L. Michael & Anr. v. M/S Johnston Pumps India Ltd.

48 9 A L. MICHAEL & ANR. _v._ M/S. JOHNSTON PUMPS INDIA LTD. _February_ 10, 1975 [A. ALAGIRISWAMI, V. R. KRISHNA IYER AND R. S. **SA!XAIUA,** JJ.] **B** #### c D F G H The service<i of \he appellant, who was an empl,Jyee of the respondents, w.crc terminated by the !alter by,.iving h.i.m a month's .not!ce as por th" stand1!1g orders without assigning anv reasons for the tern11Q.at1on. The consequential industrial dispute was referred to the Labour c.,urt. f he management alleged that the dismissed employee misused his position by p<15sing on important and secret inform.'\.tion about the affairs of the company to certain out~idcro, that even after he was transferred to another section he made attempts to elicit information from the section with a view to pass it on to outsiders, 11nd that, therefore, ihe management lost confidence in the emolovee and terminated his service~ by a _bona fide_ orJcr. lhe Labotir Court confirmed the order of termination. In appeal to this Court, it was contend~'1 that, even where a man.igement had the power to terminate the services of its employees without reasons but with notice pay the colourable exercise of <fi~t power invalidated the order and the Court could probe beneath the surface to check upon the _hona_ _{1.-lc.1_ hehind the e~ercise of the power. Allowing the appeal to this Court. HEL'.) : I (a) The Labour Court has nJ.iskJ itself on the law and its onle1 'hould be set 11Side. The workman will be reinstated with back wages. [498 GJ (b) The manner of dressing up 11.n order doe$ not matter. The Court will lift the veil to view the reality or substance of the order. [495 F] (2) (a) The Tribunal has the oower and, indeed, the dutv to X-ray the order and discover its true nature, if the object and effect, if the attendant circlllUslances and the ulterior purpose be to dismiss the employee because he is "D evil to be eliminated .. Bui if the management, to cover up the inability to establish by an inquiry, illegitimately but ingeniously passes an innocent looking <1fder of termination _simpliciter,_ such action is !:lad and is liable to be set aside. Loss of confidence is no new armour for the man?tgement; otherwise security·of tcnu;·c, ensured by the new industrial jurispruden,:e and authenticated by a. catcna of cases of _this_ Court can be subverted,by thi.5 neo formula Loss of confiden;;o in the law will be the consequence of tho Loss of Confidence doctrine. [497 C-D] (b) An employer who believe or suspects that his employee, particularly ono holrung a position of confidence, has betrayed that confid=. can, if the conditions and terms of the employment permit, terminate bis employment and discharge him without any stigma attaching to the discharge. But such belief or suspicion of the employer should not be a mere whim or fancy. It should be _bona fide_ and reasonable. It must rest on some tangible basis and the POWer bas to be exercised by the employer objectively, in good faith. which: ~ns honestly and with due care. and prudence. If the exercise of such powe1 is challenged on the gl'cund of bemg cotourable or _mala_ _fide_ or an act of victim.isation or unfair labour practice, the employer must disclose to the ('..onrt the grounds of his impugned action so that tho same may be tested judicially. 1498 B-CJ fo tho instant case this has n?t been done. There is only the _ipse_ _di.tit_ of the ewployer that he was suspecting since 1968 that the appellant was divulging 'ecrets relatinR to his business. The employer has not disclbsed the grounds on which this suspicion arose in 1968. Further, aft~r 1968, the appellant was gi••en _f11dmtrial_ _Dispules Act_ (14 _of_ _1947)-Dismlssa/ of_ _art_ _e:mployee-Powcr_ _of Tribunal_ _to_ _go_ _behind_ _an_ _order_ _of_ _tennr'nation-Employer must_ _diM:/osie_ _the_ _cro11nd3_ _of_ _his_ _action_ _when_ _challenged_ _as_ _colourable_ _or_ _ma/a_ _fide-W_ lle11 _Cort rt_ _.1/ro11/d_ _irt1erfcre_ _with_ _a_ _{iJuling_ _of_ _fact._ 490 SU1'REME COURT REPORTS [1975] 3 S.C.R. two extra increments in addition to his normal increments in appreciation of his hard wo.rk. This circumstance completely demolishes even the whimsical and tenuous stand taken bv the employer. It was manifest that the impugned action was not _bona_ _fidie._ [498 DJ _The_ _Chartered_ _Bank_ v. _The_ _Chartered_ _Bank_ _Emplovces'_ _Union_ f!960] 3 S.C.R. 441; _Murgan_ _Mill's_ _I.rd._ v. _fodustrial_ _Tribunal._ _Madras_ [1965] 2 S.C.R. 1-48 and _Workmen_ _of_ _Suddcr_ _Office,_ _Cimwmare_ v. _Management,_ [19701 II L.L.J. 620. followed. _Air_ _India_ _Corporation_ _Bombay_ v, _V._ _A. Rebellow_ & _Anr._ [1972] 3 S.C.R.. 606 diet!nguishe<l. _Delhi_ _Transport_ _Undertaking_ v. _Goel_ [1970] II LlJ, 20, referred to. (3) It is true that this Court, in appeal, a~ .1 rule of practice, is loath to inU:rfere with a finding of fact recorded by t11e trial court. But if such a fi11ding is based on no evidence, or is the result of a misreading of the mater:al evidenc.