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PETITIONER: L.   MICHAEL & ANR.

       Vs.

RESPONDENT: M/S.  JOHNSTON PUMPS INDIA LTD.

DATE OF JUDGMENT10/02/1975

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. ALAGIRISWAMI, A. SARKARIA, RANJIT SINGH

CITATION:  1975 AIR  661            1975 SCR  (3) 489  1975 SCC  (1) 574  CITATOR INFO :  RF         1980 SC1896  (68)  F          1985 SC 251  (6)  RF         1991 SC 101  (15,170,190)

ACT: Industrial  Disputes   Act  (14 of  1947)--Dismissal  of  an employee--Power  of  Tribunal  to  go  behind  an  order  of termination--Employer  must  disclose  the  grounds  of  his action  when  challenged as colourable  or  mala  fide--When Court should interfere with a finding of fact.

HEADNOTE: The  services of the appellant, who was an employee  of  the respondents,  were terminated by the latter by giving him  a month’s notice as per the standing orders without  assigning any   reasons  for  the  termination.    The   consequential industrial  dispute was referred to the Labour  Court.   The management  alleged that the dismissed employee misused  his position  by  passing on important  and  secret  information about the affairs of the company to certain outsiders,  that even  after  he was transferred to another section  he  made attempts to elicit information from the section with a  view to  pass  it  on  to outsiders,  and  that,  therefore,  the management  lost confidence in the employee  and  terminated his  services  by  a  bona fide  order.   The  Labour  Court confirmed  the  order  of termination.  In  appeal  to  this Court,  it was contended that, even where a  management  had the Power to terminate the services of its employees without reasons but with notice pay the colourable exercise of  that power  invalidated  the  order and the  Court  court  probe, beheath the surface to check upon the bona fides behind  the exercise-of the power, Allowing the appeal to this Court. HELD: 1(a) Ile Labour Court has misled itself on the law and its order should    be   set  aside.   The  word   will   be reinstated with back wages. [498 G] (b)  The  manner  of dressing up an order does  not  matter. The Court will lift the  veil   to  view  the   reality   or substance of the order. [495 F] (2)  (a)  ’The Tribunal has the power and. indeed, the  duty to  X-ray  the order and discover its true  nature,  if  the

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object  and effect, if the attendant circumstances  and  the ulterior purpose be to dismiss the employee because he is an evil  to be eliminated.  But if the management, to cover  up the inability to establish by an inquiry, illegitimately but ingeniously passes an innocent looking order of  termination simpliciter,  such  action is bad and is liable  to  be  set aside.   Loss  of  confidence  is  no  new  Armour  for  the management; otherwise security of tenure, ensured by the new industrial  jurisprudence and authenticated by a  catena  of cases  of  this Court can be subverted by this  neo  formula Loss of confidence in the law will be the consequence of the Loss of Confidence doctrine. [497 C-D] (b)  An employer who believe or suspects that _his employee, particularly  one  holding  a position  of  confidence,  has betrayed  that confidence, can, if the conditions and  terms of  the  employment  permit, terminate  his  employment  and discharge him without any stigma attaching to the discharge. But such belief or suspicion of the employer should not be a mere whim or fancy. it should be bona  fide and  reasonable. It must rest on some tangible  basis and the Power has to be exercised by the employer objectively, in good faith,  which means  honestly  and  with due care and  prudence.   If  the exercise of such power is challenged on the ground of  being colourable or mala fide or an act of victimisation or unfair labour practice. the employer must disclose to the Court the grounds  of  his  impugned action so that the  same  may  be tested judicially. [498 B-C] In  the instant case this has not been done.  There is  only the ipse dixit of the employer that he was suspecting  since 1968  that the appellant was divulging secrets  relating  to his business.  The employer has not disclosed the grounds on which this suspicion arose in 1968.  Further after 1968, the appellant was given 490 two extra increments in addition to his normal increments in appreciation of his hard work.  This circumstance completely demolishes even the whimsical and tenuous stand taken by the employer.  It was manifest that the impugned action was  not bona fide. [498 D] The  Chartered Bank v. The Chartered Bank  Employees’  Union [1960]  3  S.C.R.  441;  Murgan  Mills  Ltd.  v.  Industrial Tribunal,  Madras [1965] 2 S.C.R. 148 and Workmen of  Sudder Office,  Cinnamare  v.  Management,  [MO]  II  L.L.J.   620. followed. Air India Corporation Bombay v, V. A. Rebellow & Anr. [1972] 3 S.C.R. 606 distinguished. Delhi  Transport  Undertaking  v. Goel [1970]  II  LIJ,  20, referred to. (3)  It  is  true that this Court, in appeal, as a  rule  of practice,  is  loath  to interfere with a  finding  of  fact recorded by the trial court.  But if such a finding is based on  no  evidence  or is the result of a  misreading  of  the material  evidence or is so unreasonable or  grossly  unjust that  no reasonable Person would judicially arrive  at  that conclusion.  it is the duty of this Court to  interfere  and set matters right. [498 E-F]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1605 of 1972. Appeal  by Special leave from the Award dated  November  24, 1971 of the Labour Court, Delhi in L.C.I.C. No. 31 of 1971. M.   K. Ramamurthi and J. Ramamurthi, for the appellant. V.   M. Tarkunde, O. C. Mathur, D. N. Mishra, and Sudhir  K.

