Agricultural Produce Market Committee v. Ashok

The issue that arises in these writ petitions is having failed to prove the charges of misconduct that led to the dismissal of the employee, can the employer be permitted to rely upon very same charges to dispense with his services on the ground of loss of confidence?

These writ petitions can be decided by this common judgment as the judgment passed by the Industrial Court dated 12-7-2005 is under challenge at the instance of both the parties.

2. The petitioner in Writ Petition No. 5907/2005 shall be referred to as the employer, while the petitioner in Writ Petition No. 1311/2007 shall be referred to as the employee. Bereft of unnecessary details, the relevant facts are that the employee was appointed as a clerk with the Agricultural Produce Market Committee by employer on 13-10-1986. The employee was getting daily wages @ Rs. 20/- per day. During the course of service, a charge-sheet was issued on 5-2-1994 by the employer. The employee was put under suspension and an enquiry officer was appointed to hold the enquiry. Thereafter, a show cause notice was issued to the employee proposing to dismiss him from service. By order dated 10-8-1996, the employee came to be dismissed from service.

3. The employee filed the complaint before the Labour Court under Items 1(a)(b)(d) and (f) of Schedule-IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as the said Act). Prayer for reinstatement with continuity in service was also made. The employer filed his written statement and justified the order of dismissal. It was stated that after giving due opportunity to the employee, a proper enquiry had been conducted after which the punishment of dismissal from service was inflicted. Without prejudice, it was stated that the employer was willing to prove his misconduct on the charges levelled against the employee.

4. The Labour Court framed preliminary issue regarding fairness of the enquiry. By order dated 29-9-2004, the Labour Court while answering said preliminary issue held that the enquiry as held was not fair and proper and that the same had been held in breach of principles of natural justice. In the complaint, the employee did not adduce any evidence. However, the employer examined the Chairman, his driver and the Secretary of the Market Committee to prove their defence.

5. The Labour Court after considering the material on record held that the allegations of misconduct had not been proved against the employee. It held that the employer had not discharged its burden in that regard. It, therefore, held that the order of dismissal amounted to victimization thereby resulting in an unfair labour practice. Hence, by judgment dated 3-3-2005, the Labour Court partly allowed the complaint and after setting aside the order of dismissal, directed reinstatement of the employee with 50% backwages.

6. The employer who was aggrieved by aforesaid adjudication filed Revision ULP No. 23/2005 before the Industrial Court. The employee, however, accepted aforesaid order passed by the Labour Court. The Industrial Court held that though the employer had not proved the charges levelled against the employee, they had lost faith in the employee. It observed that though the charges were not proved either in the enquiry or before the Court, as the employer had lost confidence in the employee, he was liable to be compensated. It, therefore, set aside the order of reinstatement with 50% backwages and instead, directed the employer to pay compensation in the sum of Rs. 1,00,000/- to the employee. It further confirmed the findings recorded by the Labour Court of the employer having engaged in unfair labour practice.

7. The employer, therefore, has filed Writ Petition No. 5907/2005 challenging the order passed by the Industrial Court, while the employee has filed Writ Petition No. 1311/2007 seeking restoration of the order passed by the Labour Court.

8. Shri Abhay Sambre, learned Counsel appearing for the employer submitted that the employee was not entitled to any compensation whatsoever in view of the fact that the Industrial Court had found that the employer had lost confidence in the employee. He submitted that serious charges of misappropriation had been levelled against the employee and hence, he was not entitled to be awarded any compensation whatsoever. He further submitted that on account of seriousness of said charges, the order of dismissal ought to have been passed by the Industrial Court. He further submitted that the employee did not enter the witness box and did not offer himself for cross-examination. Therefore, his case could not have been accepted. In this regard, he relied upon decision of Division Bench in Ashok Udaram Pathrabe v. Maharashtra Remote Sensing Application Centre, Nagpur, 2007 (1) Mh. LJ. 519 He then submitted that even otherwise, the amount of compensation as awarded was without any basis and was on a higher site. To buttress aforesaid submissions, he relied upon Mahboob Deepak v. Nagpur Panchayat, Gajraula, (2008) 1 SCC 575, Assistant Engineer, Rajasthan Development Corporation v. Gitam Singh, 2013 (5) Mh. L.J 1, and Rattan Singh v. Union of India, (1997) 11 SCC 396. He, therefore, submitted that the writ petition filed by the employer deserves to be allowed.