~ or JS so unreasonable or grossly un;ust that n;i reasonable person would judi· dally arrive at that conc\usi<m. it is the duty of this Court to interfere arid se.t matters right. [498 E-F] CI.VIL APPELLATE JURISDICTION: Civil Appeal No. 1605 of l.972. A IJ #### c Apneal by Special leave from the Award dated November 24, .l 911 D of the Labour Court, Delhi in L.C.l.C, No. 31 of 1971. _M._ _K._ _Ramamurthi_ and _J._ _Ramamurthi,_ for the appellant. _V._ _M._ _Tarkunde,_ _0._ _C._ _Mathur,_ _D._ _N._ _Mishra,_ _and_ _Sudhir_ _K._ _Khanna,_ for the respondent. The Judgment of the Court was delivered by KRr>HNA. IYER, J.-Industrial law in India has many twilight patches, illustrated by the present appeal which projects the problem of an employee whose services have been terminated similiciter by the Management, a pump manufacturing enterprise, issuing a notice ending the employment and offering one month's pay as authorised by the relevant Standing Orders. The thorny legal issue is whether the _ipse_ _.dixit_ of the employer that he h~is lost confidence in the employee is. suffident justification jettison the fatter without levelling and provr.1g the objectionable conduct which has undermined his confidence so that the: tribunal may be satisfied about the _bona_ _fides_ of the 'firing• as contrasted with the colourable exercise of power hiding a not-so-innocuous purpose. _Th.e_ _backdrop_ The facts and circumst-.mces become decisive of the fate of the case even where the law is simplistic or fair in its face. Here, what are the events and enviironments of employment leading to the worker being given the boot ? Is the order an innocent and, therefore, legal quit notic<. sanctioned by the Standing Orders which does not stigmatise the worker but merely bids him good-bye ? Oris it a sinister intent to punish as a guileless order based on 'loss of confidence', an alibi which, on a certain reading of this Court's rulings, is also a protective armour .against judicial probe and setting aside? E G H A B #### c ##### n E F G H L. MICHAEL v. JOHNSTON PUMPS _(Krishna Iyer,_ _l.)_ 4 91 Michael, a permanent employee of proved efficiency and six years' standing, was appreciatively given two 'merit' increme,1ts. But a letter of September 2, 1970 told him off service, giving him one month'! 'notice-pay' discharging him without damning, as distinguished from dismissing him for misconduct. The rival versions illumine the factual confrontation, the resolutioa of which is no easy legal essay. The worker, Michael, through his Union, protested against the 'sack' order as victimisoation of a Trade Union activist but the Management was heedless, conciliation was fruitless and the dispute between the Union and the Management was eventually referred by the Delhi Administration to the Labour Court for adjudicution. The reference ran thus : "Whether the termination of services of Shri L. Michael is illegal and/or unjustified and. if so, to what relief is be entitled and what directions are necessary in this respect ?" Both sides stated their cases in their pleadi'ngs and the true nature of the conflict emerges from them. The story set out by the employee in his statement before the Labour Court was tfrat although he was efficient, appreciated and ·awarded merit increments, the Management was antagonised by his active part in the formation of an Employees' Union, especially because oral warnings by the Regional Manager against his Unionist procfr.dty was ignored. Michael became the treasurer of tqe Union. This Union chapter claimed its price, for the Management quietly terminated his services by a simple letter which reads : "We are sorry to advise that your services are no longer required by the Company. As such, this letter may be treated as a notice for the termination of your services with immediate effect. As for the terms of your employment Jetter, on termi.nati<YJ of services you will be paid one month's salary extra. You may please call on the undersigned and have your accounts settled." This act, claims the worker, was 'in flagrant violation of t:lementary principles of natural justice without assigning any reason