The main legal point established in the judgment is that in cases of unfair inquiry and illegal termination, the court may direct the payment of compensation in lieu of reinstatement and back wages.

Deepak Gupta, J.

1. This writ petition by the Punjab National Bank (hereinafter referred to as the employer) is directed against the award of the Presiding Officer, Central Government Industrial Tribunal-cum-Labour Court, Chandigarh (hereinafter referred to as the Tribunal) dated 20.6.2002 whereby he has held that the action of the employer in dismissing the respondent (hereinafter referred to as the employee) from the bank's services is not justified and has ordered the reinstatement of the employee into service with full back-wages, continuity of service and all consequential benefits including senority etc. The employer has also been held liable to pay interest (c) 8% p.a. on the back-wages from the date they became due and payable.

2. Briefly stated the facts of the case are that the employee joined the services of the employer in the year 1978. He was posted at Shimla in 1982. On 9.8.1989 the CBI registered a case against the employee under Sections 420, 468, 467 and 471 IPC. The allegations, in brief, against the employee were that that he has been filling in applications for grant of loan on behalf of certain bogus parties and had himself signed some of the documents on behalf of the so called loanees and mis-utilized the loan amounts. It was also alleged that he had been instrumental in having a loan sanctioned in favour of one lady who was not entitled to the said loan. The police case was in respect of loan of one Sh. Suresh Chand.

3. After the criminal proceedings were started the employee was suspended on 28th March, 1983. He was charge-sheeted on 25.4.1983 and disciplinary proceedings were started against him. Since the first charge in the disciplinary proceedings related to the case of Suresh Chand, was covered by the criminal proceedings the Inquiry officer held the said charge in abeyance pending conclusion of the criminal trial, Another charge levelled against the employee was that he had destroyed the bank records and the Inquiry Officer held that this charge had not been proved. The other two charges levelled against the employee were; (i) that he had filled in an application in the name of one Sh. Jagdish Chand Sharma with wrong information to defraud the bank. It was alleged that he has signed the guarantee letter of Jagdish Chand Sharrna by signing as one Sh, S.S. Thakur. The bank also alleged that the employee had withdrawn the loan amount of Rs. 5,000 by impersonating as J.D. Sharma, and (ii) that the employee had knowingly given wrong information, with regard to one Smt. Parkasho and had sanctioned her loan even though she was not entitled for the same. The Inquiry Officer held that these charges stood proved against the employee. The inquiry was concluded in November, 1985 and. the Inquiry Officer submitted, his report on 13.3.1986.

4. Before the disciplinary authority took any further action on the basis of the inquiry report the employee was convicted by the Chief judicial Magistrate, Shimla for having committed offences under Sections 420/467/468/471 read with Section 120-B IPC. On the basis of the conviction order so recorded by the CJM the employee was dismissed from service on 15.12,1987. The appeal filed by the employee before the Sessions Judge, Shimla was dismissed in May, 1989, Therefter, the employee filed Civil Revision No. 1 of 1989 before this Court ..which was allowed by this Court on 73.1990 and his convict on and sentence was set-aside.

5. After the conviction and sentence was set-aside the employer re-opened the disciplinary proceedings and the employee was again put under suspension on 5.5.1990 under Section 19.3 (d) of the Bi-partite settlement. It would be pertinent to mention that this suspension was made retrospective and a sum of Rs. 50,449.78 was paid to the employee on account of suspension allowance for the period 27.10.1987 to 30.4.1990.

6. Thereafter, the disciplinary authority proposed punishment under Bipartite settlement and the employee was afforded a personal hearin