Important pointLabour Court is expected to interfere with decision of management under Section 11A of Industrial Disputes Act only when it is satisfied that punishment imposed by management is highly disproportionate to the degree of guilty of the workman concerned.

Headnote:Industrial Disputes Act, 1947—Section 11A—Respondent employee working as Assistant Grade I in Stores Department of appellant was found guilty of misconduct of having removed title deed which he had pledged with appellant Company to secure loan—Enquiry Officer held appellant guilty of misconduct—Taking into consideration of seriousness of charge, services of respondent were terminated—Labour Court concluded that finding given by Enquiry Officer and its confirmation by Disciplinary Authority was legal and valid but punishment of dismissal was harsh and directed reinstatement— Order was upheld by High Court— Appeal—Labour Court itself came to conclusion that management had lost confidence in respondent—Question of exercising jurisdiction to alter or reduce the punishment did not arise—Impugned judgment was liable to be set aside.
       Held : With respect, we are unable to agree with these findings of the High Court. In our opinion, there is no such thing as unlimited jurisdiction vested with any judicial or quasi judicial forum. An unfettered discretion is a sworn enemy of the constitutional guaranty against discrimination. An unlimited jurisdiction leads to unreasonableness. No authority be it an administrative or judicial has any power to exercise the discretion vested in it unless the same is based on justifiable grounds supported by acceptable materials and reasons thereof. (Para 14)
       The question the Labour Court ought to have asked itself while exercising its discretion under Section 11 A should have been whether the reasons given by it that there was no earlier misconduct or that the respondent is an active participant in cultural activities is sufficient to come a reasonable conclusion that a punishment of dismissal was harsh in the background of the finding recorded by itself as to the confidence of the employer on the respondent which according to the Labour Court was shaken by the misconduct. In our opinion with no stretch of imagination either the extenuating circumstances recorded by the Labour Court or the exercise of its discretion could be termed either as reasonable or judicious. In our opinion even the learned Single Judge and the Division Bench erroneously held that the Labour Court had unlimited jurisdiction under Section 11-A of the Act. It is because of the above erroneous legal foundation as to the vastness of power vested with the Labour Court. The High Court accepted the interference by the Labour Court in the award of punishment. Thus, the Labour Court as well as the High Court fell in error in granting the relief to the respondent which is challenged in this petition. (Paras 17 and 18)
       The Labour Court has itself come to the conclusion the management has lost confidence in the respondent. If that be the case the question of it exercising its jurisdiction under Section 11-A to alter or reduce the punishment does not arise. That apart the reasons given by the Labour Court to reduce the penalty are reasons which are not sufficient for the purpose of reducing the sentence by using its discretionary power. The fact that the misconduct now alleged is the first misconduct again is no ground to condone the misconduct. On the facts of this case as recorded by the Labour Court the loss of confidence is imminent, no finding has been given by the courts below including Labour Court that either the fact of loss of confidence or the quantum of punishment is so harsh as to be vindictive or shockingly disproportionate. Without such finding based on records interference with the award of punishment in a domestic inquiry is impermissible. (Paras 25 and 26)

Judgment

Santosh Hegde, J.—These appeals are preferred against the common judgment of the High Court of Judicature Andhra Pradesh at Hyderabad made in Writ Appeal Nos. 1864 of 2001 and 1901 of 2001 whereby the High Court dismissed the appeals filed by the appellant herein confirming the order of the learned Single Judge dated 21-11-2001 made in W.P. Nos. 29150 of 1997 and 10461 of 2000.

Facts necessary for the disposal of these are as follows:—

2. The respondent herein was an employee working as Assistant Grade-I in the Stores Department of the appellants, R & D Division at Hyderabad. He borrowed house building advance by depositing title deeds of his properties as securities, creating an equitable mortgage in favour of the appellant. As per the terms of the said title deeds of the property belonging to the respondent was to be in custody of the appellant till the entire amount of the loan with interest was discharged. While the mortgage was still subsisting and an amount of Rs. 1,34,951/- was due from the respondent, the appellant’s officers came to know that certain public notices were published in the local Newspaper calling upon the intending purchasers to make their offers for the purchase of the property belonging to the respondent which was mortgaged to the appellant by deposit of title deeds. On the appellants coming to know of the same, its officers approached the advocate who on behalf of the respondent had issued the publication. Then they came to know that the original title deeds which were supposed to be in deposit of the company was in his custody. Obviously, because it was stealthily taken away from the custody of the appellant. Based on said facts a departmental enquiry was instituted and on the reports submitted by the Enquiry Officer holding the appellant guilty of the misconduct charged and taking into consideration the seriousness of the charge the services of the respondent were terminated.

3. Being aggrieved of the said decision of the appellant, respondent approached the Additional Labour Court challenging the said enquiry report as well as the consequential punishment imposed on him. The Labour Court after considering the report of the Enquiry Officer has also examined certain witnesses summoned by it came to the conclusion the finding given by the Enquiry Officer and also the confirmation of the said finding by the Disciplinary Authority was legal and valid. It also observed that in view of the said fact it did not see any reason to come to a different conclusion from that of the Enquiry Officer. During the course of its order it also observed that the most of the facts were not disputed and the documents which were supposedly to be in the custody of the appellant found its way to the possession of the respondent and by so obtaining the possession of the document the appellant tried to sell the property when the mortgage was still subsisting. The Labour Court also recorded the following finding :—

“No doubt the confidence of the employer on this petitioner has shaken by this occurrence but no instance of earlier mis-conduct are spelt. On the other hand it appears he is an active participant in the cultural activities and for common cause of the employees. Therefore, I also feel the punishment of dismissal from service is harsh in the circumstances.

4. Being aggrieved by the said order directing the reinstatement of the respondent the appellant preferred a writ petition before the learned Single Judge, the respondent also being aggrieved by the order upholding his misconduct filed a writ petition before the High Court challenging that part of the order. The learned Single Judge after hearing the parties dismissed both the writ petitions. In the course of his orders the learned Single Judge observed:—

“....There is any amount of spectrum of discretion vested with the Tribunal in taking into consideration the facts and circumstances of the case. The decision relied upon by the learned Counsel for the Management

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2005 Supreme(SC) 137

Important pointLabour Court is expected to interfere with decision of management under Section 11A of Industrial Disputes Act only when it is satisfied that punishment imposed by management is highly disproportionate to the degree of guilty of the workman concerned.

Cases Referred (5)