and without giving him an opportunity to defend himself. This, in his statement he challenged the termination as 'wIOngful, malafide, illegal, and an act of victimisation'. The counter case of the management get up in its statement, as is apparent from the discharge order, is that no dismiJsal is involved, no enquiry necessary a•ad no illegality inv-alidates. The management claimed that the alleged annoyance with the workman for union activity was a concoction in self-defence, as the Management had not even knowledge of the formation of the Union. This latter limb of the plea is a little too naive. The warning by the Regional Manager was denied and the reference to trade union activities by the worker was more 'to create a ground for the workman's daim and has been levelled as a matter of habit and routine'. The basic plea of the management was that the action being a simple 4 92 SUPREME COURT REPORTS [1975J 3 S.C.I\. termination without a sting, the process and consequence of a disciplinary action were not attracted. The Management, however, took the Court into confidence lll explain why the employee was discharged. He was employed as a Receipt and Despatch Cierk in the office upto 10-3-1970. As ar1 in sid~r with access to office corresponde,1ce the employee misused bis position by passing on 'very important and secret information about the affairs of the company to certain outsiders'. He was consequc11tially shiftl!d to the post of clerk handling posting of bills and collection of payments but the workman, although deilied direct access to com~s­ pondence in the Receipt and Despatch section, made attempt 'to elicit information from the section with a view to pass it on to outsiders'. The upshot of these activities of which the management was aforted was a loss of confidc~nce in the employee. This unreliability was visited with non-injuri()us termination of service by a _bona_ _fide_ order. Therefore, the action was claimed to be legal and immune to judicial i nteif erenoo. Two socially vital factors must inform the urnlerstanding a.nd application of Industrial jurisprudence. Tbe first is the constitutional mandate of Part IV obligating the State to make 'provisiO'J for securing just and humane conditions of work'. Security of. employment is the first requisite of a worker's life. The second equally axiomatic consideration is that a worker who wilfully or anti-socially holds up the wheels of production or undermines the success of the business is a high risk and deserves, in industrial interest, to be removed without tears. Legislation and judicial interpretation have woven the l.egal fabric. We have to see whether on the facts of the present case what the relevant law is, whether it has been applied by the Labour Court rightly and whether the appellant has merit on his side, judged by the social conscience and judicial constructiQ/a of the law in this br.ancb of discharge _simpliciter_ versus disguised dismissal. A few salient facts need emphasis before the principles of law arc applied. The workman in his statement stressed the case of _n!alus_ _animus_ due to bis union activities, although be did vaguely refer to the termination of service as wrongful and _malafide._ From this it cannot be argued, as the M:rnagement sought to make out, that his d1::nial of leaking out office secrets wa5 an after-thought pleaded only in the rejoinder and therefore liable to be discredited. How could the worker have a hunch about the management's undisclosed ground for dismissal ? When the latter stated the reason which prompted this action ior the ~t time befor:e the Labour Court, .the .workman in bis reply refuted thIS case. It 1lS noteworthy that there ts no speck of re1:ord or any hint of written material in support of the story that the management had cr~ible information of the appellant betraying sensitive secrets of busmess. The letters sent by the Union and the worker requesting for reinstatement were being ignored. The management could well have disclosed their suspicion fa reply and told the Union and the ~orkman that they resorted to an innocuous discharge to avoid puni t1v~ trauma. The management could have divulged in writing to A B ## c D l G H A B #### c D E F G H L. MiCHAEL v. JOHNSTON PUMPS _(Krishna_ _Iyer,!.)