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Khanna, for the respondent. The Judgment of the Court was delivered by KRISHNA  IYER, J.-Industrial law in India has many  twilight patches,  illustrated by the present appeal  which  projects the  problem  of  an  employee  whose  services  have   been terminated   similiciter   by   the   Management,   a   pump manufacturing  enterprise,  issuing  a  notice  ending   the ,employment  and offering one month’s pay as  authorized  by the  relevant  Standing orders.  The thorny legal  issue  is whether  the  ipse dixit of the employer that  he  has  lost confidence  in  the  employee  is  sufficient  justification jettison the latter without levelling and proving the objec- tionable conduct which has undermined his confidence so that the  tribunal may be satisfied about the bona fides  of  the ’firing’ as contrasted with the colourable exercise of power hiding a not-so-innocuous purpose. The backdrop The  facts and circumstances become decisive of the fate  of the,  ,case even where the law is simplistic or fair in  its face.   Here,  what  are  the  events  and  environments  of employment  leading to the worker being given the boot ?  Is the  order  an innocent and, therefore,  legal  quit  notice sanctioned by the Standing Orders which does not  stigmatize the worker but merely bids him good-bye ? Oris it a sinister intent  to  punish as a guileless order based  on  ’loss  of confidence’,  an alibi which, on a certain reading  of  this Court’s  rulings,  is  also  a  protective  armour   against judicial probe and setting aside ? 491 Michael,  a permanent employee of proved efficiency and  six years   standing,  was  appreciatively  given  two   ’merit’ increments.  But a letter of September 2, 1970 told him  off service, giving him one month’s ’notice-pay’ discharging him without  damning, as distinguished from dismissing  him  for misconduct. The  rival versions illumine the factual confrontation,  the resolution  of  which is no easy legal essay.   The  worker, Michael,  through  his Union, protested against  the  ’sack’ order  as  victimisation of a Trade Union activist  but  the Management was heedless, conciliation was fruitless and  the dispute between the Union and the Management was  eventually referred by the Delhi Administration to the Labour Court for adjudication.  The reference ran thus               "Whether  the termination of services of  Shri               L. Michael is illegal and/or unjustified  and,               if so, to what relief is he entitled and  what               directions are necessary in this respect ?" Both  sides  stated their cases in their pleadings  and  the true nature of the conflict emerges from them. The  story set out by the employee in his  statement  before the  Labour  Court  was  that  although  he  was  efficient, appreciated and awarded merit increments, the Management was antagonized  by  his  active part in  the  formation  of  an Employees’  Union, especially because oral warnings  by  the Regional   Manager  against  his  Unionist  proclivity   was ignored.  Michael became the treasurer of the  Union.   This Union chapter claimed its price, for the Management  quietly terminated his services by a simple letter which reads:               "We are sorry to advise that your services are               no  longer required by the Company.  As  such,               this letter may be treated as a notice for the               termination  of your services  with  immediate               effect.   As for the terms of your  employment               letter, on termination of services you will be               paid one month’s salary extra.  You may please

