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CASE NO.: Special Leave Petition (civil) 13668-13669  of  1999

PETITIONER: JANATHA BAZAR (SOUTH KANARA CENTRAL

       Vs.

RESPONDENT: VS.

DATE OF JUDGMENT:       21/09/2000

BENCH: M.B. Shah, & D.P. Mohapatra.

JUDGMENT:

Shah, J.

Leave granted.

Heard learned counsel for the parties exhaustively. L...I...T.......T.......T.......T.......T.......T.......T..J

   The  question involved in these appeals isWhether  High Court  was  justified in confirming the order passed by  the Labour  Court  reinstating the respondents-workmen with  25% back  wages  inspite  of specific finding of fact  that  the charges of breach of trust and misappropriation of goods for the  value  given  in  the said  charges  had  been  clearly established.   Apparently,  it  would   be  an   unjustified direction  to  reinstate an employee against whom charge  of misappropriation   is   established.    A  proved   act   of misappropriation  cannot be taken lightly even though number of  such misappropriation cases remain undisclosed and  such employees  or  others  amass wealth by such means.   In  any case,  misappropriation  cannot be rewarded or legalised  by reinstatement in service with full or part of back wages.

   The  matrix of the facts as culled out from the case are thatthe  appellant  is  a Co-operative  Society  registered under  the Karnataka Co- operative Societies Act, 1959.  The Management  charged  four  of  its  employees,  namely  Smt. Seetha  B., Sri D.  Chandrashekhar, Sri Madhukar Shetty  and Sri   B.    Damodhar  Naik,  with   breach  of   trust   and misappropriation   of  the  value  of  goods  amounting   to Rs.24,239.97  and Rs.19,884.06 during the period 1.7.1977 to 30.6.1978.  The said charges were based on shortage of goods noticed  on  stock verification for the above  said  period. After  holding an enquiry, the management dismissed all  the above employees.  Thereafter, the employees Union raised an industrial  dispute and on 26.6.1981 a reference was made by the  Government  to  the  Labour  Court,  Managalore,  under Section 10 of the Industrial Disputes Act, 1947 (hereinafter referred  to as the Act) in I.D.  No.45/1981.  The  Labour Court  considered  the documentary evidence produced by  the Management;   the audit report for the relevant period  from 1.7.1977  to  30.6.1978;   the admissions  of  the  indicted

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workmen  who  deposed  that  the goods were  sent  to  their counters for sale by means of supply slips and the fact that they  have not accounted for the shortage of goods  noticed, the  value  of  which  is given in  the  audit  report,  and recorded the finding that the charges of breach of trust and misappropriation of the goods entrusted to them of the value given  in the charges have been clearly established.  In the award  passed  by  the  Labour Court, there  is  a  thorough discussion of the evidence adduced by the Management and the Workmen  and sufficient reasons are given in support of  the finding  that  the charges alleged against the  workmen  are proved.   After  recording  evidence and  hearing  both  the sides,  the Labour Court vide its award dated 30.1.1995 held that  the charges of breach of trust and misappropriation by the  employees  were proved.  However, the Labour  Court  in exercise of its discretionary power under Section 11A of the Act ordered their reinstatement with 25% of back wages.  The Labour Court further ordered for continuity of their service by  imposing  penalty  of  stoppage  of  5  increments  with cumulative  effect and for fixing their pay on the basis  of imposition  of such penalty from the date of their dismissal till  the  date of reinstatement.  Against the award of  the Labour  Court, both the parties filed writ petitions  before the  High  Court  of Karnataka.  The  Learned  Single  Judge confirming  the  award passed by the Labour Court  dismissed both the writ petitions.