_ 49:! the Conciliation Officer their legitimate fears about the worker's inte,;rity and their considerate action of simple termination. This · too they failed to do. In theif writte';1 statement in Court the Management asserted for the first time that the employee was an intractable smuggler of inside information. The statement winds up with the legalistic plea : 'the management had, in the meanwhile, lost confidence in the workman'. This culminating collapse of trust is alleged to be the primary cause for the discharge from employme'at. AL the time of the evidence, M.W.l, a former Regional Manager, swore that the workman joined as a pump operator in 1963, w•as promoted as clerk in 1967, that the suspicion of disloyal communication arose 'for the first time in 1968' and yet 'thereafter he was given _two_ _increments_ _extra_ _in_ _addition_ _to_ _normal_ _increments._ He was a hard working· man and has a very good memory but the suspicion was there'. These are the facts and the evidence in the case and it has bee,1 fairly conceded before the Labour Court by the Management's representative that were the action regarded as punitive it was bad, there having been no enquiry whatever with liberty to the employee to meet the charge. But the single slender strend on which the discharge was suspended was 'loss of confidence' of the management in the employee. The Labour· Court argued : "According to the management, as there was no proof with it for this suspicion it could not proceed against him departmenrally and, in the circumstances, it was considered desirable to terminate his service3 by passing an order of discharge without any stigma attached to it." While on all hands it was agreed that the employee was efficient, the court took the view that the motivatio•a for the termination was the 'suspicion which lurked in the mind of the Regional Manager that information regarding tenders was being passed on by the workman'. We have to find out whether the holding in the award that, on the ' materials above placed, the action could be called colourable or saved as _bona_ _fide,_ could be castigated as achieving an illegitimate end or supported as a premature but straight-forward and harmless farewell. In short. was loss of confidence a legal label affixed by the management to eject the workman, there being no other legal method of accomplishing their wish to remove him for misconduct? I,· Two questions, therefore, fall for decision. Can a person, reasonably instructed ir. the law and scrutinising with critical faculties the facts on record, come to th.e conclusion that the snapping of the tie of master and servant in the present case was innocuous and _bona-_ _fide_ or oblique circumvention of the processual protection the law provides before a workman is dismissed for mis-c0'11duct ? We can discern harmony and consistency in case law _Chartered_ _Bank(_ _[1]_ _)_ and _Murugan(_ _[2 ]_ _)_ through _Sudder_ _Of!ice(3)_ from and (1) [1960] 3 S. C R. 441. (2) [1965] 2 S. C. R. 148. (3\ fl9i0] II L. L. J. 620. 17-423SCl\75 494 SUPREME COURT REPOl.TS [1975) 3 s.c.R. _Air_ _India_ _Corporation_ ( [1] ). The social justice perspective und pa.rti###### cular facts are important, though. The plethora ot precederits need not, be covered in extenso as the law laid down is the same ex1:ept that judicial response to each case situation leads to emphasis on different facets of the principle. Even so some milestone decisions, if we may say so, may be considered. fn _Muruga11_ _Mills_ _Case_ (supra) Wanchoo J (as he then was), speaking for th(: Court made the following observations : "The right of the employer to terminate the services of his workman u'L1der a standing order like cl.17(a) in the present case, which amounts to a claim 'to hire and fire' an employee as the employer pleases and thus completely negatives security of service which has been secured to industrial employees through industrial adjudication, came 1~? for c0nsidcra1ion befor,e the Labour Appellate Tribunal in _Buckingham_ _&_ _Carnatic_ _Co._ _Ltd_ v. _Workers_ _of_ _the_ _Compr.._ _·y_ (1952 L.A.C. 490). The matter the"1 came up before this Court also in _Chartered_ _Bank_ v. _Chartered_ _Bank Employees_ _Union_ (1960 3 SCR 44 I and _the_ _Management_ _of_ _U._ _B._ _Dutt_ _&_ _Co._ v. _Workmen_ _of_ _U._ _B._ _Dutt_ _&_ _Co._ (19152 Supp. 2 SCR 822) wherein the view taken by the Labour Appellate Tribunal was approved and it was held that even in a case like the present the requirement of bona fides was tsse't1tial and if the termination of service was a colourable exercise of the power or as a result of victimis•ation or unfair labour practice the industrial tribunal would have the jurisdiction to intervene and set aside such termination. The form of the order in such a case is not waclusive and the tribunal can go behind the order to find the reasons which led to the order