduced in the present case, it is given by
three witnesses who are the officers of the appellant-Bank - (i) Shri A.R. Dutt,
the Branch Manager, (ii) Shri S.K. Mitra, Head Clerk and (iii) the present Bank G
Manager. The evidence of Shri A.R. Dutt is that on the date of occurrence
a lady depositor produced two pay-in-slip consisting of draft application
forms and a saving bank deposit form, each for Rs. 1,000 only plus Bank's
commission for draft application form which were passed by the Accounts
clerk f~f ieposit -in. cash department. The amount was received by the first
respondent' who''\\ta's· acting as Head Cashier. The lady customer did not
I
H
320 SUPREME COURT REPORTS (2000] SUPP. 3 S.C.R.

A produce the savings bank pay-in-slip at the cash counter but delivered Rs ..
3,000 as told by her to him with two draft application forms. At about 1 p.m.
the lady with her husband came to him and complained that she had deposited
Rs. 3,000 and odd with the cashier but did not receive the savings Bank pay-
in-slip nor the excess amount refunded to her by the Cashier. On the receipt
B of the information he personally went to the cash department and checked
the- cash but did not find any excess amount therein. On asking the first
respondent about the amount received by him he completely denied the same.
He asked the Accountant to check the cash in the strong room and searched
the Cashier concerned whether he has any cash of Rs. l ,000 with him. There
was no excess cash found in the strong room. When at about 4.30 p.m. he
C asked the Accountant to search the Cashier, respondent No. I, the Accountant
then started checking him, he personally went out of room and saw the first
respondent throwing the bundles of notes by the side of the wall in the
accounts department, the possession of which was taken by him and he
questioned respondent No. 1 about the same. Respondent No. 1 told him that
he had put the money in his socks. On next Monday he took a statement in
D writing duly signed by the first respondent and reported the matter to the
Head Office and thereafter respondent No. I was put under suspension under
instructions from Head Office. In the cross-examination nothing worthwhile
was elicited to tilt the evidence tendered in the examination-in-chief. This
statement of Shri A.R. Dutt is corroborated by Shri S.K. Mitra who was Head
E Clerk at the relevant time. Again nothing worthwhile is elicited in his cross-
examination except to state he belonged to S.B.S.S.A. The Tribunal, however,
went on to say that even though the first respondent had not examined
himself nor was any cross-examination directed at the witnesses to the question
of his being a victim of conspiracy by the employees of the appellant-Bank
who are members of another rival Union to which he belonged and placed
F heavy reliance on non-examination of complainant, non-production of money,
non-production of so-called confessional statements and non-production of
any evidence which may have been available. But as far as the evidence
tendered by the two witnesses is concerned who actually saw the incident
having taken place in the manner referred to earlier, the charge of misconduct
G against the first respondent stood proved to the hilt and we fail to appreciate
as to how the Tribunal could have taken any other view.

A customer of the Bank need not be involved in a domestic enquiry ·
conducted as such a course would not be conducive to proper Banker
customer relationship and, therefore, would not be in the interest of the Bank.
H Further, when money was secured a prudent banker would deposit the same
ST ATE BANK OF INDIA v. TAR UN KUMAR BANERJEE [RAJ END RA BABU, J .] 321

in the account of the customer complainmg of loss of money and, therefore, A
non-production of money also would not be of much materiality. When in the
course of the domestic enquiry no reliance was placed on the so-called
confessional statement made by the first respondent, then non-production of
the same is also of no significance. Thus, in our opinion, these circumstances
are irrelevant and the Tribunal could not have placed reliance on the same
to reach the conclusion it did and, therefore, the learned single Judge was B
justified in interfering with the same. In the writ appeal the learned Judges on
the Division Bench reiterated the view expressed by the Tribunal which we
have found t...> be fallacious.

At this stage, it is necessary to notice one argument that was urged on C
behalf of the first respondent, namely, that in the course of the order dismissing
the first respondent from service it is noticed as follows :

"In summing up after going through the issue raised by Shri Banerjee
in detail, I am of opinion that a domestic enquiry like ours does not
give any scope for producing all evidence.s whether having direct D
bearing in the case or not as is being done in a Court."

It is submitted that even if evidence is withheld, the co~clusion of the
inquiry officer would be correct is a perverse approach. We do not think so.
What is stated therein is that when sufficient evidence was produced to
conclude one way or the other, the evidence not produced will not be of any E
significance unless there was such evidence which was withheld would have
tilted the evidence adduced in the course of domestic enquiry. No such
evidence is forthcoming in this case. Therefore, this argument deserves to be
rejected.

For the foregoing reasons, we have no hesitation in setting aside the F
order made by the Division Bench of the High Court and restore that of the
learned single Judge.

For the aforesaid reasons, this appeal is allowed as stated above.

M.P. Appeal allowed.