T.K. David v. Kuruppumpady Service Co-operative Bank Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **WEDNESDAY, THE 31ST DAY OF JULY 2013/9TH SRAVANA, 1935** ## **WP(C).No. 25797 of 2011 (Y)** **----------------------------** **AGAINST THE ORDER/JUDGMENT IN APPEAL NO. 78/2010 OF KERALA CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM.** **..........** **PETITIONER(S):** **--------------------------** **T.K.DAVID,SECRETARY (UNDER DISMISSAL), KURUPPUMPADY SERVICE CO-OPERATIVE BANK LTD.NO. E 257, THOTTIPARAMBIL HOUSE, MEPRATHUPADY, VENGOLA P.O., PIN 683 554, ERNAKULAM DISTRICT.** **BY ADVS.SRI.P.P.JACOB SRI.T.P.GOPAKUMAR** **RESPONDENT(S):** **----------------------------** **1. KURUPPUMPADY SERVICE CO-OPERATIVE BANK LTD.NO.E. 257, KURUPPUMPADY P.O., PIN 683 545, REPRESENTED BY ITS SECRETARY.** **2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (G), ERNAKULAM, COCHIN-682 016.** **3. THE CO-OPERATIVE ARBITRATION COURT, VANCHIPOOR FUND ROAD, FORT P.O., THIRUVANANTHAPURAM-695 023.** **4. THE KERALA CO-OPERATIVE TRIBUNAL, T.C.14/2057, UNIVERSITY P.O., THIRUVANANTHAPURAM, PIN 695 034.** **R1 BY ADVS. SRI.P.K.VIJAYAMOHANAN** **SRI.ALAN PAPALI** **SRI.GILBERT GEORGE CORREYA SRI.A.VELAPPAN NAIR** **R2 TO R4 BY GOVERNMENT PLEADER SRI.NOUSHAD THOTTATHIL** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07/03/2013,THE COURT ON 31/07/2013 DELIVERED THE FOLLOWING:** **Kss** ## **WPC.NO.25797/2011 (Y)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT-P1. TRUE PHOTOCOPY OF THE NOTICE ISSUED BY SECOND RESPONDENT TO THE FIRST RESPONDENT DATED 27.12.2002. EXHIBIT-P2. TRUE PHOTOCOPY OF THE ORDER NO.CRP (1) 7663/02 DATED 30.7.2004 ISSUED BY 2ND RESPONDENT. EXHIBIT-P3. TRUE PHOTOCOPY OF THE INTERIM ORDER IN W.P.(C) 2471/2005 DATED 4.2.2005. EXHIBIT-P4. TRUE PHOTOCOPY OF THE JUDGMENT IN A.P.21/07 DATED 29.7.2008. EXHIBIT-P5. TRUE PHOTOCOPY OF THE JUDGMENT IN W.P.(C) 26743/08 DATED 29.1.2009. EXHIBIT-P6. TRUE PHOTOCOPY OF THE JUDGMENT IN W.P.(C) 9764/09 DATED 26.3.2009. EXHIBIT-P7. TRUE PHOTOCOPY OF THE AWARD IN A.R.C. 27/06 DATED 18.8.2010 OF THE ARBITRATION COURT. EXHIBIT-P8. TRUE PHOTOCOPY OF THE RESOLUTION NO.168 DATED 23.6.2000 OF THE FIRST RESPONDENT. EXHIBIT-P9. TRUE PHOTOCOPY OF THE CIRCULAR NO.11/72 DATED 22.2.72 ISSUED BY THE REGISTRAR. EXHIBIT-P10. TRUE PHOTOCOPY OF THE DEPOSITION ALONG WITH THE PROOF AFFIDAVIT DATED 18.5.2009 OF THE PETITIONER. EXHIBIT-P11. TRUE PHOTOCOPY OF THE CLAUSE 42 OF BYELAW PAGES 1 & 16 TO 20 OF THE FIRST RESPONDENT. EXHIBIT-P12. TRUE PHOTOCOPY OF THE SUB RULE FRAMED BY THE FIRST RESPONDENT. EXHIBIT-P13. TRUE PHOTOCOPY OF THE RESOLUTION NO.409 DATED 18.9.2002 OF THE FIRST RESPONDENT. EXHIBIT-P14. TRUE PHOTOCOPY OF THE RESOLUTION NO.222 DATED 2.7.2002 OF THE FIRST RESPONDENT. EXHIBIT-P15. TRUE PHOTOCOPY OF THE RELEVANT PAGES OF THE MEMORANDUM OF ASSOCIATION OF THE JACOBITE CHURCH SERVICE SOCIETY. Kss ..2/-** **..2.....** ## **WPC.NO.25797/2011 (Y)** ## **EXHIBIT-P16. TRUE PHOTOCOPY OF THE CLAUSE 6(1) OF THE BYELAW OF THE BANK.** - **EXHIBIT-P17. TRUE PHOTOCOPY OF THE CLAUSE 47(13) OF THE BYELAW PAGE NOS.21 TO 25 OF THE BANK.** - **EXHIBIT-P18. TRUE PHOTOCOPY OF THE PROOF AFFIDAVIT DATED 11.11.08 WITH DEPOSITION OF THE SERETARY OF THE FIRST RESPONDENT.** - **EXHIBIT-19. TRUE PHOTOCOPY OF THE JUDGMENT IN A.P.81/10 AND 78/2010 DATED 16.8.2011 OF THE 4TH RESPONDENT.** - **EXHIBIT-P20. TRUE PHOTOCOPY OF THE REPLY AFFIDAVIT FILED BY THE FIRST RESPONDENT IN W.A.332/05 DATED 23.2.2005.** - **EXHIBIT-P21. TRUE COPY OF THE PUBLIC NOTICE ISSUED BY K.N.SARADA, PRESENT SECRETARY DTD. 9/09/2005.** - **EXHIBIT-P22. TRUE COPY OF MEMBERSHIP APPLICATION OF THE PRESIDENT OF THE FIRST RESPONDENT ITTOOP FILED TO THE JACOBITE CHRISTIAN SERVICE SOCIETY DTD. 6/11/2000.** - **EXHIBIT-P23. TRUE COPY OF THE MEMBERSHIP APPLICATION OF THE COMMITTEE MEMBER OF THE FIRST RESPONDENT P.V.JOSE, FILED TO THE JACOBITE CHRISTIAN SERVICE SOCIETY DTD. 7/04/2001.** - **EXHIBIT-P24. TRUE COPY OF THE COVERING PAGE AND PAGE NO.6 OF THE INAUGURATION SUPPLIMENT FOR THE YEAR 2000 OF THE JACOBITE CHRISTIAN SERVICE SOCIETY.** - **EXHIBIT-P25. TRUE COPY OF THE PETITION FILED BY THE PETITIONER BEFORE THE ARBITRATION COURT IN I.A.10/06 IN ARC 27/06 DTD. 21/08/06.** - **EXHIBIT-P26. TRUE COPY OF THE REPLY FILED BY THE FIRST RESPONDENT IN ARC 27/06 DTD. 16/10/2006.** - **EXHIBIT-P27. TRUE COPY OF THE RESOLUTION NO.387 DTD. 30/10/99 OF THE FIRST RESPONDENT.** - **EXHIBIT-P28. TRUE COPY OF RELEVANT PAGE NO.338 OF THE MINUTE BOOK WITH RESOLUTION NO.484 OF THE FIRST RESPONDENT.** - **EXHIBIT-P29. TRUE COPY OF THE NOTICE ISSUED BY THE FIRST RESPONDENT TO ONE SRI.P.N.SREEKUMAR DTD. 25/09/2003.