and then consider for itself whether the termination was a colourable exercise of unfair Jabour practice. If it came to the conclusion that the terminaticm was a colourable exercise of the power or was a result of victimisation or unfair labour practice, it would have the jurisdiction to intervene >and set aside such t~rmination." In that case the form of the order had no foul trace, but before the Tribunal dereliction of duty and go-slow tactics were disclosed as the inarticulate reasons. This Court ruled : 'This clearly amounted to pm1ishrnent for misconduct and therefore to pass an order under cl.17(a) of the Standing Orders in such circumstances was clearly a colourable exercise of the power to terminate the services of a workman under the provisions of the Standing Orders." Shri M. K. Ramamurthy, coun,cl for the appellants, contended for the proposition that cve,1 where a management had the power to terminate tl;e scn·ices of its employee without reasons but with notice pay only, the _colourable_ _exercise_ of that power invalidated it, and the (I) [1972] 3 S. C. R. _05._ A B ### c E F G H A D E F G H L. MICHAEL v. JOHNSTO.N PUMPS _(Krishna_ _Iyer,_ _J.)_ 4 95 Court could probe beneath the surface to check upon the _bonafides_ behind the exercise of the power. If the reasons including the termination were victimisation, unfair 1'abour practice or mis-conduct, it was foul play to avoid a fair e11quiry and fall back upon the power to terminate _simpliciter._ There me myriad situations where an employer may, in good faith, have to reduce his st•aff, even though he may have only a good word for his employees. Simple termination is a weapon useable on such occasions and not when the master is willing to strike but afraid to ?Vound. We have been referred to the _Bihar_ _State_ _Road_ _Transport_ _Corporation_ case(l). The power of the Court to go behind the language of the order is reaffirmed there. In _Sudder_ _Office_ (supra) the Court apparentlY. laid stress on the Management's right to terminate the services _simpliciter_ under the terms of contract, where there was no lack of _bona_ _{ides,_ unfair Jabour practice or victimisation. It is signifit:ant that this Court used language and laid down law very much like in the earlier cases and did refer to the precedents O'il the point. For instance, Vaidialingam J., there observed: "It is needless to point out that it has been held by this Court in _The_ _Chartered_ _flank, Bombay_ _v._ _The_ _Chartered_ _Bank_ _Employees'_ _Union_ (1960 II LLJ 222) that if the termination of service is a colourable exercise of the power vested in the man•ageme'at or as a result of victimisation or unfair labour practice, the Industrial Tribunal would have jurisdiction to intervene and set aside such termination. In order to find out ll'hether the order of termination is one of termination simpliciter under the provisions of CO'atract or of standing orders, the Tribunal has ample jurisdiction to go into all the circumstances which led to the termination simpliciter." Tho manner of dressing up an order does not matter. The Court will lift the veil to view the reality or substance of the order. The Court, in that case. examraed the circumstances in detail to see whether a di.smissal for mis-conduct was being masked. as a simple send off with a month's pay, and held ultimately : "We are satisfied th•at the management has passed the order of termination simpliciter and the order . does not amount to one of dismissal as and by way of punishment." Of cpurse, loss of confidence io,1 the workman was alleged by the management and the Court found that it was not a camouflage. It may be noticed that in that case the workman was being entrusted with stores worth several lakhs of rupees, some goods were Jost from the stores and the Union was informed by the management that it had Jost confideace in the workman. In the written statement boforc the Labour Court the management alleged that the workman was the head godown-clerk who was the custodian of the company's property, the post being one of trust and confidence. It is noteworthy _that_ in the High Court the workman did not even file a counter-affidavit and the counsel for the Union and the workman agreed that the order o( termination was no~ a camouflage to cover up what really was an order (1) [19701 3 S. C.R. 708. _4_ 96 SUPREME COURT REPORTS [1975) 3 ~.C.R. of dismissal. He merdy urged that the termination of the services was really by way of dismissal. In this conspectus of circumstances, this Court found that the Head Clerk in charge of