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PETITIONER: CENTRAL BANK OF INDIA LTD.

       Vs.

RESPONDENT: KARUNAMOY BANERJEE

DATE OF JUDGMENT: 18/08/1967

BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. HIDAYATULLAH, M.

CITATION:  1968 AIR  266            1968 SCR  (1) 251  CITATOR INFO :  R          1968 SC 236  (9)

ACT: Industrial  Dispute--Domestic  Enquiry--Employee   admitting charges  and pleading  extenuating  circumstances--Examining him before other witnesses and asking him questions  whether violative of natural justice.

HEADNOTE: The respondent who was an employee of the appellant bank was charged   with   issuing  unauthorised   overdrafts   to   a constituent.   A domestic enquiry was held against him.   In two written explanations before the enquiry he admitted, the allegations   against  him  and  only  pleaded   extenuating circumstances.  At the enquiry he was examined in the  first instance;  having  again  admitted his fault  he  was  asked certain  questions by the Enquiry Officer in respect of  the extenuating   circumstances  pleaded  by  him.    Two   more witnesses  were  then  examined  by  the  Enquiry   Officer. Finally, according to the latter’s report the respondent was discharged.   In  proceedings  under  s.  33(2)(b)  of   the Industrial Disputes Act, 1947 the Labour Court, Dhanbad held that  the enquiry was bad for violation of  natural  justice inasmuch  as the respondent had teen examined  before  other witnesses and was unduly cross-examined.  The bank  appealed by special leave. Held:  The  rules of natural justice as laid  down  by  this Court  have  to- be observed in the conduct  of  a  domestic enquiry against a workman.  If the allegations are denied by the  workman  the  burden  of proving  the  truth  of  those allegations  will  be on the management; and  the  witnesses called  by  the  management must be  allowed  to  be  cross- examined  by the workman and the latter must also be   given an  opportunity  to  examine himself and  adduce  any  other evidence that he might choose, in support of his plea.   But if  the  workman  admits  his  guilt,  to  insist  upon  the management to let in evidence about the allegations will  be an  empty formality.  In such a case it will be open to  the management to examine the workman himself, even in the first instance,  so as to enable him to offer any explanation  for his   conduct,  or  to  place  before  the  management   any circumstances  which will go to mitigate the gravity of  the

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offence.  But,  even then, the examination of  the  workman, under   such   circumstances,  should  not  savour   of   an inquisition.   If, after the examination of the workman  the management  chooses  to examine any witnesses,  the  workman must  be  given a reasonable  opportunity  to  cross-examine those  witnesses and also to adduce any other evidence  that he may choose. [259D-F] In   the  present  case  the  respondent  in   his   written explanations  had admitted the charges and  therefore  there was no violation of natural justice in first examining  him. The questions put to him were not unfair.  The Labour  Court was  wrong in not giving approval to his  discharge.  [258F; 259A, G] Associated Cement Co. Ltd., v. Workman [1964] 3 S.C.R.  652, distinguished. Strawboard  Manufacturing  Co.  v. Gobind,  [1962]  Supp.  3 S.C.R. 618, referred to.251 252