** **..3/-** **Kss** **..3...** ## **WPC.NO.25797/2011 (Y)** ## **RESPONDENTS' EXHIBITS:** **R1(A): COPY OF THE MINUTES DTD. 15/05/2000 OF THE SOCIETY.** **R1(B): COPY OF THE NOTICE OF THE ANNUAL GENERAL BODY MEETING OF THE JACOBITE CHRISTIAN SERVICE SOCIETY FOR THE YEAR 2001-2002.** **R1(C): COPY OF THE APPEAL MEMORANDUM FILED BY THE BANK BEFORE THE 4TH RESPONDENT TRIBUNAL AS PROVIDED UNDER SECTION 82 OF THE KERALA CO-OPERATYIVE SOCIETIES ACT.** **/TRUE COPY/** **P.A.TO JUDGE** **Kss** ## **A.M.SHAFFIQUE, J** ## *** * * * * * * * * * * * *** W.P.C.No.25797 of 2011 ---------------------------------------Dated this the 31[st] day of July 2013 ## **J U D G M E N T** The petitioner challenges Ext.P7 order passed by the Arbitration Court and Ext.P19 order passed by the Cooperative Tribunal. 2. The petitioner joined service in the Kuruppumpady Service Co-operative Bank Ltd. on 06/11/1978, by direct recruitment as Secretary and while he was working as Class I Special Grade he was suspended from service on 18/11/2002. He was served two memo of charges and charge sheet. On that basis, after conducting an enquiry he was dismissed from service. In the meantime, the petitioner approached the Joint Registrar of Co-operative Societies challenging the order of dismissal which was later set aside and ultimately after a few litigations between the parties the petitioner was directed to approach the Arbitration Court under Section 69 of the Co-operative Societies Act W.P.C.No.25797/2011 2 (hereinafter referred to as the Act). Accordingly he filed A.R.C.No.27/2006, which resulted in Ext.P7 award. In Ext.P7 award the Arbitration Court set aside the domestic enquiry report. After taking evidence it is found that charges containing the allegation of misappropriation were not proved against the petitioner and therefore the Arbitration Court, having found that some of the charges were proved, having opined that the punishment of dismissal is shockingly disproportionate to the proved charges, interfered with the punishment. Direction was issued to reinstate him by reducing him to a lower rank. He was also permitted to get all service benefits including back wages from the date of dismissal and subsistence allowance during the period of suspension, that is from 18/11/2002 to 20/03/2003. Petitioner as well as the first respondent filed separate appeals before the Kerala Co-operative Tribunal (hereinafter referred to as the Tribunal) and by common judgment as Ext.P19, the Tribunal on a re-appreciation of the evidence W.P.C.No.25797/2011 3 concurred with the findings of the Arbitration Court, but interfered with the punishment and the Tribunal imposed a punishment of compulsory retirement as on 20/03/2003 with all terminal benefits subject to his liability if any duly assessed. There was also a further direction that if subsistence allowance was not paid the appellant was entitled to realise the same with interest @ 9% per annum from 20/03/2003. 3. The facts as disclosed would show that the two memo of charges were issued to the petitioner. The enquiry officer found that charge Nos.6 and 13 in the first charge memo dated 04/01/2003 and charge No.3 in the additional charge memo dated 11/01/2003 are not proved. 4. Charge No.1 related to an allegation that when a Sub Committee of the members visited the branch on 17/09/2002 for conducting an inspection pursuant to the resolution passed by the Managing Committee on 14/09/2002 in regard to certain allegations regarding the W.P.C.No.25797/2011 4 deposit of daily collections of the branch, the petitioner did not provide any records to the Sub Committee and they were not permitted to carry out the inspection which resulted in degrading of the committee members. He had further informed in writing in the form of reports that the managing committee cannot verify the deposits as per the provisions of the Negotiable Instruments Act and despite the Managing Committee's report the same was not provided to the Sub Committee which amounts to violation of Rule 47(d) of the Co-operative Societies Rules (hereinafter referred to as the Rules) and Clauses 42 , sub Clauses 6, 19, 20, 21, 22 of the bye laws which amounts to gross negligence and misconduct on the part of the petitioner. 