STATE BANK OF INDIA v. WORKMEN

STATE BANK OF INDIA _v._ WORKMEN OF STATE BANK OF INDIA AND ANR. AUGUST 24, 1990 [P.B. SAWANT AND K. RAMASWAMY, JJ.] _Industrial Disputes Act,_ _1947:_ _Sections 2(oo) and_ _25F-Bank_ _clerk-Charged_ _with misconduct-Issued notice and enquiry_ _held-_ _Para 52I(IO)(a) Shastri Award-Discharged on payment_ _of_ _one_ _month's pay in_ _lieu_ _of notice-Held discharge-Punitive in character-_ _Not amounting to 'retrenchment'._ _All_ _India Tribunal (Bank Disputes)_ _Award-Shastri_ _Award-_ _Paragraphs_ _52 I(5)(c) and_ _52 I ( IO)(c)-Punitive discharge_ _a11d_ _dis-_ _charge simpliciter-Distinction between-Predominant object_ _of the_ _Award-To protect employees._ A B c D The appellant Bank instituted a departmental inquiry against one of its employees, a clerk in one of its branches. The departmental t inquiry was held for four acts of misconduct and the inquiry officer came to the conclusion that two of the charges were fully proved, while one charge was proved to a limited extent, and the fonrth charge was not established. On the basis of tl!e report of the inquiry officer, !he E competent authority decided to dismiss the employee from service, and issued a notice to him under paragraph 52I(IO)(a) of the Award of the All India Industrial Tribunal popularly known as the Shastri Award, requiring him to show-cause as to why the said punishment should not be imposed on him. He was also given a hearing as required by the said provision, and thereafter an order was passed to the effect: that the F established charges viz. uttering indecent words, threatening the agent, and failure to do the work allotted are quite serious and would warrant dismissal, though he may not be dismissed, in view of the extenuating circumstances, but that at the same time it would not be desirable to retain him in the Bank's service, and that as such, "he be discharged on payment of one month's pay and allowances in lieu of G notice. In terms of para 52l(IO)(c) of the Shastri Award this would not amount to disciplinary action." An industrial dispute was raised by the first respondent-Union, and it was referred to the Central Government Labour Court, for " adjudication and by its award the Labour Court upheld the order of H dismissal. II A b E H 12 SUPREME COURT REPORTS [1990] Supp. l S.C.R. The first respondent-Union preferred a writ petition to the High Cotirt arid raised several contentions, but the High Court confined its decision only to oiie point, viz. whether the termination of the serVice Was retrefichment, and whether it was made in accordance with the provisions of Section 25F of the Industrial Disputes Act, 1947; held that the termination of the service of the second respondent was retrenchment within the meaning of section 2(00), and was made in breach of the statutory provision contained in Section 25F in as much as no retrenchment compensation was paid to the employee, and set aside, the order of termination of service. In the appeal by the Bank to this Court, the question for consideration was: whether the order of termination of service served on the employee, llmoonts to punishment or not. Allowing the appeal, this Court, HELD: I. It is not possible to sustain the view taken by the High Court since it proceeds on too literal an interpretation of the provisions of paragraphs 521(-S)(e) and 52J(JO)(c) of the Award and ignoring their context. [17BJ 2. The termination of service of the employee in the instant case under paragraph 521(10)(c) of the Award is as a result of the discip**linary proceedings,** **and** **is** **punitive.** **It** **is, therefore,** **not** **"retrench-** ment" within the meaning of Section 2(oo) of the Industrial Disputes Act, 1947. Hence, there was no questiou of complyiug with the provisions of Section 25F of the Act. The decision of the High Court has, therefore, to be set aside. [25G-H; 26A) 3. It is clear from the context in which sub-clause (e) of sub-para (5) occurs that the entite expression, namely, "have his misconduct condoned and be merely discharged" has nothing but penal implications, and the measure mentioned therein is a sequal to the disciplinary **action taken for one** **of the gross misconducts mentioned** **in** **sub-para** (4). His not possible to arrive at any other conclusion on a reading of the sub-paragraph as a whole. The discharge spoken of there is nothing but a punishment for a gross misconduct. This is so not only because it is enumerated as· one of the punishments along with others but also because firstly there is a provision of simple discharge elsewhere in paragraph 522 of the Award, and when the Award intended to provide for it, it has done so in sub-paras (2)(c), (2)(d) and (3). [20G-H; 21A-B) _i_ S.B.I. _v._ WORKMEN 13 4, Sub-paras (9) and (10) of paragraph 521 lay dowii the pfoce' A dure for taking disciplinary action as well as for awarding purilshriieiit following such action. Sub-paras (9); lO(a), lO(b) would indlcaie that discharge under sub-paras (2)(c), (3), (5) and (lO)(c) is also a punish' ment, for when the employee is discharged under the said provisions •fter the inquiry, under the provisions of sub-paras (9) and (10), there is nci provision made for treating either the whole cir part of the period ll of suspension during the inquiry, as on duty. [210 & G-H] 5. In view of the fact that sub-clause (a) requires that a hearing should he given to the employee against the proposed