the engineeri\119 godown and responsible for the maintenance of considerable stores, held a sensitive position. This Court observed : "The entire basis of the Labour Court's award for holding that the order is one of dismissal is its view that the ma·,rngcment has invoked cl. 9 to camouflage its action. When that approach has been given up on behalf of the workman bcftirc the High Court the reasoning of the Labour Court falls to the ground and the High Court has acted within the jurisdiction under Art. 226 when it set aside the order ol' the Labour Court especially when there has been no finding of victimisation, ll'i1fair labour practices or mala fides recorded, against the management. To conclude we are satisfied that the High Court was justifie,i in setting aside the order of the Labour Court." We have gone into this decision at length to disabuse the impression that a new defence mechanism to protect termination of service . simpliciter, viz., loss of confidence, had been propounded in this ruling. We do not agree. that any such innovation has been made. The _Ait"_ _India Corporation Case_ (supra). may seem to support the 'no confidence' doctrine but a closer study contradicts any such view. Of course, Shri Tarkunde, counsel for the management, placed great reliance on this ruling. Needkss to say, this Court recognised the power of the Tribunal to go behind the form of the order, look at the substance and set aside what may masquerade as termination _simpliciter,_ if in walitv it cloaked a dismissal for misconduct 'as a colourable exercise of pc1wer by the management'. The Court repeated that an Industrial employer cannot 'hire and fire' his workmen on the basis of an unfettered right under the contract of employment. On the facts of the _Air-lndia Case_ (supra) the Court concluded that it was 'not possible to hold this order to be based on any conceivable misconduct'. Special reference was made to the grave suspicion regarding the complainant's private conduct with air~hbstesses. Where no misconduct spurs the action and a delicate unsuitability for the job _vis_ _a vis_ the young women in employment in the same firm is strongly suspected, resort to termination _simpliciter_ cannot be criticised as a _malafide_ mechination. In that background, the action was held to be _honafide_ and the overall unsuitability led to a loss of confidence in the employee. Not that the loss of confide·,1ce was exalted as a ground but the special circumstances of the case exonerated bad faith in discharge _simpliciter._ Before concluding the discussion, we may refer to the case of _Delhi_ _Transport Undertaking_ v. _Goel(!)_ adverted to by the Labour Court. Indeed that decision turned on Regulations framed under the Delhi Road Transport Authority Act, 1950 and not o•a pure Industrial Law or construction of the Standing Orders. Moreover, the Court, in that (I) _[1970]_ II LLJ 20. A B # c D E F G H A B ### c 0 E F G H L. MICHAEL _v._ JOnNSTON PUMPS _(Krishna_ _Iyer,_ _J.)_ 4 97 case, appears to have ~iscussed rulings under Art. 311 also. However, on the facts of that case, the Court was satisfied that order of termination was not a d;sguise or cloak for dismissing the employee and the ground given, that he was a cantankerous person undesirable to be retained was good. We do not read the _Delhi_ _Transport_ _case_ (supra) to depart from _Murugan_ _Mills_ _Case_ (supra). Indeed, the latter did not, and maybe _could not, overrule the former. The above study of the chain of rulings brings out the futility of the contention that subsequent to _Murugan_ _Mill's_ _Case_ (supra) _co/ourab/e_ _exercise_ _of_ _power_ has lost validity and _loss_ _of_ _confidence_ has gained ground. The law is simply this : The Tribunal has the power and, indeed, the duty to X-ray the order and discover its true nature, if the object and effect, if the attendant circumstances and the ulterior purpose be to dismiss the employee because he is an evil to be eliminated. But if the management, to cover up the inability to establish by an enquiry, illegitimately but ingeaiously passes an innocent-looking order of termination _simpliciter,_ such action is bad and is liable to be set aside. Loss of confidence is no new armour for the management; otherwise security of tenure, ensured by the new industrial jurisprudence and authe•aticated by a catena of cases of this Court, c•an be subverted by this neo-formula. Loss of confidence in the Law will be the consequence of the Loss of Confidence doctrine. In the light of what we have indicated, it is clear that loss of confidence