5. As per charge No.2 the allegation is that the petitioner suppressed the malpractices in the daily collection accounts of Perumbavoor branch about which he got information based on the inspection made in the branch from 30/07/2002 to 05/08/2002. As per Charge No.3 the W.P.C.No.25797/2011 5 allegation is that he failed to maintain service book and other particulars of the employees of the bank. Charge No.4 related to the petitioner forming a society under the name and style of “Jacobite Christian Service Society”, which has similar functions as that of the bank. The allegation is that he was taking active part in constituting another society. Charge No.8 and part of charge No.7 relates to execution of an agreement in connection with the contract for construction of an office building of a branch. It is alleged that though he was entrusted with the duty of obtaining proper agreement from the respective contractor, he had obtained the agreement signed by the Contractor but the petitioner has not signed in the capacity as the Secretary of the bank. It is also alleged that he had obtained the signature of the Contractor in blank stamp paper. 6. With reference to charge No.1 the Arbitration Court came to a finding that the same was proved as there was evidence to find that the petitioner did not permit the W.P.C.No.25797/2011 6 Sub Committee members to conduct the inspection on that particular date. In respect of Charge No.2 the Arbitration Court found that the said charge is not proved. The charge was relating to the mistakes that were noticed in the daily collection of various deposits. The Arbitration Court found that there is no proof to show that the petitioner has colluded with the daily collection agent and committed any misappropriation. 7. In regard to charge No.3, the Arbitration Court found on the basis of evidence adduced that the said charge has been proved. It is found that the obligation to maintain service books was that of the petitioner and he had not made any entries in the service book of most of the employees during the relevant time as evidenced from the service books of the said employees. This finding of fact is not disturbed by the appellate authority. 8. The Arbitration Court also found that charge No.4 was proved since it was admitted by the petitioner that he W.P.C.No.25797/2011 7 was functioning as the Secretary of the Jacobite Christian Service Society, another society. It was found that the he had not produced any document to prove that it was a charitable society and he was only the Honorary Secretary. 9. In respect of charge Nos.5 and 6, the Arbitration Court found that the said charges were vague and not very specific and therefore they are treated as not proved. The allegation in charge No.5 was that on account of the plaintiff working as the Secretary of the Jacobite Christian Service society it has adversely affected the profit of the bank. It was found that there was no evidence to prove the said charge. There is an allegation in charge No.6 that the petitioner had instigated the depositors to withdraw the deposit from the bank. In the absence of any details, the Arbitration Court found that the charge was vague. The authority also relied upon the judgment of the Supreme Court in **Management of the Northern Railway Cooperative Credit Society Ltd. v. Industrial Tribunal** W.P.C.No.25797/2011 8 ## [ _AIR 1967 SC 1182]_ . 10. In respect of charge Nos.7 and 8 also, the Arbitration Court found that part of Charge No.7 and 8 were proved. The allegation was that the petitioner had not executed proper agreement with the Contractor after colluding with him in respect of building contract as well as computerization contract. The Arbitration Court found that there is no evidence of collusion but the fact that agreements were not properly executed was found against the petitioner. 11. In respect of charge No.9, the Arbitration Court found that the same is not proved. The allegation was that when it was decided to send a lawyer's notice to the contractor demanding loss caused to the bank and thereafter to take legal steps, no such action was taken by the petitioner. It is found that the petitioner had sent a notice to the Contractor as a preliminary step to take legal action and the reply received was placed by the petitioner W.P.C.No.25797/2011 9 before the Managing Committee on 18/11/2002. Since he was suspended on 18/11/2002 no further action could be taken by him. It is also found that even after the petitioner was suspended no action was taken by the bank against the other contracting party. 12. In respect of charge No.10 relating to stock verification it is found that as per Resolution dated 26/02/2002 the managing committee member was entrusted to verify the stock in the head office and since it is not the obligation of the petitioner, the said charge was not proved. 