JUDGMENT: CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 440 of 1966. Appeal by special leave from the order dated May 30, 1964 of the Central Government Labour Court, Dhanbad in  Application No. L.P. 123 of 1962. H.   R.  Gokhale, C. A.,Chopra, P. C. Bhartari, land  0.  C. Mathur, for the appellant. Janardan Sharma, for the respondent. The Judgment of the Court was delivered by Vaidialingam,  J.  This  appeal, by special  leave,  by  the appellant Bank, is directed against the order, dated May 13, 1964,  of  the Central Labour Court, Dhanbad,  rejecting  an application,  filed by the Bank, under s. 33(2)(b),  of  the Industrial Disputes Act, 1947 (Act XIV of 1947) (hereinafter called  the  Act), and declining to grant  approval  of  the action  taken,  by  the  Bank, by  way  of  discharging  the respondent-workman, from the Bank’s services. The respondent was, at the material time, the Assistant  Ac- countant,  at the main Office of the Bank, at Calcutta.   In view  of certain serious irregularities,  noticed  by  the Bank,  in  respect  of the work of  the  respondent  in  the Current  Accounts Department and, in particular, in  current account ledgers Nos. 4 and 6, by order dated March 8,  1961, the respondent was suspended, with immediate effect.  He was also  informed  that  the  charges  against  him  would   be communicated, in due course. By  a  further communication, dated March 13/14,  1961,  the respondent was required to offer his explanation, in respect of  four  allegations made in the said  communication.   The main  allegations were that, in respect of ledger  ’accounts Nos.  4 and 6, standing in the names of Messrs.   Commercial Bureau  and  Messers Evergreen Paper Syndicate  and  Messrs. Gokul  Chand  Radharam, respectively,  overdrafts  had  been allowed,  by  the  respondent, from time  to  time,  without obtaining the sanction of the authorities competent to allow overdrafts.   The other allegations were to the effect  that the respondent, who was charged with the duty of supervising both  these  ledgers. did not bring to the  notice.  of  the authorities the said irregularities, that must have come  to his  knowledge, and that the pass -book of ledger No. 4  was missing.  The respondent sent a reply, dated March 17, 1961, wherein he has admitted that, in the course of discharge  of his  routine duties and responsibilities, in good faith  and honestly, he had granted overdrafts to the parties  referred

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to, by the Bank, temporarily, in excess of their credits  or limits,  without  reference to the higher  authorities.   He also admitted that it was a blunder on his part and that  he should not have done so.  He offered an explanation to,  the effect  that he was led to believe in the  credit-worthiness of  the individuals, because of their long association  with the  Bank  and  also  because of the  fact  that,  on  prior occassions, overdrafts 253 had  been granted to them, in excess of permissible  limits. He  also  stated  that  the Bank had not  been  put  to  any financial loss because of his having granted the overdrafts; but,  he  again  admitted his negligence,  in  not  strictly abiding  by the Bank’s rules, when he made  the  overdrafts. He,  however, added that his conduct had always been  guided by  good faith and honesty.  This Was the answer,  regarding the main allegations, contained in the Bank’s letter,  dated March  13/14,  1961.  He also stated,  regarding  the  other minor allegations, that it was not his duty to report  about the  debit balances, which was the function of  the  ledger- keeper, and that he was not also responsible for the loss of the pass book, of ledger No. 4. He wound-up his  explanation by  stating  that  his conduct, in  making  the  overdrafts, without  obtaining the sanction of the higher  authorities,, was an omission which had been, unfortunately, committed  by him,  and he expresed regret for the same and requested  the management to excuse him, accepting his explanation. The  appellant Bank was not satisfied with  the  explanation offered by the respondent, and communicated a  charge-sheet, on   June  3,  1961.   The  main  charges  related  to   the overdrafts, paid by the respondent, in ledger Nos. 4 and  6, without  obtaining the permission of the proper  sanctioning authority.   The Bank also informed the respondent  that  he would,  be  given  a  further  opportunity  to  explain  his conduct, in relation to those matters, and defend himself in the enquiry which would be held by the Agent of the Bank, on June 20, 1961, at 3.30 p.m. The  respondent again sent a reply, dated July 11, 1961,  to the  charge-sheet  served on him.  In this  reply  also,  he admitted  that,  in the course of discharge of  his  routine duties  and  responsibilities, he had allowed  the  parties, mentioned  in  the charge-sheet, to overdraw, in  excess  of their credits, without reference to the higher  authorities, and  that it was a blunder on his part which he  should  not have  committed.  But, he again reiterated that he, in  good faith  and bona fide, was led to believe about  the  credit- worthiness  of the parties, who had long  association,  with the Bank.  He also emphasized, here again, that the Bank had not been put to any financial loss, because of his  conduct. He  again admitted that this act of permitting  the  parties concerned  to overdraw, in excess of their  limits,  without reference  to  the  sanctioning  authorities,  amounted   to negligence,  but  his conduct was perfectly  bona  fide  and honest.   He  also offered explanation, on the  minor  alle- gations,  to the effect that it was the duty of the  ledger- keeper to give the figures regarding the overdrafts and that he had not done any mis-reporting to the higher authorities. Finally  he  made  a  plea that  he  had  been  serving  the institution  for over 20 years without any blemish, and  the unfortunate  omission,  done by him, in the  matter  of  not taking  the  sanction of the higher  authorities,  might  be excused, accepting his expression of regret, 254 The inquiry proceedings (conducted by the Agent, who was the Inquiry  Officer), produced before the Labour  Court,  shows

