Supreme Court Upholds Dismissal in Theft Case: BHEL vs. Mani (2017)

Date of the Judgment: 9 November 2017

Citation: (2017) INSC 977

Judges: R.K. Agrawal, J., Abhay Manohar Sapre, J. (authored the judgment)

Can an employer dismiss an employee based on a departmental inquiry even if a criminal court acquits the employee on the same charges? The Supreme Court of India addressed this question in a case involving Bharat Heavy Electricals Ltd. (BHEL) and two of its employees who were dismissed for theft. The court clarified that departmental proceedings and criminal proceedings are distinct and operate independently, thereby upholding the dismissal.

Case Background

The case involves two employees of Bharat Heavy Electricals Ltd. (BHEL), M. Mani and T.A. Mathivanan, who worked as drivers. On February 17, 1991, during their night shift, they were found to be absent from their designated posts. Instead, they were discovered driving a forklift and had unauthorizedly removed a heavy machine part, a “Face Milling Cutter,” from one shop floor. They loaded it into a company ambulance and took it outside the factory premises.

BHEL management, upon learning of the incident, issued charge sheets to both employees. After denying the charges, a departmental inquiry was initiated. The Enquiry Officer concluded that the charges were proved, leading to the dismissal of both employees on August 31, 1991. Appeals against the dismissal were also rejected.

Timeline

Course of Proceedings

Following their dismissal, two parallel cases were initiated. The State filed a criminal case against the employees under Section 379 of the Indian Penal Code, 1860, for theft. Simultaneously, the employees challenged their dismissal in the Labour Court.

The Magistrate Court acquitted the employees on November 24, 1992. However, the Labour Court, in its award dated August 6, 2001, ruled in favor of the employees. It held that while the departmental inquiry was conducted properly, it should have been stayed until the conclusion of the criminal proceedings. The Labour Court also stated that since the employees were acquitted in the criminal case, the findings of the Enquiry Officer were incorrect, and ordered reinstatement with full back wages.

BHEL then filed writ petitions in the High Court. A Single Judge of the High Court set aside the Labour Court’s award and remanded the case back to the Labour Court for fresh consideration. The Single Judge held that the Labour Court should have only considered the proportionality of the punishment, given that the departmental enquiry was found to be legal and proper.

The employees then filed intra-court appeals before a Division Bench of the High Court. The Division Bench allowed the appeals, reinstating the employees with continuity of service but without back wages, thereby restoring the Labour Court’s order partially.

Legal Framework

The case primarily revolves around the interpretation of the principles of natural justice and the powers of the Labour Court under the Industrial Disputes Act, 1947. The Supreme Court also considered the distinction between criminal proceedings and departmental inquiries, referencing its previous judgments on the matter.

The relevant legal provision cited is Section 379 of the Indian Penal Code, 1860 which deals with the punishment for theft.

The Supreme Court also discussed Section 11-A of the Industrial Disputes Act, 1947 which empowers the Labour Court to interfere with the quantum of punishment imposed by the employer, if it is found to be disproportionate to the charges.

Arguments

Appellant (BHEL) Arguments:

• ✓ The departmental inquiry was conducted legally and properly.
• ✓ The Labour Court erred in holding that the departmental inquiry was vitiated by the criminal court’s acquittal.
• ✓ Criminal and departmental proceedings are separate and independent.
• ✓ The dismissal order was based on the findings of the departmental inquiry, not the criminal court’s judgment.
• ✓ The punishment of dismissal was appropriate given the seriousness of the theft committed by the employees.

Respondent (Employees) Arguments:

• ✓ The departmental inquiry should have been stayed until the conclusion of the criminal case.
• ✓ The acquittal by the criminal court should invalidate the findings of the departmental inquiry.
• ✓ The dismissal orders should be set aside, and the employees should be reinstated.
• ✓ The acquittal was an “honorable acquittal,” implying that the charges were baseless.

The core of the argument by the employees was that the criminal court’s acquittal should have nullified the departmental inquiry’s findings. They argued that since they were cleared of the charges in a criminal court, the departmental inquiry, which was based on the same charges, should also be deemed invalid. This argument also implied that the employer should not have proceeded with the departmental inquiry while the criminal case was ongoing, and that the acquittal was “honorable” and therefore should have led to reinstatement.