9. In reply to aforesaid submissions, Shri M.P Jaiswal, learned Counsel for the employee submitted that it was not open for the Industrial Court to have substituted the order of reinstatement with 50% backwages by directing award of compensation. He submitted that on the one hand, the Industrial Court upheld the finding that unfair labour practice had been engaged by the employer and on the other hand, it had interfered with the order of reinstatement. He further submitted that the plea regarding loss of confidence was required to be specifically pleaded and proved. As the charges on which the enquiry was held itself were not held to be proved, it cannot be said that the employer had proved loss of confidence in the employee. He further submitted that once finding that the enquiry was vitiated was recorded, the burden to prove fairness of enquiry as well as the charges shifted on the employer and hence, it was not necessary for the employee to lead any evidence. In support of his submission that the Industrial Court should not have accepted the plea regarding loss of confidence, the learned Counsel relied on following judgments.

(1) Delhi Cloth and General Mills Co. v. Ludh Budh Singh, (1972) 1 SCC 595 : AIR 1972 SC 1031, (2) Shankar Chakravarti v. Britannia Biscuit Co. Ltd., (1979) 3 SCC 371 : AIR 1979 SC 1652 and 1979 LAB.I.C 1192, (3) President, Agricultural Produce Market Committee, Tumsar v. Murari Kapurchand Yadav, 1986 Mh. LJ. 258, (4) Chaganlal Prahladrai Singhania v. Maharashtra State Co-Operative Marketing Federation, Ltd., 1992 (1) CLR 332, (5) Vithal Gatlu Marathe v. Maharashtra State Road Transport Corporation, 1995 (1) CLR 854, (6) Harjinder Singh v. Punjab State Warehousing Corporation, 2010 (1) SCALE 613, (7) Gujarat Agricultural University v. All Gujarat Kamdar Karmachari Union, (2009) 15 SCC 335 : AIR 2010 SC 2507, (8) Devinder Singh v. Municipal Council, Sanaur, 2011 (5) Mh. LJ. 503, (9) Neeta Kaplish v. Presiding Officer, Labour Court, 1999 (I) L.L.J SC 275

He then submitted that the jurisdiction of the Industrial Court under section 44 of the said Act was very limited and there was no scope for interference with the finding recorded by the trial Court that the enquiry was not fair and proper. He submitted that in fact, the Industrial Court had affirmed the finding that unfair labour practice had been followed by the employer. He, therefore, urged that the order passed by the labour Court was required to be restored. He, thus, submitted that Writ Petition No. 1311/2007 was required to be allowed.

10. Shri Sambre, the learned Counsel for the employer in reply submitted that there was delay in filing aforesaid writ petition by the employee. There was no explanation given for approaching this Court belatedly. He, therefore, sought dismissal of the writ petition.

11. The question, therefore, that arises for consideration is whether the Industrial Court was justified in directing grant of compensation of an amount of Rs. 1 lakh to the employee despite maintaining the finding recorded by the Labour Court that the employer had engaged in unfair labour practice under Item 1 of Schedule IV of the said Act. After hearing the learned Counsel for the parties and after perusing the records of the cases, I am of the opinion that such course could not have been followed by the Industrial Court.