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             call on the undersigned and have your accounts               settled." This  act, claims the worker, was ’in flagrant violation  of elementary  principles of natural justice without  assigning any  reason and without giving him an opportunity to  defend himself.    This,  in  his  statement  he   challenged   the termination as ’wrongful, mala fide, illegal, and an act  of victimisation’.   The counter case of the management get  up in  its statement, as is apparent from the discharge  order, is  that no dismissal is involved, no enquiry necessary  and no illegality invalidates. The management claimed that the alleged annoyance with  the, workman for union activity was a concoction in self-defence, as the Management had not even knowledge of the formation of the  Union.   This fatter limb of the plea is a  little  too naive.   The warning by the Regional Manager was denied  and the  reference to trade union activities by the  worker  was more  ’to  create a ground for the workman’s claim  and  has been  leveled as a matter of habit and routine.   The  basic plea of the management was that the action being a simple 492 termination without a sting, the process and consequence  of a disciplinary action were not attracted. The  Management, however, took the Court into confidence  to explain why the employee was discharged.  He was employed as a  Receipt and Dispatch Clerk in the office upto  10-3-1970. As an insider with a     to   office   correspondence    the employee misused his position by passing on ’very  important and  secret information about the affairs of the company  to certain  outsiders.  He was consequentially shifted  to  the post  of  clerk handling posting of bins and  collection  of payments  but the workman, although denied direct access  to correspondence  in  the Receipt and Dispatch  section,  made attempt ’to elicit information from the section with a  view to pass it on to outsiders’.  The upshot of these activities of which the management was alerted was a loss of confidence in  the employee.  This unreliability was visited with  non- injurious  termination  of  service by a  bona  fide  order. Therefore, the action was claimed to be legal and immune  to judicial interference. Two socially vital factors must inform the understanding and application  of Industrial jurisprudence.  The first is  the constitutional  mandate of Part IV obligating the  State  to make  ’provision for securing just and humane conditions  of work’.   Security of employment is the first requisite of  a worker’s  life.  The second equally axiomatic  consideration is that a worker who willfully or anti-socially holds up the wheels  of  production  or undermines  the  success  of  the business  is  a  high  risk  and  deserves,  in   industrial interest,  to  be removed-without  tears.   Legislation  and judicial  interpretation  have woven the legal  fabric.   We have  to see whether on the facts of the present  case  what the  relevant  law is, whether it has been  applied  by  the Labour Court rightly and whether the appellant has merit  on his  side,  judged  by the social  conscience  and  judicial construction  of  the  law  in  this  branch  of   discharge simpliciter versus disguised’ dismissal. A  few salient facts need emphasis before the principles  of law are applied.  The workman in his statement stressed  the case of malaus antinus due to his union activities, although he  did  vaguely  refer to the  termination  of  service  as wrongful  and malafide.  From this it cannot be  argued,  as the  Management  sought  to make out,  that  his  denial  of leaking out office secrets was an after-thought pleaded only in  the  rejoinder and therefore liable to  be  discredited.

