JUDGMENT - GOKHALE H.L., J.:—This appeal and the cross objection arise out of an oral judgment and order of a learned Single Judge of this Court dated 4th September, 1996 allowing the writ petition filed by respondent No. 1 herein against his dismissal from service but substituting the impugned departmental order passed by the Appellant with only compensation. The appellant is aggrieved by that part of the order passed by the learned Single Judge which interferes with their disciplinary order and that is why it has filed this appeal. The respondent No. 1, on the other hand, is aggrieved by that part of the order passed by the learned Single Judge not granting the full relief of reinstatement with full back wages which the respondent No. 1 had sought in the said writ petition. That is why the respondent No. 1 has filed the cross objection.

2.The short facts leading to this appeal are as follows :

The respondent No. 1 was working as an Acting Deputy Manager in-charge of Oil Movement and Storage Department under the Appellant at is refinery situated in Chembur, Mumbai. The Appellant is a statutory Corporation set up under the ESSO Acquisition Act, 1974 and also incorporated under the Companies Act, 1956. Dealing in petroleum products is its principal activity. The respondent No. 2 is Union of India through the Secretary, Ministry of Petroleum and Natural Gas, but the respondent No. 2 does not have much role in this matter.

3.It so happened that on 14th March, 1986 when the respondent No. 1 was on duty, the police intercepted on oil tanker Bearing No. MCU-1914 which had gone out of the Chembur Refinery of the appellant and it was found that the tanker was carrying excess quantity of oil as against what it was officially supposed to carry. The investigation followed and the respondent No. 1 was arrested along with some other 50 employees by the State C.I.D. on 24th November, 1986 on the charge of theft of petroleum products of the appellant and other related offences. Some of the employees gave statements of confession to the police and the investigation led to the prosecution of the employees including the respondent No. 1. It is material to note that subsequently the respondent No. 1 was discharged by the concerned criminal Court on 6th July, 1989 for lack of necessary evidence.

4.In a parallel proceeding at the departmental level, the appellant charge-sheeted the respondent No. 1 on 17th December, 1986 for the misconduct of-

(a) fraud and dishonesty with the business of the Corporation;

(b) acting in a manner prejudicial to the interest of the Corporation; and

(c) commission of the act which amounts to criminal offence involving moral turpitude.

The allegation against the respondent No. 1 was that he had signed the shift gate pass in respect of earlier mentioned tanker and that the respondent no. 1 was a party to the fraud of creating convenient record leading to the theft of the oil product. The respondent No. 1 was suspended during the inquiry. He submitted his explanation on 29th December, 1986 denying the allegations against him. That was followed by departmental inquiry.

5.In the departmental inquiry, the appellant Management sought to produce the allegedly confessional statements made by some of the employees during the course of the criminal proceeding either before the police or before the Judicial Magistrate. Two of such witnesses appeared, i.e. one Shri Bhoir and Shri Mohite, but did not give any deposition in the departmental inquiry. The third witness Shri Dhuri declined to appear in the inquiry. The appellant management examined two more witnesses, namely one Shri Ram Mohan Rao to prove certain documents and Shri A.L. Khillari, sub-Inspector of Police, who had carried out the investigation and before whom Shri Dhuri had made the confession. The confessional statements made by three employees were tendered in the departmental inquiry. The respondent No. 1-delinquent employee cross-examined the officers. The cross-examinat

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