punishment, the authority is enjoined under sub-clause (c) to take into account the gravity of- the mis-conduct, the previous record of the employee arid any other aggravating or extenuating circumstances that may exist and may C be brought ou record "while awarding punishment by way of disciplinary action". The sub-clause then provides for discharge with or without notice or on payment of a month's pay and allowances, in lieu of notice. The punishment of discharge is to be awarded in two circumstances. _The first circumstance is when there are sufficiently extenuat- D ilig circumstances but the mis-conduct is of a "gross" type. The second circumstance is when the charge is such that the Bank does not for some reason or other think it expedient to retain the employee any foni:er in service but the evidence is insufficient to prove the charge. [220-E] 6. Read with sub-para (5)(e), the provisions of sub-clause (c) of E sub-para (10) become more clear that if a mis-conduct is riot of a "gross" type, it may be merely condoned without any further action. But when it is of "gross" type, the authority has no option but to condone and to proceed to discharge the employee. The expressions used both in sub-para (5)(e) and sub-para lO(c) in that respect are identical. Similar is the action contemplated for the second circum' F stance referred to in sub-para lO(c), namely when the charge though **unsustainable for want** **of evidence** **is** **such that** **it** **is considered** **inex•** pedient to retain the employee in service. [230-E] 7. Since in the context, such a discharge is by way ofpunisbmerit, the relevant provisions give a discretionary power to the authority to G **convert, what would otherwise be a dismissal into a** **mere** **discharge.** This is for the benefit of the employee. It protects him from the baneful consequences of dismissal. At the same time, it relieves the management of the burden of retaining him in service when it has become inexpe' dient to do so. Thus the provision of such discharge works to the advantage of both. At the same time, it cannot be gainsaid that the said H A B 14 SUPREME COURT REPORTS [1990] Supp. l S.C.R. discharge is as a result of the disciplinary proceeding. Although bt form it may not, and in the peculiar circumstances, it is intended that it should not look like a disciplinary action, it cannot be denied that it flows from and is a result of the disciplinary .Proceedings. To make clear, however, that the action, though spawned by the disciplinary proceedings should not prejudice the employee, the last sentence viz: "Discharge in such cases shall not be deemed to amount to disciplinary action", has been added by way of abundant precaution. [23F-H; 24A] 8. That this is not a discharge simpliciter or a simple termination of service becomes clear when it is compared both with the provisions of para 522(1), and with those of sub-paras (2)(c), (2)(d) and (3) of paragraph 521 itself. The distinction between discharge contemplated 1mder paragraph 521(10)(c) and discharge simpliciter or simple ter llli!lation of employment under the other provisions is clear enough. T!tis will also show that the two belong to different categories and are not the same. While the former is intended to be punitive, the latter is not. As is further clear from the provisions of paragraphs 521(2)(c), D (2)(d) and (3), the discharge contemplated there, as against simple terminatiqn, is in proceedings under "sub-paragraphs (9) and (10) infra relating to discharge". In other words, it is as a result of a disci plinary proceeding. [248; 2SC-D I 9. Tl! construe the discharge under paragraphs 52I(S)(e) and E 521(Hl)(~J as a simple discharge not flowing from disciplinary proceed· ings will deprive an employee of a valuable advantage, viz. that of challenging the legality and pr11priety of the disciplinary action taken against him, whatever the form of the order, by showing that he was either not guilty of any misconduct or thal the misconduct was not of a "gross" type or that the punishment meted out to him by way of dis· F charge was not warranted In the circumstances etc. It is not, therefore, ii! the Interests of the employees to construe the provisions as the High Court has done. The predominant object of the Award is to protect the interests of the employees. [2SE-F] 10. Remanding the matter to the High Court for deciding the (i other contentions raised in the writ petition, is not advisable for various reasons. The misconducts complained of against the employee are of 1966. lie was charge-sheeted In January 1968 and removed from service on April 9, 1970. The Court proceedings have been pending for more than about 23 years. In the meapwhile, the respondent No. 2 who was a clerk on the date he was charge-sheeted, has become a lawyer and has H been practising as such. Further, the mis-conducts, which are held S.B.l. _v._ WORKMEN [SAWANT, J.] 15 proved by the Labour Court are of "gross" type within the meaning of paragraph 521(4) of the Award. 