Supreme Court Upholds Dismissal in Drunken Misconduct Case: Standard Chartered Bank vs. R.C. Srivastava (29 September 2021)

Date of the Judgment: 29 September 2021

Citation: 2021 INSC 658

Judges: Justice Ajay Rastogi and Justice Abhay S. Oka. The judgment was authored by Justice Ajay Rastogi.

Can a Labour Tribunal, acting under Section 11-A of the Industrial Disputes Act, 1947, overturn a disciplinary authority’s decision in a domestic enquiry? The Supreme Court of India addressed this question in a case involving a bank employee accused of drunken misconduct. The court clarified the extent to which a Tribunal can interfere with findings of a domestic enquiry. The bench comprised of Justice Ajay Rastogi and Justice Abhay S. Oka, with Justice Rastogi authoring the judgment.

Case Background

The respondent, R.C. Srivastava, was an employee of Standard Chartered Bank. On 12th January 1988, he was accused of being drunk on bank premises, manhandling senior officers, and using abusive language. A charge sheet was issued on 27th January 1988, detailing these allegations. The charge sheet stated that Mr. Srivastava, along with others, entered the bank in a drunken state and abused the management and officers. It was also alleged that Mr. Srivastava manhandled Mr. Seth, a bank officer, leading to his spectacles being broken and a bruise on his eye.

The bank conducted a departmental enquiry. Three bank officers, Mr. P.K. Seth, Mr. B.M. Sikka, and Mr. Arun Sharma, testified against Mr. Srivastava. Mr. Srivastava did not testify in his defense but presented two other employees as defense witnesses. The enquiry officer found the charges to be proven and the disciplinary authority dismissed Mr. Srivastava from service on 22nd August 1991.

The matter was referred to a Tribunal, which initially found the domestic enquiry to be fair and proper. However, after re-examining the evidence, the Tribunal concluded that the bank failed to prove the charges against Mr. Srivastava. The Tribunal ordered his reinstatement with full back wages. The High Court of Judicature at Allahabad upheld the Tribunal’s decision, leading to the present appeal before the Supreme Court.

Timeline

Course of Proceedings

The matter was initially adjudicated by the Tribunal, which initially found the domestic enquiry to be fair and proper. However, the Tribunal later reversed its stance, re-evaluating the evidence and concluding that the bank had not sufficiently proven the charges against Mr. Srivastava. Consequently, the Tribunal ordered Mr. Srivastava’s reinstatement with full back wages and other benefits. The High Court of Judicature at Allahabad upheld the Tribunal’s decision, dismissing the writ petition filed by the bank. The bank then appealed to the Supreme Court.

Legal Framework

The case involves the interpretation of Section 11-A of the Industrial Disputes Act, 1947. This section empowers the Labour Tribunal to examine the findings of a domestic enquiry and to determine if the punishment imposed on a workman is justified. The court also considered the Bipartite Settlement dated 19th October 1966, which outlines the procedure for conducting domestic enquiries and defines acts of misconduct. Clause 19.5 of the Bipartite Settlement specifies that:

“19.5 (c): Drunkenness or riotous or disorderly or indecent behaviour on the premises of the bank and (d) Doing any act prejudicial to the interest of the bank, and you are hereby charged with the above gross acts of misconduct.”

Arguments

Appellant’s (Bank) Arguments:

• The Tribunal exceeded its jurisdiction under Section 11-A of the Industrial Disputes Act, 1947 by acting as an appellate court and re-evaluating the evidence in detail.
• The Tribunal should not have interfered with the findings of the domestic enquiry, which was found to be fair and proper, unless the findings were perverse or unsupported by evidence.
• The Tribunal incorrectly applied the standard of proof beyond a reasonable doubt, which is applicable in criminal cases, rather than the standard of preponderance of probabilities applicable in domestic enquiries.
• The Tribunal failed to consider that the misconduct was proven by the testimonies of three bank officers, and the defense witnesses were not directly involved in the incident.
• The High Court also erred in upholding the Tribunal’s decision without appreciating the findings of the domestic enquiry.

Respondent’s (Workman) Arguments:

• The Tribunal rightly concluded that the alleged incident never occurred, as there was no credible evidence to support the charges.
• The action taken against the respondent was a result of his trade union activities and was an attempt by the bank to curb his activism.
• The Tribunal’s interference was justified as the bank’s allegations were baseless and did not stand up to judicial scrutiny.
• The High Court correctly upheld the Tribunal’s decision.

