Judgment

SHELAT, J.: This appeal, by special leave, is against the order by which the Labour Court, Patna, set aside the order of discharge from service passed by the Appellant-Company against the respondent and which also directed his reinstatement.

2. The respondent was appointed a salesman on August 19, 1954, by a letter of appointment, clause (9) whereof provided that either party could terminate the contract of employment by a notice of 28 days. The Appellant-Company had also appointed by an agreement M/s. Hari Bhagat Laxmi Bhagat at Kathmandu as its wholesalers. The said agreement provided that the wholesalers would have to deposit with the Company a sum of Rs. 20,000/-, that they would be paid commission at 3% on all sale proceeds in respect of sales effected by them, that out of the stock supplied to the wholesalers the Company s own salesman posted at Kathmandu would also be entitled to effect sales and that the sale proceeds in respect of sales effected by both of them should be remitted to the Company through its salesman. On August 26, 1956 the Company sent the respondent to Kathmandu for promoting sales and for assisting the said wholesalers in their sales. No difficulty appears to have been experienced by the Company by this arrangement until the middle of 1960. But it was said that thereafter the respondent became irregular in remitting the sale proceeds and that notwithstanding his assurances to regularise his work he did not do so. The result was that the Company sent one P. N. Saxena to Kathmandu and also a relief salesman, one K. B. Sinha, who on December 5, 1960, took over charge from the respondent. On December 6, 1960, the Company received a telegram from the wholesalers that there was cash shortage of Rs. 11,000/- by the respondent. On receipt of the telegram, one K. P. Sinha, the Branch Manager at Patna, went over to Kathmandu and made a preliminary enquiry in the course of which it was said that the respondent admitted that he had taken personal loans from the wholesalers and had executed two loan bonds for Rs. 6,400/- and Rs. 4,600/-. The respondent was also said to have written on 7th, 8th, 9th and 10th December 1960, letters to the said Branch Manager admitting that he had obtained the said loans from the wholesalers. On December 9, 1960, the wholesalers wrote to the Company that they had paid the said two amounts to the respondent for remittance to the Company and asked the Company to send them the requisite credit vouchers therefor. On December 28, 1960 the wholesalers also enclosed copies of two receipts purported to have been executed by the respondent in respect of the said two amounts. On December 27, 1960, the respondent intimated to the Company that the said receipts were extorted from him by the wholesalers, and that ending instructions from the Company he was filing a criminal complaint against them. It is clear that the wholesalers had changed their case, their case first being that the said two amounts were advanced by way of loans to the respondent and later on stating that the said two amounts were given to the respondent for remittance but the respondent had failed to remit them and that therefore there was cash shortage of Rs, 11,000/-. The respondent s case, on the other hand was that he had not taken any loans from the said wholesalers, that contrary to the said agreement with the wholesalers, the Company s officers at Patna Branch connived at credit sales effected by the wholesalers, that the wholesalers, on coming to know that on December 5, 1960 the respondent had handed over charge to a new salesman, got panicky and realising that they would not be able to recover the sale proceeds of the said credit sales, they and the said K. P. Sinha, the Branch Manager arranged between them to get the said loan bonds executed by the respondent, that the wholesalers thereafter also extorted under coercion the said two receipts, and that therefore the wholesalers version that there was cash sh