'l;he Labour Court is the final fact· finding forum. The High Court while setting aside the order of the Labour Court has granted reinstatement in service and back wages and pursuant to the said order, the employee has already received an amount of Rs.93,000. The effect of decision would be to set aside not only the order of reinstatement but also of the back-wages which would require the employee to refund the said amount. Even though the employee was prepared to refund the amount and to contest the petition on other grounds, at present, the employee is in his fifties. Taking into consideraiion all these facts the interests of justice would be served if the order of the High Court is set aside and the order of the Labour Court is restored without requiring the employee to refund the amount he has already received. [26E-G; 27C·E] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4381 of 1990. B c From the Judgment and Order dated 23.8. 1989 of the Bombay D High Court in W.P. No. 494of1982. Ashok H. Desai, SolicitorfGeneral, Shishir Sharma and P.H. Parekh for the Appellant. Vinod Bobde, S.V. Deshpande and P.S. Sadavartey for the E Respondents. The Judgment of the Court was delivered by ( SA WANT, J. Special leave granted. The appeal is set down for hearing by consent of both the parties. F 2. This appeal involves a question of interpretation of paragraphs 521(5)(e) and 52l(IO)(c) of the Award of the All India Industrial Tribunal (Bank Disputes) which is popularly known as the Shastri Award, (hereinafter referred to as the Award) and is important for the entire banking industry in the country covered by the Award. G 3. In order to appreciate the significance of the question, it is necessary to narrate the facts leading to this appeal. The employee concerned was working as a clerk in the Gadchiroli branch of the appellant State Bank of India at the relevant time. A departmental inquiry was held against him for four acts of misconduct and the H A B c D E 16 SUPREME COURT REPORTS ( 1990] Supp. 1 S.C.R. inquiry officer came to the conclusion that two of the charges were fully proved while one charge was proved to a limited extent and the fourth charge was not established. On the basis of the report of the inquiry officer, the competent authority tentatively decided to dismiss the employee from service, and issued a notice to him under paragraph 52 l(lO)(a) of the Award, _to_ show cause as to why the said punishment should not be imposed on him. The competent authority also gave him a hearing as required by the said provision, and thereafter passed an order, the operative and relevant part of which is as follows: "Looking 'at the entire case I find that the established charges, viz., uttering indecent word, threatening the Agent and failure to do the work allotted are quite serious charges and would warrant dismissal. However, the employee has had the benefit of a very tenacio~s defence from the date of the issue of the show cause notice for dismissal and various arguments have been raised with a view to evade )he punishment which would normally follow out of the seriousness of the offences. Taking note of them, even though I do not quite find them tenable, as indicated in my detailed observations thereon, and of the extenuating circumstances (most important of which is the comparatively young age of the employee) I have decided not to impose the punishment of dismissal. At the same time I am of the opinion that it would not be desirable to retain Shri Sadavarte in the Bank's service and accordingly I order that he be discharged on payment of one month's pay and allowances in lieu of notice. In terms of para 521( 10)( c) of the Sastry Award, this would not amount to disciplinary **action."** ' F 4. An industrial dispute was raised by the first respondentUnion, and in due course it was referred to the Central Govt. Labour Court, Bombay for adjudication. By its award of March 2, 1981, the Labour Court held that the order of dismissal of the petitioner was proper. Against the said decision, the respondent-Union preferred a writ petition before the High Court raising several contentions. The High Court confined its decision only to one point, viz., whether the termination of the service was retrenchment, and if so, whether it was made in accordance with the provisions of Section 25F of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act). The Court held that _the_ termination of tlje services was retrenchment and was H made in breach of the said provisions in as ml!ch as nq retrenchment S.B.I. _v._ WOR](MEN [SAWANT, J.] 17 compensation was paid to the employee. The termination of the A services was, therefore, set aside. 5. It is not possible to sustain the view taken by the High Court since it proceeds on too literal an interpretation of the provisions of paragraphs 521(5)(e) and 52J(!O)(c) of the Award and ignoring their context. We may first refer to the provisions with regard to retrench, men! under the Act. Section 2(oo) of the Act defines retrenchment as follows: . "Retrenchment" means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include (a) voluntary retirement of the workman; or **"Compensation in** **cases of retrenchment''.** 6. As pointed out above, paragraph 521 is in Section III which contains the only other paragraph. namely, paragraph 520. That paragraph is a prologue to Section III and to paragraph 521, which both deal with procedure for taking disciplinary action. Para 520 reads as follows: "Under the subject of disciplinary action we deal with **dismissal, suspension, warning or censure, fine, the making** of adverse remarks and the stoppage of an increment." c **D** E { It is, therefore, clear both from the heading of Section III as well as from the contents of para 520 that the provisions of para 521 deal with **F** nothing but disciplinary action and th_e procedure for taking such **action.