12. Certain admitted facts need to be noticed. The preliminary issue regarding fairness of inquiry was answered by the Labour Court holding that said inquiry was not fair. Accordingly the employer led evidence before the Labour Court to justify the order of dismissal on the basis of charges levelled against the employee. The Labour Court after considering said evidence, recorded a finding that the employer had failed to prove the misconduct that was alleged against the employee. This finding recorded by the Labour Court has been confirmed by the Industrial Court and it has been specifically observed in the impugned order that the employer had engaged in unfair labour practice by dismissing the employee from service on 10-8-1996.

13. In this background, the submissions as urged on behalf of the learned Counsel for the parties will have to be adjudicated. However, before doing so, it would be necessary to refer to the settled position of law while examining the validity of the exercise undertaken by the Industrial Court of substituting the punishment of dismissal from service by dispensing with the services of the employee on the ground that loss of confidence.

14. The Supreme Court in The Workmen of Assam Match Co. Ltd. v. Presiding Officer, Labour Court, Assam, 1973 (11) L.L.J 279, while considering the reason as regards loss of confidence while refusing the reinstatement in paragraph 8 observed as under:

“It is then urged that the Tribunal was justified in taking into account the fact that having regard to what has happened in the present proceedings, it should be held that the respondent has lost confidence in Dutt and that would be a ground for refusing reinstatement to him. This argument is plainly misconceived. We do not think it would be possible to accept the contention that event of an employer is shown to have dismissed his employee wrongfully and without justification, the fact that he has adopted such a course should be taken into account while determining whether the reinstatement should be ordered or not. It would, we think, be unfair to allow and employer in such a case to urge that though the charge framed against his employee was not justified, the fact that a domestic enquiry was held against him on such a charge has led to a loss of confidence in the mind of the employer, and so, the employee should not be reinstated. If this contention were to prevail the industrial employees who are illegally or unjustifiably dismissed would never get the relief of reinstatement.”

The Division Bench in Vinayak Bhagwan Shetye v. Kismet Pvt. Ltd., 1984 (1) L.L.J 203, while considering the effect of the fairness of inquiry not having been proved and justification on the part of the employer to discharge the employee on the ground of loss of confidence has observed as under in paragraphs 7 and 11:

“7. Now, it is difficult for us to see how the learned Judge of the Labour Court having positively discarded the enquiry proceedings on the ground that the enquiry was not fair and having found that even before the Labour Court the misconduct with which the petitioner was charged was not proved, could have proceeded to make out an entirely new case for respondent No. 1. At this stage Mr. John wanted to refer to the enquiry papers and the statements recorded during the course of the enquiry by the Enquiry Officer. Such a course was clearly impermissible because the enquiry has been rejected as not fair and once the enquiry has been rejected and the employer has been given the opportunity to prove the misconduct by adducing independent evidence before the Labour Court, the matter before the labour Court would have to be judged on the basis of such evidence as was adduced before the Labour Court.

11. It is difficult to see how the learned Judge could have entered into the question as to whether there was any loss of confidence in the employee because such was never the case of the employer. The action taken against the employee was clearly penal in nature. The order of dismissal was one by way of punishment. Such an order cannot be sustained on the ground that the employee was liable to be discharged from employment on the ground of loss of confidence. Such a course would mean that the basis on which the employer has taken the action is being substituted by the Court by another ground of termination which, in our opinion, is wholly impermissible to be done.”

Similarly, the Supreme Court in Kanhaiyalal Agrawal v. Factory Manager, Gwalior Sugar Company Ltd., (2001) 9 SCC 609 has highlighted the importance of pleading and proving the aspect of loss of confidence. In paragraph 9 it has been observed as under:

“9. Substantial contention on the merits of the case by the employer in these appeals is that the finding of loss of confidence in the employee by the Labour Court has been reversed in appeal by the Industrial Court on unreasonable grounds. What must be pleaded and proved to invoke the aforesaid principle is that (i) the workman is holding a position of trust and confidence; (ii) by abusing such position, he commits acts which results in forfeiting the same; and (iii) to continue him in service would be embarrassing and inconvenient to the employer or would be detrimental to the discipline or security of the establishment. All these three aspects must be present to refuse reinstatement on the ground of loss of confidence. Loss of confidence cannot be subjective based upon the mind of the management. Objective facts which would lead to a definite inference of apprehension in the mind of the management regarding trustworthiness or reliability of the employee must be alleged and proved. Else the right of reinstatement ordinarily available to the employee will be lost.”