13. In respect of charge No.11, the Arbitration Court found that after the amendment to Rule 185 of the Rules departmental test is not necessary for promotion to the post of Internal Auditor. This is an apparent conflict to the feeder category sub Rules and since the Rules prevail, there is nothing wrong with the report submitted by the petitioner and therefore charge No.11 was not proved. 14. Charge No.12 was with reference to the report W.P.C.No.25797/2011 10 submitted by the petitioner to the President of the Bank in regard to the application submitted by Smt.Saramma Mathew. It is found that the said report was submitted by the petitioner in good faith and therefore there is no basis for the said charge. In respect of Charge No.13 the Arbitration Court accepted the explanation offered by the petitioner and therefore there was no material to implicate the petitioner and the oral evidence given by MW1 is not sufficient to prove the said charge. 15. In respect of additional charge No.1, the allegation was that the petitioner had not recovered an amount of Rs.1.63 lakhs from Consumer Federation. The Federation supplied medicines for Rs.1.63 lakhs on credit. According to the petitioner those medicines were returned to the Federation and as no money was paid by the bank to the Federation it cannot be recovered as well. Hence it was found that the said charge was not proved. With reference to charge Nos.2 and 3 in the additional charge memo it was W.P.C.No.25797/2011 11 found that the charges were not specific and therefore they are not found against the petitioner. 16. The Tribunal, having considered the matter in detail, and after elaborately considering the evidence on record, concurred with the view expressed by the Arbitration Court in regard to the findings on allegations of misconduct. However in respect of the punishment it was observed that the disciplinary authority had imposed a punishment of dismissal of the appellant from the service of the respondent bank based on the findings in the domestic enquiry. When the Arbitration Court has set aside the domestic enquiry and found that only certain charges are proved, the Arbitration Court was not expected to evaluate the proportionality of the punishment imposed by the disciplinary authority and should have entered into an independent conclusion after evaluating the nature, extent and gravity of the charges found to have been proved. The Tribunal however observed that the punishment should not have been interfered with W.P.C.No.25797/2011 12 without evaluating the gravity of the charges which were proved in the case. Based on the judgment of the Supreme Court in **Hussain Sasansaheb kaladgi v. State of Maharashtra** [ _AIR 1987 SC 1627]_ the Tribunal found that since the petitioner was directly recruited as the Secretary of the Bank, he cannot be reduced to a rank lower than to which he was recruited as at the time of suspension he remained in the position of Secretary with a higher grade. Hence the Tribunal interfered with the punishment and found that the findings of the Arbitration Court directing payment of full back wages was unsustainable based on the judgment of the Supreme Court in **J.K.Synthetics Ltd. v. K.P.Agrawal and Another** [( _2007) 2 SCC 433]_ . Hence the Tribunal interfered with the punishment and found that the punishment of compulsory retirement from service as on 20/03/2003 will be the ideal method. 17. Counter affidavit is filed by the 1[st] respondent supporting the stand taken by the Tribunal. It is inter alia W.P.C.No.25797/2011 13 contended that though the disciplinary authority had imposed a punishment of dismissal from service and the Tribunal had exercised its jurisdiction to reduce the punishment as certain charges were not found to be proved, and after taking into consideration the overall factual circumstances, directed compulsory retirement from service. It is also contended that as far as the proved charges are concerned when two authorities have already decided the matter based on evaluation of evidence it may not be possible for this Court to exercise the power of judicial review to set aside the said finding of fact. 18. Having regard to the aforesaid factual situation the question that arises for consideration is whether the orders passed by the Arbitration Court as well as the Tribunal is liable to be interfered with setting aside the punishment imposed on the petitioner. It is not in dispute that the scope of judicial review is very limited in matters relating to the decision based on findings of fact. Reliance is W.P.C.No.25797/2011 14 placed on the judgment of the Supreme Court in **Coimbatore District Central Cooperative Bank v. Coimbatore District Central Cooperative Bank Employees Assn.