** 7. Paragraph 521 which is a self-contained code of disciplinary action and of the procedure for taking it, begins with the following statement: G **"A** **person against whom disciplinary action is** **pi-o-** posed or likely to be taken should, in the first in>tance, be informed of the particulars of the charge against him; he should have a proper opportunity to give his explanµtion <1s to such particulars. Final orders shoulcj-be passed after due **H** 18 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R. consideration of all the relevant facts and circumstances. With this object,, in view we give the following directions: A It classifies delinquencies into three categories, namely, (i) offences (ii) gross-misconduct and (iii) minor-misconduct and prescribes proceB <lure to deal with each of them. c D E Sub-paragraph (1) to (3) deal with the cases of offences. Subpara (1) defines offence to mean any act involving moral turpitude and for which an employee is liable to conviction and sentence under the provisions of law. Sub-para 2(a) states that when in the opinion of the management, the employee has committed an offence and he is not prosecuted by the prosecuting agency, the bank may take steps to prosecute him or get him prosecuted. The bank is also empowered to suspend the employee in such circumstances. Sub-paragraph 2(b) states that if the employee is convicted in such prosecution, he may either be dismissed or "be given any lesser form of punishment as mentioned in sub-para 5 below". However, if he is acquitted with or without the benefit of doubt, sub-para 2(c) lays down two different procedures to meet the two situations. It states that even if an employee is given a clean acquittal, it is open to the management to proceed against him under the provisions set out in sub-paras (9) and ( 10) "relating to discharges". It may be mentioned here that the provisions with regard to the discharges in sub-paras (9) and (10) referred to here, are contained only in sub-para JO(c) and they come into play only when the management decides under sub-para (9) to take a disciplinary action and the action is taken after the procedure for the same as laid down in sub-para (10) is followed. But with that, we may deal with a little later. F In cases of clean acquittal and a departmental inquiry held thereafter, the management is given yet another option. Instead of the discharge as provided under sub-para 10( c), the management may only terminate the services of the employee with three months' pay and allowances in lieu of notice, if it comes to the decision not to continue G the employee in service. In such cases, he shall be deemed to have been on duty during the entire period of suspension, if any, and therefore shall be entitled to the full pay and allowances minus the subsistance allowances he had drawn and also to all other privileges for the period of suspension. Such simple termination of service is not pro- ·-. vided for either in sub-para (5) or in sub-para (10). Thus it is obvious H from sub-paragraph 2(c) that when a departmental inquiry is held or .,._ S.B.l. _v._ WORKMEN {SAWANT, j.l 19 when disciplinary action is taken in case of a clean acquittal. two options are given to the management, namely, (i) to discharge the A employee under sub-paragraph lO(c) with or without notice or on payment of only a month's pay and allowances, in lieu of notice but without the benefit of the suspension being converted into a period of duty or (ii) to terminate the services with three months' pay and allowances, in lieu of notice and also with the further benefit of converting !3 the period of suspension into a period of duty. However, when the acquittal is with the benefit of doubt and the management does not proceed to discharge the employee under sub-para 10( c) bµt wants to resort to the second option of the termination of service with three months' pay and allowances in lieu of notice, it is left to the discretion of the management to pay the employee such portion of the pay and allowances for the period of suspension as the managemellt may deem c proper, and unless the management so directs, the period of suspension is not to be treated as the period spent on duty. It should, how ~ver, be remembered that the course of action open to the manage, ment under sub-paragraph 2( c) is in tlje alternative to and not in neg4, tion of the other modes of punishment, namely, to dismiss etc. the employee. What is, however, necessary to note is the distinction bet###### I 'I ~ ween an action of discharge following the disciplinary proceedings under sub-paras (9) and (JO) and that of simple termination of service under sub-para 2( c). The same distinction is also maintained in subpara 2(d). tion of the other modes of punishment, namely, to dismiss etc. the D employee. What is, however, necessary to note is the distinction bet'I Sub-para (3)°throws yet more light on the subject. It states that where an employee is guilty of an offence but he is not put on trial ## " within a year of the commission of the offence, the management l)lay deal with him as if he had committed an act of "gr0ss misconduct'', or ' "minor misconduct" as the case may be. The employee may not be put on trial within an year, either because the prosecuting authority re, f fuses to do so, or because it comes to the conclusion that there is no case for prosecution. Hence