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that  the  respondent was examined in  the  first  instance. After  eliciting  answers  regarding  the  duration  of  his employment, in the institution, and as to the nature of  the work he was discharging, he was asked about the charge-sheet served on him, as well as the explanation, furnished by him. The respondent has categorically answered to the effect that he has understood the charge-sheet and that he does not want to add anything more to the explanation that he has  already submitted.    This  answer  must  have  reference   to   the explanation,  furnished by him, on June 20, 1961, in  answer to the charge-sheet, wherein he has admitted his mistake  in sanctioning the overdrafts, to the parties concerned,  with- out  obtaining the sanction of the appropriate  authorities. But, inasmuch as he has stated, in his explanation, that  on prior occasions also overdrafts have been allowed beyond the permissible  limits, certain questions were put to  him,  in respect of those matters.  The respondent, no doubt, appears to  have  stated  that some of the cheques,  issued  to  the parties concerned, have been initialled by an Officer of the Bank,   Mr.  Bhatena.   The  respondent,   again,   squarely admitted, in his answers, that he has committed a blunder in granting  advances, on his own responsibility, of about  Rs. 87,000.   He  has  also admitted that he did  not  make  any reference to the Agent, when passing the cheques,  regarding the  accounts  of  Messrs.   Evergreen  Paper  Syndicate  or Messrs.  Gokul Chand Radharam. During the course of the inquiry, the respondent was allowed to search the records concerned, and trace, if possible, any cheques that may have been initialled by Mr. Bhatena, and no such  cheque  could  be traced.   Inasmuch  as  three  other officers,  whose conduct was being enquired into,  had  made certain  statements against the respondent, the  latter  was asked  as to whether he wanted to examine, or  cross-examine those  persons; and the respondent very clearly stated  that he did not like to cross-examine anybody. The Management then examined Mr. Bhatena and Mr. Savkar, two Officers of the Bank, in the presence of the respondent.  It is  also  seen  that the respondent  has  also  put  certain questions  to  those two witnesses; and he has  also  stated that he has no further questions to be put to them.  At  the conclusion of the recording of the evidence, it is seen that the  respondent  finally  made an appeal  to  the  Enquiring Officer  to consider his case sympathetically, at  the  same time admitting his acts of omission, in the discharge of his duties.  He has also expressed his gratitude for the patient hearing that has been given to him during the inquiry. The Enquiry Officer, in his report, dated November 10, 1961, has, after referring to the nature of the enquiry  conducted by him, 255 found  the respondent guilty of the main charges  of  having permitted  the  parties  concerned,  to  obtain  overdrafts, beyond  the permissible limits, without having obtained  the sanction   of   the  appropriate   authorities.    In   this connection,  the  Enquiry Officer has referred to  the  fact that these allegations have been admitted by the respondent. Regarding  the other minor allegations, that the  respondent caused other officers to record debit balances  incorrectly, and the loss of the pass book relating to ledger No. 4,  the respondent  was exonerated.  The Enquiry Officer was of  the view that the offence committed by the respondent, of  which he  had, been found guilty, was very serious  which  merited dismissal;  but,  in  view of the long number  of  years  of service put in by the respondent and as no loss has resulted to  the Bank itself, he held that the respondent  should  be

