Bombay High Court Holds Employer Cannot Constitute Its Own Appellate Authority Under POSH Act

In a significant ruling, the Bombay High Court has held that an employer has no authority to create or constitute an Appellate Authority under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). A Division Bench of Justice G.S. Kulkarni and Justice Dr. Neela Gokhale quashed a major penalty imposed by Union Bank of India on its employee Ashok Upadhyay after finding that the entire disciplinary process was vitiated by the use of an illegally constituted appellate forum.

No Authority to Create Appellate Authority

The Court examined the interplay between Section 18 of the POSH Act and Rule 11 of the POSH Rules. Section 18 permits an appeal to be filed before a "court or tribunal" in accordance with applicable service rules. Where no service rules exist, Rule 11 prescribes appeal to the Appellate Authority notified under clause (a) of Section 2 of the Industrial Employment (Standing Orders) Act, 1946.

"The cumulative reading of Section 18 read with Rule 11 do not bring about any authority or jurisdiction with the employer to create or constitute an Appellate Authority ," the Court observed. "If these provisions are so read, it would amount to defeating the provision(s) as also reading something in the provision which the legislature has avoided to incorporate."

The Controversy

Ashok Upadhyay, a senior officer at Union Bank of India, faced a sexual harassment complaint in April 2023. The bank's Internal Complaints Committee (ICC) initially exonerated him on 20 April 2023. The complainant then appealed to what the bank described as its "Appellate Authority." Without notice to Upadhyay, this authority ordered a reinvestigation by a fresh ICC, which found him guilty. Based on that report, the disciplinary authority imposed a major penalty: reduction from SMGS-V to SMGS-III grade.

Upadhyay challenged the penalty, arguing that the bank's self-constituted appellate authority had no legal basis. He also contended that he was not heard before the reinvestigation was ordered or before his subsequent appeal was rejected.

Bank Fails to Justify Jurisdiction

The bank's counsel, Mr. Ashok D. Shetty, could not point to any service rules authorising the creation of an internal appellate authority or to any statutory provision empowering the employer to appoint such a body. The Court noted that the entire fresh investigation was premised on an order from an inherently illegal authority, rendering the subsequent proceedings non-est in law.

Key Observations

The Court did not mince words in criticising the bank's handling of the matter. It observed that the bank's "misconceived interpretation" led to a "chaotic situation" where both the complainant and the accused suffered prejudice.

The judgment states: "The order passed by the Appellate Authority , in our opinion, was non-est, and that too passed by an inherently illegal Appellate Authority ."

On the broader implications, the Court remarked: "The Bank and other such public institutions must be cautious and careful while interpreting legal provisions, lest the altogether misconceived interpretation made by the Respondent No.1/Bank, leading to a chaotic situation."

Decision and Remedy

The Court allowed Upadhyay's writ petition, quashing the penalty order dated 4 September 2023 and the appellate order dated 3 February 2024. However, it kept open the complainant's right to challenge the initial exoneration before a legally valid appellate forum, granting her six weeks to file such proceedings without limitation objections.

The Court also expressed dissatisfaction with the manner in which the bank handled the issue, noting it caused prejudice to both parties. The decision reinforces that employers must strictly adhere to the statutory framework under the POSH Act when dealing with sexual harassment complaints, and cannot bypass the law by creating their own appellate mechanisms.