although the management is empowered **to** **proccCd against the** **employee** **under the provisions set out** **in** **sub-** paras (9) and (10) relating to discharge, he has to be given the benefit of being treated on duty for the period he was under suspension, if any, and he is entitled to all the further benefits accruing on that G account. In the departmental inquiry following such non-prosecution, the management may also come to the decision not to continue the employee in service. In that case instead of proceeding against him, under the provisions relating to discharge in sub-paras (9) and (10), the management is el)lpowered to terminate his services with tliree #### " months' pay and allo.,,,ances in lieu of notice as provided in sub-para under the provisions relating to discharge in sub-paras (9) and (10), the management is el)lpowered to terminate his services with tliree months' pay and allo.,,,ances in lieu of notice as provided in sub-para H A B c 20 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R. (2). Thus sub-paragraph (3) like sub-para (2) also makes a distinction between discharge under sub-paragraph (lO)(c) and a mere termination of service with three months' pay and allowances, in lieu of notice. It is the latter action which amounts to the simple discharge and for it, a separate .Provision is made in paragraph 522 in Section IV. We will refer to that provision at a later st.age. What is necessary, to bear in mind at this stage is the distinction made between the discharge under sub-paragraph ( 10) and simple termination of service in sub-paras 2(c). 2(d) and (3). 8. Sub-para (4) of paragraph 521 defines "gross misconduct" and sub-para (5) prescribes punishment for "gross misconduct". Sub-para (6) defines "Minor misconduct" and sub-para (7) prescribes punishment for such misconduct. Sub-para (8) then states the manner in which the record is to be kept when action is taken under sub-paras (3), (5) or (7) which deal with the punishment for "gross misconduct" or "minor misconduct" as the case may be. D Sub-para (5) as stated above, follows on the heels of the enu meration of gross misconducts in sub-para (4), and reads as follows: ' E F "(5) An employee found guilty of gross misconduct may: (a) be dismissed without notice, or (b) be warned or censured, or have an adverse remark entered against him, or (c) be fined, or (d) have his increments.topped, or ( e) have his misconduct condoned and be merely dis**charged".** It should be clear from the context in which sub-clause ( e) of subG paragraph (5) occurs that the entire expression, namely. "have his mis~onduct condoned and be merely discharged" has nothing but penal implications, and the measure mentioned therein is a sequel to the disciplinary action taken for one of the gross misconducts mentioned in sub-para (4). It is not possible to arrive at any other conclusion on a reading of the sub-paragraph as a whole. The disH charge spoken of there is nothing-but a punishment for a gross miscon S.B.I. _v._ WORKMEN (SAWANT, J.] 21 duct. This is so not only because it is enumerated as one of the punish- A ments along with others but also because firstly there is a provision of simple discharge elsewhere in paragraph 522 of the Award, as pointed earlier, and when the Award intended to provide for it, it has done so in sub-paras (2)(c), (2)(d) and (3). If it was intended to provide for a discharge simpliciter there, which was not meant to be penal, there was no need to enumerate it in sub-para (5) which specifically enu- B merates punishments for acts of gross-misconduct. Secondly, nothing prevented the authors of the Award in stating in the said sub-clause (e) that the discharge simpliciter was in terms of paragraph 522. We have pointed out earlier the distinction made by the Award in sub-paragraphs (2)(c), (2)(d) and (3) between the discharge following proceedings under paras (9) and (10) and the simple termination of service or c discharge simpliciter as contemplated by paragraph 522. B c 9. Sub-paragraphs (9) and (10) of paragraphs 521 lay down the procedure for taking disciplinary action as well as for awarding punishment following such action. Sub-para (9) says that when it is decided to take a disciplinary action against an employee, such decision shall .be D communicated to him within three days thereof. Sub-Para (lO)(a) then lays down the procedure to be followed while conducting the disciplinary proceedings. It also enjoins upon the management to give the employee a hearing with regard to the nature of the proposed punishment. The latter provision has also bearing on the construction of sub-clause (c) thereof. We will advert to it instantly. E Sub-clause (b) of sub-para (JO) gives power to the management to. suspend the employee pending inquiry. Its other provisions also throw light on the construction of sub-clause (c) thereof. These provisions state that although the employee is suspended during the inquiry, if on the conclusion of the inquiry it is decided to take no action F whatsoever against him, he shall be ·deemed to have been on duty throughout the period of suspension and would accordingly, be entitled to the full wages and allowances and all other privileges for the said period. On the other hand "if _some punishment other than dismis-_ _sal"_ is inflicted, it is left to the discretion of the management to treat either the whole or a part of the period of suspension