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discharged from service. The Bank communicated the order of discharge, by its letter, dated  June 27, 1962, enclosing a pay-order for  Rs.  472.70 being  the  wages  for  one month,  viz.,  July  1962.   The respondent, who had a right to file an appeal, against  this order  of discharge, based upon the finding of  the  Enquiry Officer, does not appear to have had recourse to any appeal, but,  on the other hand, filed a representation, dated  July 11,  1962,  before the Managing Director  of  the  appellant Bank.   Even  in  this representation, he has  not,  in  any manner,  attacked the enquiry proceedings, nor the  findings recorded  by  the Enquiry Officer.  On the  other  hand,  he again admitted his fault in having permitted, overdrafts, to the parties concerned, without obtaining the sanction of the appropriate  authorities  after expressing  regret  for  his conduct.  He also stated that the Bank had not suffered  any financial  loss, because of his conduct.  Having due  regard to these circumstances, he made a plea for mercy being shown to him, by cancelling the order of discharge and  permitting him  to  resume  his  duties  in  the  Bank.   The  Managing Director,  by his communication, dated September  17,  1962, rejected  the  representation made by  the  respondent,  and declined to reinstate him in the Bank’s service. In  the  meanwhile, inasmuch as an  industrial  dispute  was pending   before  the  National  Industrial  Tribunal,   the appellant  had  filed,  an  application,  before  the   said Tribunal,  on  March 17, 1962, under s. 33(2)  of  the  Act, seeking approval of the action taken against the respondent, on  the basis of the recommendation of the Enquiry  Officer. This  application was transferred to the Central  Government Labour Court, Dhanbad, on April 18, 1962. in the objections, dated September 2, 1963, filed by the respondent before  the Labour Court, for the first time he raised the plea that  in view  of  the advice given by the officers of the  Bank,  he sent  replies admitting his guilt regarding the  allegations made against him, by the Bank.  He also raised the plea that the  overdrafts,  that  were given by him,  to  the  parties concerned, were 256 really  due to oral orders given by the then Agent  and  the Superintendent, on telephone.  He also raised the plea  that he was not allowed to represent his case, through the Union, before  the  Enquiry Officer, nor was he allowed  to  cross- examine the persons making allegations against him. We  have  elaborately  referred to  the  matters,  mentioned above, because the question, that arises for  consideration, in this appeal, is as to the correctness of the view of  the Labour  Court,  that the domestic enquiry conducted  by  the Bank,  as  against  the respondent, is  not  fair  and  that principles  of  natural  justice have  been  violated.   The Labour  Court, by its order under attack. has held that  the domestic  enquiry, conducted by the Bank, is not proper  and that  rules of natural justice have not been observed;  and, in  consequence,  it  has declined to  grant  the  approval, sought for, by the Bank. At this stage, it may be mentioned that the Labour Court has held in favour of the management, that it has complied  with the  proviso to s. 33(2)(b) of the Act, as  interpreted,  by this Court, in its decision in Strawboard Manufacturing  Co. v.  Gobind(1).  That is, it has held that the action of  the Bank,  by way of discharge, payment of wages and  making  of the application for approval, have been taken as part of the same  transaction.   For coming to the conclusion  that  the inquiry  proceedings are violative of the rules  of  natural justice, the Labour Court has given three reasons (i) in the