   Being  aggrieved  by  the  common order  passed  by  the learned  Single  Judge, both the parties filed Writ  Appeals No.  8795 of 1996 and 1954 of 1997 before the Division Bench of the High Court.  The Division Bench found that the Labour Court  had  arrived  at   its  conclusion  after  thoroughly considering  the entire evidence and, therefore, it did  not call  for  any  interference.  Further, with regard  to  the question   whether  the  Labour   Court  was  justified   in interfering  with  the  order  of dismissal  passed  by  the Disciplinary  Authority  in  exercise of  its  powers  under Section  11A  of  the  Act,  the  High  Court  came  to  the conclusion  that the Labour Court gave reasons for coming to its  conclusion  and  those reasons could be  considered  as justifiable  and  sufficient grounds to interfere  with  the punishment  imposed by the employer.  By common judgment and order  dated  18.9.1998,  the writ appeals  were  dismissed. Hence, these appeals by special leave.

   As  stated  above,  the  learned Single  Judge  and  the Division  Bench in writ appeals confirmed the findings given by  the  Labour Court that charges against the  workmen  for breach  of trust and misappropriation of funds entrusted  to them  for  the value mentioned in the charge-sheet had  been established.   After giving the said findings, in our  view, the Labour Court materially erred in setting aside the order passed  by  the  Management removing the  workmen  from  the service  and reinstating them with 25% back wages.  Once act of  misappropriation is proved, may be for a small or  large amount,  there  is  no  question  of  showing  uncalled  for sympathy and re- instating the employees in service.  Law on this  point  is well settled.  [Re.:   Municipal  Committee, Bahadurgarh  v.   Krishnan  Behari and Others (1996)  2  SCC 714].  In U.P.  State Road Transport Corporation v.  Basudeo Chaudhary  and  Another [(1997) 11 SCC 370] this  Court  set aside  the judgment passed by the High Court in a case where a  conductor  serving  with the U.P.  State  Road  Transport Corporation  was  removed  from service on the  ground  that alleged  misconduct  of the conductor was attempt  to  cause

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loss  of Rs.  65/- to the Corporation by issuing tickets  to 23  passengers for a sum of Rs.2.35 but recovering @ Rs.5.35 per  head and also by making entry in the waybill as  having received   the   amount  of   Rs.2.35,  which   figure   was subsequently altered to Rs.2.85.  The Court held that it was not  possible to say that Corporation removing the conductor from   service   has   imposed   a   punishment   which   is disproportionate  to  his misconduct.  Similarly  in  Punjab Dairy  Development  Corporation Ltd.  and Another  v.   Kala Singh  and Others [(1997) 6 SCC 159], this Court  considered the  case  of  a  workman  who   was  working  as  a   Dairy Helper-cum-Cleaner  for  collecting  the milk  from  various centres  and was charged for the misconduct that he inflated the  quantum  of  milk  supplies in milk  centres  and  also inflated  the quality of fat contents where there were  less fat  contents.   The  Court held that in view of  proof  of misconduct  a necessary consequence will be that  Management has  lost  confidence that the workman would truthfully  and faithfully  carry on his duties and consequently the  Labour Court  rightly declined to exercise the power under  Section 11A of the I.D.  Act to grant relief with minor penalty.

   In  view  of the aforesaid settled legal  position,  the High  Court  materially erred in confirming  the  directions given   by   the   Labour     Court   in   reinstating   the respondent-workmen  with  25%  back wages.  For  giving  the aforesaid  direction, the Labour Court considered that there is  no  evidence regarding past misconduct by the  employees and,  therefore, it can be observed that they have  rendered several  years  of service without any blemish and  to  some extent, there was lapse on the part of the Management.

   In  case of proved misappropriation, in our view,  there is  no  question  of  considering past record.   It  is  the discretion  of  the  employer  to   consider  the  same   in appropriate  cases,  but the Labour Court cannot  substitute the penalty imposed by the employer in such cases.

   In  the  result, the appeals are allowed.  The  impugned order  passed  by the High Court confirming the award  dated 30.1.1995  passed  by the Labour Court is set aside.   There shall be no order as to costs.