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How  could  the worker have a hunch about  the  management’s undisclosed  ground for dismissal ? When the  latter  stated the  reason  which prompted this action for the  first  time before  the Labour Court, the workman in his  reply  refuted this  case.   It  is noteworthy that there is  no  speck  of record  or  any hint of written material in support  of  the story  that the management had credible information  of  the appellant  betraying  sensitive secrets  of  business.   The letters  sent  by the Union and the  worker  requesting  for reinstatement were being ignored.  The management could well have  disclosed their suspicion in reply and told the  Union and the workman that they resorted to an innocuous discharge to  avoid  punitive  trauma.   The  management  could   have divulged in writing to 493 the  Conciliation Officer their legitimate fears  about  the worker’s  integrity and their considerate action  of  simple termination.  This too they failed to do.  In their  written statement  in  Court the Management asserted for  the  first time that the employee was an intractable smuggler of inside information.   The  statement winds up with  the  legalistic plea  : ’the management had, in the meanwhile,  lost  confi- dence  in the workman’.  This culminating collapse of  trust is  alleged to be the primary cause for the  discharge  from employment. At  the  time  of the evidence,  M.W.1,  a  former  Regional Manager, swore that the workman joined as a pump operator in 1963,  was promoted as clerk in 1967, that the suspicion  of disloyal  communication arose ’for the first time  in  1968’ and  yet  ’thereafter he was given two increments  extra  in addition  to normal increments.  He was a hard  working  man and has a very good memory but the suspicion was there’. These are the facts and the evidence in the case and it  has been  fairly  conceded  before  the  Labour  Court  by   the Management’s representative that were the action regarded as punitive  it was bad, there having been no enquiry  whatever with  liberty to the employee to meet the charge.   But  the single  slender strand on which the discharge was  suspended was  ’loss of confidence of the management in the  employee. The Labour Court argued:               "According to the management, as there was  no               proof with it for this suspicion it could  not               proceed against him departmentally and, in the               circumstances, it was considered desirable  to               terminate his services by passing an order  of               discharge without any stigma attached to it." While  on  all  hands it was agreed that  the  employee  was efficient,  the court took the view that the motivation  for the  termination was the suspicion Which lurked in the  mind of  the Regional Manager that information regarding  tenders was  being passed on by the workman’.  We, have to find  out whether  the  holding in the award that,  on  the  materials above placed, the action could be called colourable or saved as   bona  fide,  could  be  castigated  as   achieving   an illegitimate  end or supported as a premature but  straight- forward  and  harmless  farewell.  In  short,  was  loss  of confidence a legal label affixed by the management to  eject the workman, there being no other legal method of  accompli- shing their wish to remove him for misconduct ? Two questions, therefore, fall for decision.  Can a  person, reasonably  instructed  in  the law  and  scrutinising  with critical  faculties  the  facts  on  record,  conic  to  the conclusion that the snapping of the     tic  of  master  and servant in the present case was innocuous andbona-fide or  oblique circumvention of the processual  protection  the

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law provides before a workman is dismissed for mis-conduct ? We can discern harmony and consistency in case lawfrom Chartered  Bank(1) and Murugan(2) through  Sudder  Office(3) and (1) [1960] 3 S. C. R. 441.    (2) [1965] 2 S. C. R. 149. (3) [1970] II L. L. J. 620. -423SCI/75 494 Air   India   Corporation(1).   The   social   justice   ice perspective and particular facts are important, though.  The plethora  if precedents need not, be covered in  extenso  as the law laid-down is the same except that judicial  response to each case situation leads to emphasis on different facets of  the principle.  Even so some milestone decisions, if  we may say so, may be considered. In  Murugan Mills Case (supra) Wanchoo J (as he  then  was), speaking for the Court made the following observations :               "The  right of the employer to  terminate  the               services of his workman under a standing order               like  cl.17(a)  in  the  present  case,  which               amounts  to  a  claim ’to hire  and  fire’  an               employee  as  the employer  pleases  and  thus               completely negatives security of service which               has  been  secured  to  industrial   employees               through  industrial adjudication, came up  for               consideration  before  the  Labour   Appellate               Tribunal  in Buckingham & Carnatic Co. Ltd  v.               Workers of the Company (1952 L.A.C. 490).  The               matter then came up before this Court also  in               Chartered  Bank  v. Chartered  Bank  Employees               Union (1960 3 SCR 441 and the Management of U.               B.  Dutt & Co. v. Workmen of U. B. Dutt &  Co.               (1962 Supp. 2 SCR 822) wherein the view  taken               by the Labour Appellate Tribunal was  approved               and  it was held that even in a case like  the               present  the  requirement of  bona  fides  was               essential  and if the termination  of  service               was a colourable exercise of the power or as a               result  of  victimisation  or  unfair   labour               practice  the industrial tribunal  would  have               the  jurisdiction to intervene and  set  aside                             such  termination.   The form of the order  in               such a case is not conclusive and the tribunal               can  go behind the order to find  the  reasons               which  led to the order and then consider  for               itself   whether   the   termination   was   a               colourable exercise of unfair labour practice.               If   it  came  to  the  conclusion  that   the               termination  was a colourable exercise of  the               power  or  was a result  of  victimisation  or               unfair  labour  practice, it  would  have  the               jurisdiction  to intervene and set aside  such               termination." In  that case the form of the order had no foul  trace,  but before the Tribunal dereliction of duty and go-slow  tactics were  disclosed  as the inarticulate  reasons.   This  Court ruled :               "This  clearly  amounted  to  punishment   for               misconduct  and  therefore to  pass  an  order               under cl.17(a) of the Standing Orders in  such               circumstances   was   clearly   a   colourable               exercise   of  the  power  to  terminate   the               services of a workman under the provisions  of               the Standing Orders."