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inquiry, the respondent has been examined, even in the first instance,  and  he was cross-examined, to elicit  points  in support of the charges; (ii) the respondent was not  allowed to  crossexamine  witnesses; and (iii)  the  respondent  was prejudiced, in his defence, as he had to conduct his defence without the assistance of the Union, during the enquiry. There  can be no controversy that the principles of  natural justice  must  be  observed, in the conduct  of  a  domestic enquiry,  and  the  workman,  concerned,  must  be   allowed reasonable opportunity to defend himself.  It has also  been held,  by this Court, that rules of natural justice  require that  the  workman, proceeded against,  should  be  informed clearly  of  the  charges levelled  against  him;  witnesses should be normally examined in the presence of the employee, in  respect of the charges; if statements, taken  previously and  given by witnesses, are relied on, they should be  made available  to  the workman concerned the workman  should  be given  a  fair opportunity to examine  witnesses,  including him-self in support of his defence; and the Enquiry  Officer should  record  his  findings, based upon  the  evidence  so adduced. So  far as grounds Nos. 2 and 3, given by the  Labour  Court are  concerned, it is clear from the record of  the  enquiry proceedings,  that  the  respondent  was  permitted  to  put questions  to Mr Bhatena and Mr. Savkar, who were  examined, during the enquiry (1) [1962] Supp. 3 S.C.R. 618. 257 We  have also referred to the fact that the Enquiry  Officer has  recorded that the respondent has stated that he has  no further questions to be put to them.  We have also  referred to  the  fact  that the inquiry proceedings  show  that  the respondent was specifically asked as to whether he wanted to examine  or  cross-examine the three other  Officers,  whose conduct  was  also under enquiry, and who had  made  certain statements  against  the  respondent;  but  the   respondent categorically  stated  that he did not like  to  examine  or cross-examine any of those persons.  The respondent has  not stated,  even  in  the representations made by  him  to  the Managing Director, that he was not given any opportunity  to cross-examine the witnesses produced in the inquiry.  Again, even in his evidence before the Labour Court, the respondent has  categorically stated that he has not made any  request, in  writing,  for  being represented by the  Union,  at  the inquiry.   Apart  from the fact that he has no  such  right, even  factually  it is seen that he made  no  such  request. Therefore  the findings of the Tribunal that the  respondent was not permitted to cross-examine the witnesses during  the domestic enquiry, and, that he was prejudiced in his defence because  he was not permitted to have the assistance of  the Union, are both erroneous. Then  the question is as to whether the inquiry  proceedings can be considered to have been conducted in violation of the rules  of  natural justice, inasmuch as the  respondent  was examined,  even  in  the first instance.   We  have  already indicated  that, as a fact, it is borne out by  the  records that  the respondent, so far as the inquiry against him  was concerned,  was  examined, in the first  instance,  and  Mr. Bhatena  and Mr. Savkar, were examined later.  According  to the Labour Court, the object of the management, in examining the  respondent, in the domestic enquiry even in  the  first instance,   was  to  have  the  charges   substantiated   by statements got out of the mouth of the employee, rather than to  examine  witnesses  for  the Bank,  in  support  of  the charges.   It is the further view of the Labour  Court  that

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the respondent has been, so to say, cross-examined, just  to elicit  points  in  substantiation of  the  charges.   These circumstances,  according to the Labour Court,  violate  the principles  of  natural  justice and, as  such  vitiate  the domestic enquiry. In this connection, the Labour Court has relied upon certain observations,  contained  in the judgment of this  Court  in Associated Cement Co. Ltd., v. Workmen(1) viz.:               "It  seems  to  us  that it  is  not  fair  in               domestic    enquiries    against    industrial               employees that at the very commencement of the               enquiry, the employee should be (1)  [1964] 3 S.C.R. 652, 661. 258               closely cross-examined, even before any  other               evidence is led against him." and draws the inference that under no circumstances should a workman,  whose  conduct  is  the  subject  of  disciplinary proceedings, by a domestic tribunal, should be examined,  in the  first  instance.  We are of the opinion  that  no  such conclusion  could  be drawn from the decision,  referred  to above.   In that case, it will be Seen’, the management  had charge-sheeted one Malak Ram, with disorderly behaviour when a  cinema, show was being given.  Malak Ram, at all  stages, stoutly  denied his having taken part in any hooliganism  or rowdyism,  as  alleged  by  the  management.   Under   those circumstances,  instead of adducing evidence, in  the  first instance, regarding the allegations made against Malak  Ram, in  the  domestic  enquiry,  the  management  commenced  the proceedings,  with  a very close examination  of  Malak  Ram himself.   The  nature  of the questions  put  to  him  also clearly indicated that the worker was being  cross-examined, and  answers  sought  to  be  elicited  in  support  of  the allegations  made by the management.  This Court, in  coming to  the conclusion that the conduct of an enquiry,  in  that manner,  constitutes a very serious infirmity, made the  ob- servations, quoted above.  Therefore, it will be seen,  that in that case, when the workman concerned was totally denying the  allegations  made against him, it was the duty  of  the management  to  let in evidence, in the first  instance,  to substantiate  its  allegations, and permit  the  workman  to cross-examine those witnesses and also permit him to let  in independent evidence, in defence of his plea; and this Court emphasized  that  the normal rule to be followed,  in  such, enquiries, is, as stated above. In  the  case  before us, we have already  referred  to  the various  proceedings  that have taken place, from  which  it will  be seen clearly that the workman was’ at  all  stages, admitting the truth of the allegations made against him,  by the management.  In his communication, dated March 17, 1961, as  well  as, in his reply, to the charges, made by  him  on June  20, 1961, he has ‘categorically admitted that  he  has committed a mistake in permitting the constituents concerned to   overdraw,  without  obtaining  the  sanction  of,   the appropriate authorities.  Even when the enquiry  proceedings began,  he  had stated that he had nothing more to  add,  in respect  of the charges framed against him.  When once   the workman  himself  has,  in answer  to  the  charge  levelled against him, admitted his guilt, in our opinion, there  will be  nothing more for the management to enquire  into.   That was  the position in the case before us.  Therefore, we  are not inclined to agree with the reasoning of the Labour Court that  when  there has been an admission’ of  guilt,  by  the respondent himself, it can still be stated, that there is  a violation  of  the  principles  of  natural  justice  merely

