1. Bank employee misappropriated funds via forgery — dismissal for gross misconduct — Industrial Tribunal ordered reinstatement — High Court upheld reinstatement based on opportunity to reform. (Para 2 )
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1999 Supreme(SC) 1071
SUPREME COURT OF INDIA
R.C.Lahoti : S.P.Bharucha : S.S.M.Quadri
Assistant General Manager, State Bank Of India
Versus
Thomas Jose
Case No. : 5341 of 1999
Date of Decision : 9/17/99
Important Points
Misappropriation of public funds by a bank employee is a grave misconduct that must be treated more severely than similar acts in other undertakings, as it involves a breach of public trust.
Subject
Labour and Employment Law - Employee Misconduct and Discipline
Headnote
(A) Employment Law - Misconduct - Misappropriation of funds - Misappropriation of public moneys by an employee of a bank is a grave misconduct and must be treated differently from similar misconduct in other undertakings - Such misconduct cannot be treated lightly as it involves public trust and funds. (Para 3)
Facts of the case:
An employee of a bank, while officiating as a cash officer, forged the signature of an account-holder to withdraw funds from a third party's account for personal use. Following an inquiry and admission of guilt, the employee was dismissed for gross misconduct under the governing awards. An industrial tribunal found the misconduct proved but deemed dismissal too harsh, ordering reinstatement without back wages. The High Court upheld this decision, citing a precedent that errant workmen should be given an opportunity to reform.
Findings of Court:
The court observed a vital difference between a general undertaking and a bank, noting that a bank deals with public moneys. Consequently, misappropriation by a bank employee is misappropriation of public moneys and warrants a more severe approach than in other industrial contexts.
Issues: Whether the reinstatement of a bank employee who misappropriated public funds without any further penalty was appropriate, and whether the nature of the employer as a financial institution necessitates a stricter approach to misconduct involving funds.
Ratio Decidendi: Because a bank deals with public moneys, misappropriation by its employee is a serious breach of trust and must be treated more severely than in other undertakings. While reinstatement may be permissible, it should be accompanied by significant penalties, such as the denial of increments for a substantial period, to reflect the gravity of the offense.
Result: Appeal allowed. The order under appeal is modified so that the respondent is reinstated in the appellant Banks service but without back wages and without any increments for a period of ten years, with all cumulative consequences.
Facts of the case:
An employee of a bank, while officiating as a cash officer, forged the signature of an account-holder to withdraw funds from a third party's account for personal use. Following an inquiry and admission of guilt, the employee was dismissed for gross misconduct under the governing awards. An industrial tribunal found the misconduct proved but deemed dismissal too harsh, ordering reinstatement without back wages. The High Court upheld this decision, citing a precedent that errant workmen should be given an opportunity to reform.
Findings of Court:
The court observed a vital difference between a general undertaking and a bank, noting that a bank deals with public moneys. Consequently, misappropriation by a bank employee is misappropriation of public moneys and warrants a more severe approach than in other industrial contexts.
Issues: Whether the reinstatement of a bank employee who misappropriated public funds without any further penalty was appropriate, and whether the nature of the employer as a financial institution necessitates a stricter approach to misconduct involving funds.
Ratio Decidendi: Because a bank deals with public moneys, misappropriation by its employee is a serious breach of trust and must be treated more severely than in other undertakings. While reinstatement may be permissible, it should be accompanied by significant penalties, such as the denial of increments for a substantial period, to reflect the gravity of the offense.
Result: Appeal allowed. The order under appeal is modified so that the respondent is reinstated in the appellant Banks service but without back wages and without any increments for a period of ten years, with all cumulative consequences.
Legal Category Hierarchy
Table of Contents
2. Whether dismissal for misappropriation of funds was disproportionately harsh and whether the employee should be granted an opportunity to reform. (Para 2 )
3. Misappropriation of public money by bank employees is more severe than misconduct in other undertakings and must be treated differently. (Para 3 )
4. Misappropriation of public funds by bank employees warrants more stringent treatment than misconduct in other undertakings due to the nature of public money. (Para 3 )
5. Appeal allowed — respondent reinstated without back wages and without increments for ten years. (Para 4 )
6. Does the principle of providing an opportunity to reform apply equally to bank employees who misappropriate funds?
No. The court held that because banks deal with public money, misappropriation by bank employees is more severe than misconduct in other undertakings and must be treated more stringently. (Para 3 )
7. What is the appropriate modification to a reinstatement order for a bank employee guilty of misappropriation?
The court held that reinstatement without back wages should be accompanied by a direction that the employee is not entitled to increments for a substantial period. (Para 3 , 4 )
SYED SHAH MOHAMMED QUADRI, J.
(1) LEAVE granted.
(2) THE first respondent was an employee of State Bank of India (appellant). He had joined as a Typist-cum-Clerk in 1976. When officiating as Cash Officer in a branch of the Bank, he made a withdrawal of Rs 3000 from the savings bank account of a third party with the Bank. He did so by forging the signature of the account-holder on the withdrawal form. He appropriated the amount for his personal use. The external auditors of the Bank detected this and an inquiry was made. The first respondent admitted that he had withdrawn Rs 3000 from the said account. A charge-sheet was issued to the first respondent wherein he again admitted his guilt. The enquiry officer found the charge against the first respondent proved. Consequent upon this finding, amounting to gross misconduct in terms of the Sastri Award and the Desai Award governing the Bank, the first respondent was dismissed from the Banks service. His appeal was dismissed. An industrial dispute was raised. The Industrial Tribunal, acting thereon, found that the misconduct was proved but that the punishment of dismissal was too harsh. It, therefore, ordered reinstatement, as a Typist Clerk, without back wages. The Bank filed a writ petition in the High Court of Kerala impugning the Industrial Tribunals award. The writ petition was dismissed. The appeal against that order was dismissed. The Division Bench of the High Court relied upon the judgment of this Court in Scooters India Ltd. v. Labour Court, Lucknow AIR 1989 SC 149 : 1989 Supp(l) SCC 31 : 1989-I-LLJ-71 and held that the Tribunal was right in affording an opportunity to the first respondent to reform himself and prove to be a disciplined and loyal employee.
(3) IN the aforestated case, in more or less similar circumstances, this Court declined to interfere with the view taken by the Labour Court that an errant workman should be given an opportunity to reform himself and prove to be a loyal and disciplined employee of Scooters India Ltd. There is, in our view, a vital difference between an undertaking such as Scooters India Ltd. and the bank. A bank deals with public moneys. Misappropriation by an employee of a bank is misappropriation of public moneys and must be treated very differently. Misconduct such as this cannot be treated as lightly as it has been done. We think that the appropriate order should at least have been of reinstatement without back wages plus a direction that the first respondent would not be entitled to any increments for a substantial period with all the cumulative consequences of such an order. That is the order that we propose to pass.
(4) THE appeal is allowed. The order under appeal is modified so that the respondent is reinstated in the appellant Banks service but without back wages and without any increments for a period of ten years, with all cumulative consequences. The period often years shall run from today.
(5) NO order as to costs.