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Shri M. K. Ramamurthy, counsel for the appellants, contended for  the  proposition that even where a management  had  the power  to  terminate the services of  its  employee  without reasons but with notice pay only, the colourable exercise of that power invalidated it, and the (1)[1972] 3 S. C. R. 606. 495 Court  could  probe, beneath the surface to check  upon  the bonafides behind the exercise of the power.  If the  reasons including the termination were victimisation, unfair  labour practice  or  misconduct, it was foul play to avoid  a  fair enquiry   and  fall  back  upon  the  power   to   terminate simpliciter  There are myriad situations where  an  employer may in good faith, have to reduce his staff, even though  he may  have  only  a  good word  for  his  employees.   Simple termination  is  a weapon usable on such occasions  and  not when  the master is willing to strike but afraid  to  wound. We  have  been referred to the Bihar  State  Road  Transport Corporation  case(1).  The power of the Court to  go  behind the  language of the order is reaffirmed there.   In  Suddek Office  (supra)  the  Court apparently laid  stress  on  the Management’s  right  to terminate the  services  simpliciter under the terms of contract, where there was no lack of bona fides,  unfair  labour  practice or  victimisation.   It  is significant that this Court used language and laid down  law very  much  like in the earlier cases and did refer  to  the precedents  on  the point.  For instance,  Vaidialingam  J., ’there observed :               " It is needless to point out that it has been               held  by  this Court in  The  Chartered  Bank,               Bombay v. The Chartered Bank Employees’  Union               (1960  11 LLJ 222) that if the termination  of               service is a colourable exercise of the  power               vested  in  the management or as a  result  of               victimisation  or unfair labour practice,  the               Industrial Tribunal would have jurisdiction to               intervene and set aside such termination.   In               order  to  find  out  whether  the  order   of               termination is one of termination  simpliciter               under   the  provisions  of  contract  or   of               standing   orders,  the  Tribunal  has   ample               jurisdiction to go into all the  circumstances               which led to the termination simpliciter." The  manner  of dressing up an order does not  matter.   The Court will lift the veil to view the reality or substance of the   order.   The  Court,  in  that  case,   examined   the circumstances  in  detail  to see whether  a  dismissal  for misconduct  was  being masked as a simple send  off  with  a month’s pay, and held ultimately :               "We  are  satisfied that  the  management  has               passed  the order of  termination  simpliciter               and  the  order  does not  amount  to  one  of               dismissal as and by way of punishment." of course, loss of confidence in the workman was alleged  by the  management  and  the  Court found that  it  was  not  a camouflage.  It may be noticed that in that case the workman was  being  entrusted  with stores worth  several  lakhs  of rupees,  some goods were lost from the stores and the  Union was  informed by the management that it had lost  confidence in the workman.  In the written statement before the  Labour Court  the management alleged that the workman was the  head godown-clerk   who  was  the  custodian  of  the   company’s property, the post being one of trust and confidence.  It is noteworthy  that in the High Court the workman did not  even file  a counter-affidavit and the counsel for the Union  and