** _[(2007) 4 SCC 669]_ . In that judgment the question was whether the punishment imposed was proportionate to the proved charges and what is the scope of jurisdiction that could be exercised in the matter. Supreme Court considered the doctrine of proportionality as evolved in England and found that our legal system also has accepted the doctrine of proportionality. While considering whether the High Court was justified in invoking and applying the said doctrine, the Supreme Court observed as under. _“_ _**29.** From the above decisions, it is clear that our legal system also has accepted the doctrine of proportionality. The question, however, is whether in the facts and circumstances of the present case, the High Court was justified in invoking and applying the doctrine of proportionality. In our judgment, the answer must_ W.P.C.No.25797/2011 15 _be in the negative. Normally, when disciplinary proceedings have been initiated and finding of fact has been recorded in such inquiry, it cannot be interfered with unless such finding is based on “no evidence” or is perverse, or is such that no reasonable man in the circumstances of the case would have reached such finding. In the present case, four charges had been levelled against the workmen. An inquiry was instituted and findings recorded that all the four charges were proved. The Labour Court considered the grievances of the workmen, negatived all the contentions raised by them, held the inquiry to be in consonance with principles of natural justice and findings supported by evidence. Keeping in view the charges proved, the Labour Court, in our opinion, rightly held that the punishment imposed on workmen could not be said to be harsh so as to interfere with it._ _**30.** In our opinion, therefore, the High Court was not right in exercising power of judicial review under Articles 226/227 of the Constitution and virtually substituting its own judgment for the judgment of the Management and/or of the Labour Court. To us, the learned counsel for the appellant_ W.P.C.No.25797/2011 16 _Bank is also right in submitting that apart from Charges 1 and 2, Charges 3 and 4 were “extremely serious” in nature and could not have been underestimated or underrated by the High Court.”_ 19. Another judgment of relevance is **J.K.Synthetics Ltd.** (Supra) wherein the Supreme court considered the question of reinstatement in service with back wages. “ _**15.** But the manner in which “back wages” is viewed, has undergone a significant change in the last two decades. They are no longer considered to be an automatic or natural consequence of reinstatement. We may refer to the latest of a series of decisions on this question. In U.P. State Brassware Corpn. Ltd. v. Uday Narain Pandey, this Court following Allahabad Jal Sansthan v. Daya Shankar Rai and Kendriya Vidyalaya Sangathan v. S.C. Sharma held as follows: (Uday Narain Pandey case, SCC p. 480d-g)_ _“A person is not entitled to get something only because it would be lawful to do so. If that principle is applied, the functions of an Industrial Court shall lose much of their significance._ W.P.C.No.25797/2011 17 _Although direction to pay full back wages on a declaration that the order of termination was invalid used to be the usual result, but now, with the passage of time, a pragmatic view of the matter is being taken by the court realising that an industry may not be compelled to pay to the workman for the period during which he apparently contributed little or nothing at all to it and/or for a period that was spent unproductively as a result whereof the employer would be compelled to go back to a situation which prevailed many years ago, namely, when the workman was retrenched. The changes brought about by the subsequent decisions of the Supreme Court, probably having regard to the changes in the policy decisions of the Government in the wake of prevailing market economy, globalisation, privatisation and outsourcing, is evident._ _No precise formula can be laid down as to under what circumstances payment of entire back wages should be allowed. Indisputably, it depends upon the facts and circumstances of each case. It would, however, not be correct to contend that it_ W.P.C.No.25797/2011 18 _is automatic. It should not be granted mechanically only because on technical grounds or otherwise an order of termination is found to be in contravention of the provisions of Section 6-N of