BHEL argued that the departmental inquiry was independent of the criminal proceedings. They emphasized that the standard of proof differs between the two, and that the departmental inquiry had been conducted properly. BHEL also argued that the Labour Court should have examined whether the punishment was disproportionate, instead of setting aside the dismissal order based on the criminal court acquittal.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues:

1. Whether the Labour Court was justified in holding that the departmental enquiry got vitiated due to the criminal court’s order which had acquitted the respondents from the charge of theft, once the departmental enquiry was held legal and proper?
2. Whether the Labour Court was justified in holding that since the appellant failed to lead any evidence to prove the charge in the Labour Court, the dismissal orders of the respondents are liable to be set aside?
3. Whether the Single Judge of the High Court was right in remanding the case to the Labour Court when the enquiry was held to be legal and proper?
4. Whether the Division Bench of the High Court was right in setting aside the order of the Single Judge and restoring the order of the Labour Court?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court allowed the appeals filed by BHEL, setting aside the judgment of the Division Bench of the High Court and upholding the dismissal orders of the employees. The Court held that the Labour Court and the High Court had erred in their assessment of the case.

How each authority was viewed by the Court:

✓ The Workmen of M/s Firestone Tyre & Rubber Co. of India (Pvt.) Ltd. vs. The Management & Ors. [CITATION]: The Court relied on this case to highlight the Labour Court’s power under Section 11-A of the Industrial Disputes Act, 1947, to examine the proportionality of punishment.

✓ Divisional Controller, Karnataka State Road Transport Corporation vs. M.G. Vittal Rao [CITATION]: The Court cited this case to reiterate the principle that departmental and criminal proceedings are distinct and operate independently.

✓ Shankar Chakravarti vs. Britannia Biscuits Co. Ltd. & Anr. [CITATION]: The Court referred to this case to explain the circumstances under which an employer should be given an opportunity to prove the charge before the Labour Court on merits.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that departmental inquiries and criminal proceedings are distinct and independent legal processes. The Court emphasized that the standard of proof required in a departmental inquiry is “preponderance of probabilities,” while in a criminal case, it is “beyond reasonable doubt.” The Court also highlighted that the departmental inquiry was conducted fairly and legally, and the punishment of dismissal was commensurate with the gravity of the proven charge of theft.

The Court’s reasoning was based on the following:

The Court considered the argument that the acquittal was “honorable,” but it reiterated that the dismissal was based on the departmental inquiry, not the criminal case. The Court emphasized that the Labour Court should have focused on whether the punishment was disproportionate, rather than setting aside the dismissal based on the criminal acquittal. The Court also found that the Single Judge of the High Court should have decided the case on merits instead of remanding it to the Labour Court, and that the Division Bench erred in restoring the Labour Court’s order.

The Court stated, “In our opinion, once the Labour Court upheld the departmental enquiry as being legal and proper then the only question that survived for consideration before the Labour Court was whether the punishment of “dismissal” imposed by the appellant to the respondents was legal and proper or it requires any interference in its quantum.”

The Court also noted, “The Labour Court should have seen that the dismissal order of the respondents was not based on the criminal Court’s judgment and it could not be so for the reason that it was a case of acquittal. It was, however, based on domestic enquiry, which the employer had every right to conduct independently of the criminal case.”

Furthermore, the Court held, “An act of theft committed by an employee while on duty is a serious charge. This charge once proved in enquiry, the employer is justified in dismissing the employee from service.”

Key Takeaways

• ✓ Departmental inquiries and criminal proceedings are separate and independent.
• ✓ An acquittal in a criminal case does not automatically invalidate a departmental inquiry based on the same charges.
• ✓ The standard of proof in a departmental inquiry is “preponderance of probabilities,” while in a criminal case, it is “beyond reasonable doubt.”
• ✓ The Labour Court, after upholding a departmental inquiry as legal and proper, should only examine the proportionality of the punishment.
• ✓ Theft by an employee while on duty is a serious charge that can justify dismissal.

Directions

The Supreme Court did not issue any specific directions other than setting aside the impugned judgment and upholding the dismissal orders.

Development of Law

The ratio decidendi of this case is that departmental inquiries and criminal proceedings are distinct and independent. An acquittal in a criminal case does not automatically invalidate a departmental inquiry based on the same charges. This judgment reinforces the settled legal position on the matter and clarifies the scope of the Labour Court’s powers under Section 11-A of the Industrial Disputes Act, 1947. There is no change in the previous positions of law.

Conclusion

The Supreme Court’s judgment in Management of Bharat Heavy Electricals Ltd. vs. M. Mani clarifies that a departmental inquiry can proceed independently of criminal proceedings. An acquittal in a criminal case does not nullify the findings of a properly conducted departmental inquiry. The Labour Court’s role, after finding a departmental inquiry to be legal and proper, is limited to assessing the proportionality of the punishment. This judgment reinforces the employer’s right to maintain discipline and integrity within the workplace.