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the  workman agreed that the order of termination was not  a camouflage to cover up what really was an order (1)  [1970] S.C.R. 708. 496 of  dismissal.  He merely urged that the termination of  the services was really by way of dismissal.  In this conspectus of  circumstances, this Court found that the Head  Clerk  in charge  of  the engineering godown and responsible  for  the maintenance   of  considerable  stores,  held  a   sensitive position.  This Court observed :               "The entire basis of the Labour Court’s  award               for holding that the order is one of dismissal               is  its view that the management  has  invoked               cl.  9  to camouflage its action.   When  that               approach  has been given up on behalf  of  the               workman before the High Court the reasoning of               the  Labour Court falls to the ground and  the               High  Court has acted within the  jurisdiction               under Art. 226 when it set aside the order  of               the  Labour  Court especially when  there  has               been  no  finding  of  victimisation,   unfair               labour  practices  or  mala  fides   recorded,               against  the management.  To conclude  we  are               satisfied that the High Court was justified in               setting aside the order of the Labour Court." We  have gone into this decision at length to  disabuse  the impression   that  a  new  defence  mechanism   to   protect termination   of   service  simpliciter,   viz.,   loss   of confidence,  had been propounded in this ruling.  We do  not agree,  that  any such innovation has been made.   The  Air, India  Corporation Case (supra) may seem to support the  ’no confidence’ doctrine but a closer study contradicts any such view.  of course, Shri Tarkunde, counsel for the management, placed great reliance on this ruling.  Needless to say, this Court recognised the power of the Tribunal to go behind  the form of the order, look at the substance and set aside  what may masquerade as termination simpliciter, if in reality  it cloaked a dismissal for misconduct ’as a colourable exercise of  power  by the management.  The Court  repeated  that  an Industrial  employer cannot ’hire and fire’ his  workmen  on the  basis  of  an unfettered right under  the  contract  of employment.  On the facts of the Air-India Case (supra)  the Court concluded that it-was ’not possible to hold this order to  be  based  on  any  conceivable  misconduct’.    Special reference  was  made to the grave  suspicion  regarding  the complainant’s private conduct with air-hostesses.  Where  no misconduct spurs the action and a delicate unsuitability for the job vis a vis the young women in employment in the  same firm   is   strongly  suspected,   resort   to   termination simpliciter cannot be criticized as a malafide  machination. In  that background, the action was held to be bonafide  and the overall unsuitability led-to a loss of confidence in the employee.  Not that the loss of. confidence was exalted as a ground but the special circumstances of the case  exonerated bad faith in discharge simpliciter. Before  concluding the discussion, we may refer to the  case of Delhi Transport Undertaking v. Goel(1) adverted to by the Labour  Court.  Indeed that decision turned  on  Regulations framed  under the Delhi Road Transport Authority  Act,  1950 and  not  on  pure Industrial Law  or  construction  of  the Standing Orders.  Moreover, the Court, in that (1)  [1970] II LLJ 20. 497 case, appears to have discussed rulings under Art. 311 also. However, on the facts of that case, the Court was  satisfied