The innovativeness in the argument of the respondent was that the action taken against him was a result of his trade union activities and was an attempt by the bank to curb his activism.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a numbered list. However, the primary issue before the court was:

• Whether the Labour Tribunal was justified in interfering with the findings of the domestic enquiry, which was held to be fair and proper.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not explicitly cite any previous cases or books in this judgment. However, the court did discuss the following legal provisions:

• Section 11-A of the Industrial Disputes Act, 1947: This section empowers the Labour Tribunal to examine the findings of a domestic enquiry and to determine if the punishment imposed on a workman is justified. The court clarified the extent to which a Tribunal can interfere with findings of a domestic enquiry.
• Clause 19.5 of the Bipartite Settlement dated 19th October 1966: This clause defines the acts that constitute gross misconduct, including “Drunkenness or riotous or disorderly or indecent behaviour on the premises of the bank” and “Doing any act prejudicial to the interest of the bank.”

Judgment

How each authority was viewed by the Court?

• Section 11-A of the Industrial Disputes Act, 1947: The Court clarified that this section does not grant the Tribunal the power to act as an appellate court. The Tribunal’s role is limited to examining whether the domestic enquiry was fair and proper and whether the punishment was justified.
• Clause 19.5 of the Bipartite Settlement dated 19th October 1966: The Court acknowledged that the charges against the respondent fell under this clause, which defines acts of gross misconduct.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The Tribunal exceeded its jurisdiction by acting as an appellate authority.
• The Tribunal incorrectly applied the standard of proof of beyond reasonable doubt instead of preponderance of probabilities.
• The domestic enquiry was found to be fair and proper.
• The misconduct was proven by the testimonies of three bank officers.

The Court’s reasoning was primarily based on legal principles and the correct application of the law. The factual aspects of the case were considered, but the legal principles of jurisdiction and standard of proof were the dominant factors.

The Supreme Court held that the Tribunal had exceeded its jurisdiction by re-evaluating the evidence as an appellate court. The court emphasized that the Tribunal’s role was not to re-appreciate the evidence but to determine if the domestic enquiry was fair and proper. The court also noted that the Tribunal had applied the wrong standard of proof, requiring proof beyond a reasonable doubt instead of the preponderance of probabilities applicable in domestic enquiries. The court also considered that the misconduct was proven by the testimonies of three bank officers.

The court also considered the fact that the respondent had been paid a sum of Rs. 57,16,517.72 during the litigation period and had attained the age of superannuation on 31st January, 2012. The court, while setting aside the judgment of the High Court, clarified that no recovery shall be made in reference to the payment which has been made to the respondent-workman in the interregnum period.

The court quoted the following from the judgment:

“The scope of judicial review in the matter of domestic enquiry is to examine whether the procedure in holding domestic enquiry has been violated or the principles of natural justice has been complied with, or any perversity in the finding of guilt recorded during the course of domestic enquiry has been committed.”

“The Tribunal converted itself into a Court of Appeal as an appellate authority and has exceeded its jurisdiction while appreciating the finding recorded in the course of domestic enquiry and tested on the broad principles of charge to be proved beyond reasonable doubt which is a test in the criminal justice system and has completely forgotten the fact that the domestic enquiry is to be tested on the principles of preponderance of probabilities.”

“The decision of the Labour Court should not be based on mere hypothesis. It cannot overturn the decision of the management on ipse dixit. Its jurisdiction under Section 11-A of the Act 1947 although is a wide one but it must be judiciously exercised.”

Key Takeaways

• Labour Tribunals cannot act as appellate courts when reviewing domestic enquiries.
• The standard of proof in domestic enquiries is “preponderance of probabilities,” not “beyond a reasonable doubt.”
• Findings of a fair and proper domestic enquiry should not be interfered with unless they are perverse or unsupported by evidence.
• The Supreme Court clarified the limited scope of interference by the Tribunal under Section 11-A of the Industrial Disputes Act, 1947.

Directions

The Supreme Court directed that no recovery shall be made in reference to the payment of Rs. 57,16,517.72, which has been made to the respondent-workman in the interregnum period.

Development of Law

The ratio decidendi of this case is that a Labour Tribunal’s power to interfere with a domestic enquiry is limited. The Tribunal cannot act as an appellate court and re-evaluate evidence. Its role is to ensure that the enquiry was fair and proper and that the punishment was justified. The court also clarified that the standard of proof in domestic enquiries is preponderance of probabilities and not beyond reasonable doubt. This case reinforces the principles of limited judicial review in domestic enquiries and clarifies the scope of Section 11-A of the Industrial Disputes Act, 1947.

Conclusion

The Supreme Court allowed the appeal filed by Standard Chartered Bank, setting aside the judgment of the High Court and the award of the Tribunal. The Court held that the Tribunal had exceeded its jurisdiction by acting as an appellate court and re-evaluating the evidence in detail. The Court clarified that the Tribunal should not have interfered with the findings of the domestic enquiry, which was found to be fair and proper, unless the findings were perverse or unsupported by evidence. The Court also noted that the Tribunal had incorrectly applied the standard of proof beyond a reasonable doubt, which is applicable in criminal cases, rather than the standard of preponderance of probabilities applicable in domestic enquiries. The Court directed that no recovery be made from the respondent for the payments made to him during the litigation period.