as on duty with G the right to corresponding portion of the wages, allowances, etc. These provisions would indicate that discharge under sub-paras (2)(c), (3), (5) and (JO)(c) is also a punishment, for when the employee is discharged under the said provisions after inquiry, under the provisions of sub-paras (9) and ( 10), there is no provision made for treating either the whole or part of the period of suspension during the inquiry, as on H duty. " ) ., A B c D E f 22 SUPREl>JE COURT ~EPORT& (!990) Sµpp, l S,C.R. I T.hen fpUows t.he provision of sub-clause ( c) wqich is crucial fpr [1] 1 our purpqse. Tl]e said sub-clause reads as follows: "In awarding punisbrnen,t by way of disciplinqfy action the authority concerned sha!l ta~e into accoµnt the gravity of the misconduct, the preyipus recofd, if any, of tlte employee and any otper aggravating pr ~xtequating circumstances that may exist. Where sufficie11t!y e~t~l)µ~!­ ing circumstances exist the misconduct may be condoned and jn ~ase such misconduct is of the "gross" type J1e may be merely discharged, with or without notice pr on payment of a month's pay and allowances, in lieu of notice. Suc!i discharge may also be given where the evidence is found to be insufficient to sustain the charge and where the bank does not, for some reason or other, tpink it elfPedient to retain the employee in question any longer .in service. Discharge in such cases shall not be deemed to amount \o djsciplinary action." ln view of the fact that sub clause (a) requires that a hearing should be given to the employee against the proposed punishment, the authority js enjoined under sub-clause (c) to take into account the gravity of the mis-conduct, the previous record of the employee and any ot]jer aggravating or extenuating circumstances that may exist and may be brought on record "while awarding punishment by way of disciplinary action". The sub-clause then provides for discharge with or without notice or on payment of a month's pay and allowances, in lieu of notiF~· The punishment of discharge is to be awarded in two circumstances. Tue first circumstance is when there are sufficiently extenuating circumstances but the misconduct is of a "gross" type. In Atlter words, where the misconduct is not of a "gross" type and there are extenuating circumstances, the misconduct may merely be condoneq without the authority proceeding to inflict the punishment of discharge. That is made clear by stating thus-"and in case such misconduct is of the gross type he may be merely discharged" etc. The secbnd circ1Jmstance in which the authority is given power to inflict 5µ~h discharge is when (he charge is such that the Bank does not for sqll)e reason or other t]jink it expedient to retain the employee any lopger in service but the evidence is insufficient to prove the charge. Read in the context, therefore,-tlle discharge given under sub-clause (c) can hardly be doµbteq as being a punishment. However, as was s0ught to b~ con\endeq on belialf of the respopdent-Un,iqp al!!'! £ertai11lv with s0me force, t\le !~st sen\ence of the said clause is couc~ed. iq ### I S.B.I. _v._ WORKMEN [SAWANT; J.) 23 a language wllich is calculated to create considerable doubt arid corifusiciri with regard io the true nature of the action _bf_ dischar.ge spoken of there. The said sentence states in so mariy words that the disi:harge effected riridei both the circulllstarices shail not be "deellled'; io atiiollnt to "disciplinary action". Read in isolation, the said sentence does purport to convey that the discharge is not by way _bf_ a puriishrilerit arid ori that score we may _ilbt_ firid any fault with the reasoning of the High CoiJrt. But as stated at the very outset, we have to tead this seriterice also in its proper context and in the light of the othet provisions of the Awatd. As pointed out earlier, one of the two circumstances in which such discharge is to be effected is when the tiiiscoriduct is _bf_ a "gross'; type and even if there _ate_ extenuating circumstances. It is to provide a punishment precisely for misconducts of gross type that a provision for such discharge is made in sub-clause (e) of sub-para (5) to which we have already made a reference. Read with the said sub-para (5)(e), the provision of the present sub-clause (c) of sub-para (10) becomes more clear. If a misconduct is not of a "gross" type, it may be merely condoned without any further action. But when it is of "gross" type, tlie authority has no option but to condone and to proceed to discharge the employee. The expressions used both in sub-para 5(e) and subpara 10( c) iri that respect are identical. Similar is the action coniemplated for the second circumstances referred to in sub-para IO(c), namely' when the charge though unsustainable for want of evidence is such that it is considered inexpedient to retain the employee iri sefvice. 