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that  order of termination was not a disguise or  cloak  for dismissing  the employee and the ground given that he was  a cantankerous   person undesirable to  be  retained-was good. We  do not read the Delhi Transport case (supra)  to  depart from  Murugan  Mills Case (supra).  Indeed, the  latter  did not, and maybe could not, over-rule the former. The  above  study of the. chain of rulings  brings  out  the futility of the contention that subsequent to Murugan Mill’s Case (supra) colourable exercise of power has lost  validity and  loss  of  confidence has gained ground.   The  law  is. simply  this : The Tribunal has the power land, indeed,  the duty  to  X-ray the order and discover its true  nature,  if ,,he  object and effect, if the attendant circumstances  and the  ulterior purpose be to dismiss the employee because  he is  an  evil to be eliminated.  But if  the  management,  to cover   up  the  inability  to  establish  by  an   enquiry, illegitimately  but ingeniously passes  an  innocent-looking order of termination simpliciter, such action is bad and  is liable to be set aside.  Loss of confidence is no new Armour for the management; otherwise security of tenure, ensured by the  new  industrial Jurisprudence and  authenticated  by  a catena of cases of this Court, can be subverted by this neo- formula.   Loss of confidence in the Law will be the  conse- quence of the Loss of Confidence doctrine. In  the  light of what we have indicated, it is  clear  that loss  of  confidence  is  often  a  subjective  feeling   or individual   reaction   to  an  objective  set   facts   and motivations.  The Court is concerned with the latter and not with  the  former, although circumstances  may  exist  which justify   a  genuine  exercise  of  the  power   of   simple termination.   In  a reasonable case of  a  confidential  or responsible  post being misused or a sensitive or  strategic position  being  abused, it may be a high risk to  keep  the employee, once suspicion has started and a disciplinary  en- quiry cannot be forced on the master.  There, a  termination simpliciter  may  be bow fide, not colourable, and  loss  of confidence may be evidentiary of good faith of the employer. In the present case, the catalogue of circumstances set  out in the earlier part of the judgment strikes a contrary note. The  worker  was not told when he wrote; the Union  was  not disclosed  when they demanded; the Labour Court was  treated to verbal statements like; very reliable sources’ and  other credulous  phrases  without a modicum of evidence  to  prove bonafides.   Some  testimony  of unseemly  attempts  by  the workman to get at secrets outside his orbit, some indication of  the source of suspicion, some proof of the sensitive  or strategic  role of the employee, should and would have  been forthcoming had the case been bona fide.  How contradictory, that  even when a strong suspicion of leaking out  sensitive secrets  was  being entertained about the  employee  he  was being  given  special merit increments over  and  above  the normal  increments’ A case of res ipsa  loauitur.   Circums- tances  militate  against the ’I say so’ of M.W.1  that  the management had suffered an ineffable loss of confidence.  To hit  below  the  belt  by  trading  legal  pharses  is   not Industrial  Law.   We are constrained to  express  ourselves unmistakably lest industrial unrest induced by 498 wrongful terminations based on convenient loss of confidence should be generated. Before we conclude we would like to add that an employer who believes  or  suspects that his employee,  particularly  one holding   a  position  of  confidence,  has  betrayed   that confidence,  can,  if  the  conditions  and  terms  of   the employment  permit, terminate his employment  and  discharge

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him without any stigma attaching to the discharge.  But such belief  or  suspicion of the employer should not be  a  mere whim  or fancy.  It should be bona fide and reasonable.   It must  rest  on some tangible basis and the power has  to  be exercised by the employer objectively, in good faith,  which means honestly with due care and’ prudence.  If the exercise of  such  power  is  challenged  on  the  ground  of   being colourable or mala fide or an act of victimisation or unfair labour practice, the employer must disclose to the Court the grounds  of  his  impugned action so that the  same  may  be tested  judicially.  In the instant case this has  not  been done.  There is only the ipse dixit of the employer that  he was  suspecting since 1968 that the appellant was  divulging secrets relating to his business.  The employer has not dis- closed  the grounds oil which this suspicion arose in  1968. Further  after  1968,  the appellant  was  given  two  extra increments, in addition to his normal increments, as  stated already,   in   appreciation  of  his   hard   work.    This circumstance  completely demolishes even the  whimsical  and tenuous  stand  taken  by the  employer.   It  was  manifest therefore that the impugned action was not bona fide. It  was  urged  by Mr. Tarkunde,  learned  counsel  for  the employer  that the question whether or not the employer  had lost confidence in the employee, was essentially one of fact aad  this  Court  should not disturb  the  finding  of  fact recorded by the trial court on this point.  It is true  that this  Court, in appeal, as a rule of practice, is  loath  to interfere  with  a  finding of fact recorded  by  the  trial Court.  But if such a finding is based on no evidence, or is the  result of a misreading of the material evidence, or  is so unreasonable or grossly unjust that no reasonable  person would  judicially arrive at that conclusion, it is the  duty of this Court to interfere and set matters fight.  The  case before us is one such instance-, where we are called upon to do so. The  Labour Court has misled itself on the law land  we  set aside its order.  The workmans will be reinstated with  back wages.   However  the  management will be free,  if  it  has sufficient  material and if so advised, to  proceed  against the  workman for misconducts or on other ,grounds  valid  in law. The appeal is, accordingly, allowed with costs. P.B.R.                    Appeal allowed. 499