the U.P.Industrial Disputes Act. While granting relief, application of mind on the part of the Industrial Court is imperative. Payment of full back wages cannot be the natural consequence.” In G.M., Haryana Roadways v. Rudhan Singh this Court observed: (SCC p. 596, para 8)_ _“8. There is no rule of thumb that in every case where the Industrial Tribunal gives a finding that the termination of service was in violation of Section 25-F of the Act, entire back wages should be awarded. A host of factors like the manner and method of selection and appointment i.e. whether after proper advertisement of the vacancy or inviting applications from the employment exchange, nature of appointment, namely, whether ad hoc, short term, daily wage, temporary or permanent in character, any special qualification required for the job and the like should be weighed and balanced in taking a decision regarding award of back wages. One of_ W.P.C.No.25797/2011 19 _the important factors, which has to be taken into consideration, is the length of service, which the workman had rendered with the employer. If the workman has rendered a considerable period of service and his services are wrongfully terminated, he may be awarded full or partial back wages keeping in view the fact that at his age and the qualification possessed by him he may not be in a position to get another employment. However, where the total length of service rendered by a workman is very small, the award of back wages for the complete period i.e. from the date of termination till the date of the award, which our experience shows is often quite large, would be wholly inappropriate. Another important factor, which requires to be taken into consideration is the nature of employment. A regular service of permanent character cannot be compared to short or intermittent daily-wage employment though it may be for 240 days in a calendar year.”_ _**16.** There has also been a noticeable shift in placing the burden of proof in regard to back wages. In Kendriya Vidyalaya Sangathan this_ W.P.C.No.25797/2011 20 _Court held: (SCC p. 366, para 16)_ _“When the question of determining the entitlement of a person to back wages is concerned, the employee has to show that he was not gainfully employed. The initial burden is on him. After and if he places materials in that regard, the employer can bring on record materials to rebut the claim. In the instant case, the respondent had neither pleaded nor placed any material in that regard.”_ _In U.P. State Brassware Corpn. Ltd. this Court observed: (SCC p. 495, para 61)_ _“61. It is not in dispute that the respondent did not raise any plea in his written statement that he was not gainfully employed during the said period. It is now well settled by various decisions of this Court that although earlier this Court insisted that it was for the employer to raise the aforementioned plea but having regard to the provisions of Section 106 of the Evidence Act or the provisions analogous thereto, such a plea should be raised by the workman.”_ _**17.** There is also a misconception that whenever reinstatement is directed, “continuity of service”_ W.P.C.No.25797/2011 21 _and “consequential benefits” should follow, as a matter of course. The disastrous effect of granting several promotions as a “consequential benefit” to a person who has not worked for 10 to 15 years and who does not have the benefit of necessary experience for discharging the higher duties and functions of promotional posts, is seldom visualised while granting consequential benefits automatically. Whenever courts or tribunals direct reinstatement, they should apply their judicial mind to the facts and circumstances to decide whether “continuity of service” and/or “consequential benefits” should also be directed. We may in this behalf refer to the decisions of this Court in A.P. SRTC v. S. Narsagoud, A.P. SRTC v. Abdul Kareem and Rajasthan SRTC v. Shyam Bihari Lal Gupta._ _**18.** Coming back to back wages, even if the court finds it necessary to award back wages, the question will be whether back wages should be awarded fully or only partially (and if so the percentage). That depends upon the facts and circumstances of each case. Any income received by the employee during the relevant period on_ W.P.C.No.25797/2011 22 _account of alternative employment or business is a relevant factor to be taken note of while awarding back wages, in addition to the several factors mentioned in Rudhan Singh and Uday Narain Pandey. Therefore, it is necessary for the employee to plead that he was not gainfully employed from the date of his termination. While an employee cannot be asked to prove the negative, he has to at least assert on oath that he was neither employed nor engaged in any gainful business or venture and that he did not have any income. Then the burden will shift to the employer. But there is, however, no obligation on the terminated employee to search for or secure alternative employment. Be that as it may._ _**19.