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because  of the fact that the workman was examined,  in  the first  instance.   Nor, are we impressed  with  the  further view,  expressed by the Labour Court, that the way in  which answers 259 were elicited from the workman, showed that there has  been a cross-examination, by the management, to obtain points  in substantiation  of  the charges.  We have gone  through  the entire  examination  of  the  respondent  at  the   domestic enquiry,  and  we  are  satisfied  that  there  is  no  such infirmity.   In fact, the question of the management  trying to obtain answers to support the charges, does not arise  at all,  in this case because the respondent  has  consistently admitted  his guilt, at all stages.  On the other hand,  the nature  of  the  questions put  to  the  respondent  clearly indicate  that  the management, when once the  workman  had, admitted  his guilt, was only giving him an  opportunity  to explain  his conduct or to refer to circumstances,  if  any, which  could  be taken into account in  extenuation  of  his conduct.   The management had also permitted the  respondent to put questions to the other two witnesses, examined during the enquiry, viz., Mr. Bhatena and Mr. Savkar. We  must, however, emphasize that the rules of natural  jus- tice, as laid down by this Court, will have to be  observed, in the conduct of a domestic enquiry against a workman.   If the  allegations are denied, by the workman, it is  needless to  state  that  the burden of proving the  truth  of  those allegations  will be on the management; and,  the  witnesses called,  by  the management, must be allowed  to  be  cross- examined, by the workman, and the latter must also be  given an  opportunity  to  examine himself and  adduce  any  other evidence that he might choose, in support of his plea.  But, if the workman admits. his guilt, to insist upon the manage- ment to let in evidence above the allegations, will, in  our opinion,  only  be an empty formality.  In such a  case,  it will  be  open  to the management  to  examine  the  workman himself, even in the first instance, so as to enable him  to offer  any explanation for his conduct, or to  place  before the  management any circumstances which will go to  mitigate the gravity of the offence.  But, even then, the examination of the workman, under such circumstances, should not  savour of  an  inquisition.   If,  after  the  examination  of  the workman,  the management chooses to examine  any  witnesses, the workman must be given a reasonable opportunity to cross- examine  those  witnesses  and  also  to  adduce  any  other evidence’ that he may choose. Having considered the enquiry proceedings, in its  entirety, in  this  case,  we are satisfied that  there  has  been  no violation  of the rules of natural justice.   Therefore,  it follows  that  the order of the Labour  Court,  refusing  to grant  approval,  as  asked  for,  by  the  management,   is erroneous and, as such, it is set aside.  In the result, the appeal is allowed-, but parties will bear their own costs in this appeal. G.C.                                    Appeal allowed. 260