10. If our reading of the provisions is correct, then it needs no elal5oraie explanation as to why the punishlllerit of discharge both in sril5-para 5(e) and lO(c) has beeri worded as it is and why forther ii became necessary to add the last sentence to sub' para 10( c). Sirice iri the coritext, such a discharge is by way of punishment, the relevant provisions give a discretionary power to the authority to convert, what would otherwise be a dismissal into a mere discharge. This is for _tlie_ benefit of the employee. It protects him from the baneful coilseq uences of dismissal. At the same time, it relieves the management of the burden of retaining him in service when it has become inexpedient to do so. Thus the provision of such discharge works to the advantage of both. At the same time, it carinot be gainsaid that the said discharge is as a result of the disciplinary proceeding. Although in form it rriay not, arid for the reasons stated above in the peculiar Circulllstarices, it is iiiiendeci that it should riot look like a ciiscipliriaty aciiori, ii canri6t be' detiied that it flows from arid is a result of the diseijJlinary jJioceed' c E **A** **B** c **D** E F G H 24 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R. ..., ings. To make clear, however, that the action, though spawned by the disciplinary proceedings should not prejudice the employee, the last sentence in question has been added by way of an abundant precaution. 11. That this is not a discharge simpliciter or a simple termination of service becomes clear when it is compared both with the provisions of paragraph 522(1), and with those of sub-paras (2)(c), (2)(d) and (3) of paragraph 521 itself. Paragraph 522 as stated earlier is in section IV and is entitled "procedure for termination of employment" as distinct from the title of section III, namely, "procedure for taking disciplinary action" in which paragraph 521 occurs. Paragraph 522 begins by saying "We now proceed to the subject of termination of employment. We give the following directions: .......... "Thereafter in sub-paragraph (1) thereof, it speaks of a simple termination of service of a permanent employee and in sub-paragraph (4), talks of similar discharge simpliciter of employees other than permanent employees. But what is important to note is that the discharge simpliciter or simple termination of service which is provided for here, has two distinguishing features. Firstly, it is effected in cases not involving disciplinary action for mis-conduct and secondly, it is to be effected by giving three months' notice or of payment of three months' pay and allowances in lieu of notice, in the case of permanent employees and by giving one month's notice or on payment of one month's pay and allowances, in lieu of notice in case of probationers. There is some apparent conflict in the provisions of sub-clause (1) and sub-clause (4) with regard to the period of notice in case of an employee other than a permanent employee. It is, however, immaterial for our purpose. There are yet other conditions imposed by sub-para ( 6) of paragraph 522 when the termination of the service of the employees is on account of the closing down of the establishment or when retrenchment of more than 5 employees is to be effected. But those conditions again do not obliterate the distinction between discharge simpliciter or simple **termination of service other than** **as** **a result of a disciplinary** proceed~ ing, and discharge effected under sub-paras 5(e) and lO(c) as a result of such proceedings. As stated earlier, the termination of employment other than discharge provided for in sub-paras 2(c), 2(d) and 3 of paragraph 521 also requires three months' pay and allowances, in lieu of notice as do the provisions of paragraph 522(1). But unlike the provisions of paragraph 522(1) which require three months' notice or payment of three months' pay and allowances only in case of permanent employees and one month's notice or one month's pay and allowances, in lieu of notice in case of employees other than per ### I ,. ')S.B.l. _v._ WORKMEN (SAWANT, J.l 25 "' manent employees, the relevant provisions of paragraphs 521(2)(c) A and 521(3) require, a notice of three months' or pay and allowances for three months' in lieu of notice, in respect of all employees. Further, ~ what is equally important to note is that whereas para 522(1) and 521(2)(c) and (3) relating to simple termination of service, require the requisite notice to be given or the payment of salary allowances in lieu thereof, the provisions of discharge contained in the sub-paras (2)(c) B and (3) and ( 10)( c) of para 521 do not in all cases require notice or pay and allowances, in lieu of notice. The discharge may also be affected under the said provisions without any notice or pay and allowances in _f_ lieu of it. Thus the distinction between the discharge contemplated under paragraph 521( lO)(c) and discharge simpliciter or simple termination of employment under the other provisions will also show that the two belong to different categories and are not is clear enough. This c the same. While the former is intended to be punitive, the latter is not. As is further clear ftom the provisions of paragraphs 521(2)(c). (2)(d) # • will also show that the two belong to different categories and are not the same. While the former is intended to be punitive, the latter is not. As is further clear ftom the provisions of paragraphs 521(2)(c). (2)(d) and (3), the discharge contemplated there, as against simple termination. is in proceedings under "sub-paragraphs (9) and ( 10) infra relating to discharge". Jn other words. it is as a result of a disciplinary D ... proceeding. , _12._ Apart from it, we find that to construe the discharge under 521(5)(e) and 521( IO)(c) as a simple discharge not flowing from disciplinary proceedings will deprive an employee of a valuable advantage. viz .. that of challenging the legality and propriety of the disciplinary action taken against him. whatever