15. With this legal position in mind it is necessary to consider whether the Industrial Court was justified in interfering with the order of reinstatement as passed by the Labour Court. The record indicates that the employer had accepted a finding recorded on the preliminary issue and had thereafter led evidence to prove the misconduct. That such burden was on the employer can hardly be debated. Said principle has been explained by the Supreme Court in para 38 of its decision in Delhi Cloth and General Mills Co. (supra). Observations of the Division Bench in Ashok Udaram Pathrabe (supra) cannot be made applicable to the facts of the present case as the burden to prove misconduct was solely on the employer. Said evidence was not found to be sufficient to bring home the charges as alleged against the employee. The finding in that regard recorded by the Labour Court has been affirmed by the Industrial Court. The loss of confidence as alleged was based on the very same charges for which the employer held the inquiry and had terminated the services of the employee. Having failed in proving the misconduct the employer cannot be permitted to rely upon very same charges to dispense with services of the employee on the ground of loss of confidence. Such course has not been found to be legally sustainable by the Division Bench in Chaganlal (supra).

In fact, as observed by the Supreme Court in Neeta Kaplish (supra), on the enquiry proceedings having been found to be bad, same would have to be ignored completely. The record of the enquiry proceedings could not be termed “material on record” in terms of section 11A of the Industrial Disputes Act, 1947.

16. Another aspect of the matter which is required to be considered is scope for interference under section 44 of the said Act. The revisional jurisdiction of the Industrial Court cannot be invoked to overturn findings of facts even if the same are erroneous. As observed by the Division Bench in Vimal Marathe (supra), said jurisdiction is limited and in the present case it was not open for the Industrial Court to have substituted the order of reinstatement with that of grant of compensation while dispensing with services of the employee on the ground of loss of confidence. Hence on that count also the order passed by the Industrial Court cannot be sustained.

17. As regards the plea raised on behalf of the employer regarding delay on the part of the employee in challenging the order passed by the Industrial Court dated 12-7-2005 it is to be noted that the Writ Petition was filed on 12-3-2007. In para 11 of the Writ Petition the employee has explained the reasons for not approaching this Court immediately. It is stated that on account of unemployment he could not make necessary arrangement to file the Writ Petition. Said aspect has not been denied in the reply filed on behalf of the employer. In the facts of the present case, especially when it has been found that the order passed by the Industrial Court cannot be sustained, I am not inclined to dismiss the Writ Petition filed by the employee on the ground of delay and laches.

18. The attempt on the part of the learned Counsel for the employer to justify grant of compensation in lieu of reinstatement by relying upon the decisions in Mahboob Deepak, Assistant Engineer and Rottan Singh (supra) cannot succeed as there is no occasion to dispense with the services of the employee in absence of misconduct being proved.

19. In view of aforesaid discussion the following order is passed:

1) The order dated 12-7-2005 passed by the Industrial Court in Revision ULP No. 23 of 2005 is set aside.

2) The order passed by the Labour Court dated 3-3-2005 in Complaint ULP No. 345 of 1996 is restored. Both the Writ Petitions stand disposed of with aforesaid observations. The amounts already deposited by the employer are permitted to be withdrawn by the employee and the amount of backwages shall be duly adjusted with the amount so withdrawn.

3) At this stage the learned counsel for the employer prays for staying the effect and operation of the judgment. Hence the operation of this judgment is stayed for a period of eight weeks from today.

Order accordingly.