is often a subjective feeling or individual reaction to an objective set facts 1md motivations. The Court is concerned with the latter and not with the former, although circumstances may exist which justify a genuine exercise of the power of simple termination. In a reasonable case of a confidential or responsible post being misused or a sensitive or strategic position being abused, it may be a high risk to keep the employee, once suspicion has started and a disciplinary enquiry cannot be forced on the master. There, a termination _simpliciter_ may be _bona1_ _fide,_ not colourable, and loss of confidence may be evidentiary of good faith of the employer. In the present case, the catalogue of circumsta'aces set out in the earlier part of the judgment strikes a contrary note. The worker was not told when he wrote; the Union was not disclosed when they demanded; the Labour Court was treated to verbal statements like; 'very reliable sources' and other credulous phrases without a modicum of evidence to prove bonafides. Some testimony of unseemly attempts by the workman to get at secrets outside his orbit, some radication of the sour.:e of suspicion, some proof of the sensitive or strategic role of the employee, should and would have been forthcoming had the case been _bona_ _fide._ How contradictory, that even when a strong suspicion of leaking out sensitive secrets was being entertained about the employee he was being given special merit increments over and above the normal increments' A case of _res_ _ipsa_ loauitur. Circumstances militate against the 'I say so' of M.W.1 that,he man-agement had suffered an ineffable loss of confidence. To hit below the belt by trading legal phmses is not Industr!al Law. We are constrained to express ourselves unmistakably lest industrial unrest induced by ###### ' 498 SUPREME COURT REPORTS [1975] 3 S.C.R. wrongful terminations. based on convenient loss of confidence should be generated. Before w1~ conclude we would like to add that an employer who believes or suspects that his employee, particularly one holding a position of confid~ace, has betrayed that confidence, can, if the conditions and terms of the employment permit, terminate his employment and dischurge him without any stigma attaching to the discharge. But such belief or suspicion of the employer should not be a mere whim or fancy. It should be _bona_ _fide_ and reasonable. It must rest on some tangible basis and the power has to be exercised by the employer objectively, in good faith, which means honestly with due care and prudence. lf the exercise of sucn power is challenged on the ground of being colourable or _ma/a_ _fide_ or an act of victimisation or unfair labour practice, the employer must disclose to the Court the grounds of his impugned action so that the same may be tested judicially. In the instant case this has not been done. There is only the _ipse dixit_ of the employer that he was suspecti [1] ag since l. 968 that the appellant was divulging secrets relating to his business. The employer has not disclosed the grounds m which this suspicion arose in 1968. Further after 1968, the appellant was given two extra increments, in addition to his normal increments, as stated already, in appreciation of his hard work:. This circumsr;mce completely demolishes even the whimsical and tenuous stand t'aken by the employer. It was manifest therefore that the impugned action was not _bona_ _fide._ It was urged by Mr. Tarkunde, learned counsel for the employer that the question whether or not the employer had lost conndence in the employee, was essentially one of fact a•,1d this Court should not disturb the finding of fact recorded by the trial court on this point. It is true that this Court, in appeal, as a rule of practice, is loath to interfere with a finding of fact recorded by the trial Court. But if such a finding is based on no evidence, or is the result of a misreading of the material evidence, or is so unreasonable or grossly u [1] njust tfatt no reasonable person would judicially arrive at that conclusion, it is the duty of this Court to interfere and set matters right. The case before us is one such instance, where we are called upon to do so. The Labour Court has misled itself on the law and we set aside its order. The work.man: will be reinstated with back: wages. However the management will be free, if it has sufficie·,1t material and if so advised, to proceed against the workman for misconducts or on other grounds valid in law. The appeal is, accordingly, allowed with costs. P.B.R. _Appeal_ _allowed._ A ### c D· F G