the form of the order, by showing ~ that he was either not guilty of any misconduct or that the misconduct was not of a "gross" type or that the punishment meted ou.t to him by .. way of discharge was not warranted in tile circumstances etc. It is not. therefore. in the interests of the employees to construe the provisions as the High Court has done. The predominant object of the Award is to F protect the interests of the employees. It is for all these reasons that we are unable to accept the very ##### ' able arguments advanced by Mr. Bobde on behalf of the respondentUnion to support the reasoning of the High Court. G 13. The result to our aforesaid discussion is that the termination of service of the employee in the present case under paragraph 52 l(IO)(c) of the Award is as a result of the disciplinary proceedings and is punitive. It is. therefore. not "retrenchment" within the mean~ -.;' ing of Section 2(oo) of the Act. Hence. there was no question of complying with the provisions of Section 25F of the Act. The decision H ,,.., §UPREME touin RE!lokts [1990] Supp. 1 S.C.R. " of ihe HigHCoutt has. therefore; lo oe set aside. 14. IH view bf the iriierpretation piated oy us on the provisions bf paragraph 52 l(S)(e) and 52 l(lO)(c). there is a queer situation in whicli both the appellant-Bank and the respondent-Union would find themselves. The Bank has been supporting the interpretation which we have placed and the respondent-Union has been opposing it. but both not looking beyond their immediate interest involved in the present tase, Which is qua an individual employee. We are happy that the Bank has canvassed the view that it has done in this case. For that view is calcuiated to benefit the employees at large and in the long run though, it may be _tb_ its advantage and to the disadvantage of the individual employee iii lhis case. The respondent-Union, however; by pfessing ihe propbsiiicin to the contrary, was supporting a view which was not iii the interests of the employee at all. Though, therefore, it may be a loser in the present case, it should thank itself that the interpretation is not in accordance with the submissions made on its behalf. 15. This leaves us with the question of the relief to be granted in the present case. Shri Bobde. submitted that if we are not to accept the inierj:iteiation placed by the High Court on the provisions in question, we shoula remand the matter to the High Court for deciding the other contentions raised in the writ petition, since the court had not gone E: into the same and had allowed the petition only on the basis of its interpreta:ion of the said provisions. We find that this course is not advisable in the present case for various reasons. The mis-conducts complain~ d of against the employee are of 1966. He was chargesheeted iil January 1968 and removed frorri service on April 9, 1970. The Cciiirt-pioceedings have been pending since then till today, i.e., F for more than about 23 years noiv. In the meanwhile, we are informed ihat the appellant who was a clerk on the date he was charge-sheeted, **h_as** **become a lawyer and has been practising as** **such.** We. **further, find** tlfai the fnis-conducts which are held proved by the Labour Court are of "gross" type within the meaning of paragraph 521(4) of the Award. The Labour Court is the final fact-finding forum. Further. while setG ting aside the order of the Labour Court. the High Court has granted re-instatenient in service and back wages as follows: (i) 50 per cent of the back wages from 9.4.70 to 24.11.75. (which is the date of the reference for adjudication to the Labour Court) on the ground that the damages for the delay in making should H be shared by both the parties equally. and (ii) full back wages ... _j_ ' Iii ... S.B.I. _v._ WORKMEN [SAWANT. J.] 27 from 25.11.75 till 31.5.79 on the ground that though the emp- **A** loyee started his· practice as a lawyer in June 1978, he was not well-settled in practice for the first year, and (iii) no back wages for the period from 1.6. 79 till the date of his re-instatement which is the date of the High Court's judgment. i.e .. August 23. 1989. **B** _)_ .• .. , ' ~'.:( . ti ii; Shri Desai, the learned Solicitor General appearing for the Bank **wanted** **to** **produce before us a letter from the Maharashtra State** Electricity Board to show that in fact the employee was in gainful employment with the said Board for about six years. Although we have not taken the said letter on record, there is no denial of such employment from the side of the employee. We are further informed that pursuant to the order of the High Court, the employee has already received an amount of Rs.93,000. The effect of our decision would be to set aside nor only the order of re-instatement but also of the back wages which would require the employee to refund the said amount of Rs.93,000. Of course, Shri Bobde stated that the employee was prepared to **refund the** said **amount** and to contest the petition on other grounds. At present, the employee is in his fifties. Taking into consideration all the facts. we are of the view that it would serve the interests of justice if we set aside the order of the High Cou~t and restore that of the Labour Court without requiring the employee to refund the amount which he has already received. 16. The appeal is allowed, accordingly. There will be no order as to costs. N.V.K. Appeal allowed . c **D** **E**