** But the cases referred to above, where back wages were awarded, related to termination/retrenchment which were held to be illegal and invalid for non-compliance with statutory requirements or related to cases where the Court found that the termination was motivated or amounted to victimisation. The decisions relating to back wages payable on illegal retrenchment or termination may have no_ W.P.C.No.25797/2011 23 _application to the case like the present one, where the termination (dismissal or removal or compulsory retirement) is by way of punishment for misconduct in a departmental inquiry, and the court confirms the finding regarding misconduct, but only interferes with the punishment being of the view that it is excessive, and awards a lesser punishment, resulting in the reinstatement of employee. Where the power under Article 226 or Section 11-A of the Industrial Disputes Act (or any other similar provision) is exercised by any court to interfere with the punishment on the ground that it is excessive and the employee deserves a lesser punishment, and a consequential direction is issued for reinstatement, the court is not holding that the employer was in the wrong or that the dismissal was illegal and invalid. The court is merely exercising its discretion to award a lesser punishment. Till such power is exercised, the dismissal is valid and in force. When the punishment is reduced by a court as being excessive, there can be either a direction for reinstatement or a direction for a nominal lump sum compensation. And if reinstatement is_ W.P.C.No.25797/2011 24 _directed, it can be effective either prospectively from the date of such substitution of punishment (in which event, there is no continuity of service) or retrospectively, from the date on which the penalty of termination was imposed (in which event, there can be a consequential direction relating to continuity of service). What requires to be noted in cases where finding of misconduct is affirmed and only the punishment is interfered with (as contrasted from cases where termination is held to be illegal or void) is that there is no automatic reinstatement; and if reinstatement is directed, it is not automatically with retrospective effect from the date of termination. Therefore, where reinstatement is a consequence of imposition of a lesser punishment, neither back wages nor continuity of service nor consequential benefits, follow as a natural or necessary consequence of such reinstatement. In cases where the misconduct is held to be proved, and reinstatement is itself a consequential benefit arising from imposition of a lesser punishment, award of back wages for the period when the employee has not worked, may amount to_ W.P.C.No.25797/2011 25 _rewarding the delinquent employee and punishing the employer for taking action for the misconduct committed by the employee. That should be avoided. Similarly, in such cases, even where continuity of service is directed, it should only be for purposes of pensionary/retirement benefits, and not for other benefits like increments, promotions, etc._ _**20.** But there are two exceptions. The first is where the court sets aside the termination as a consequence of employee being exonerated or being found not guilty of the misconduct. Second is where the court reaches a conclusion that the inquiry was held in respect of a frivolous issue or petty misconduct, as a camouflage to get rid of the employee or victimise him, and the disproportionately excessive punishment is a result of such scheme or intention. In such cases, the principles relating to back wages, etc. will be the same as those applied in the cases of an illegal termination.”_ The scope of interference in punishment awarded by the disciplinary authority is also dealt with in paragraphs 22 and W.P.C.No.25797/2011 26 ## 27 which reads as under: _**“22.** This takes us to the next question as to whether the Labour Court was justified at all in interfering with the punishment of dismissal. The Labour Court held that one serious charge was proved, another charge was not proved and in regard to the third charge gave “benefit of doubt” to the employee. The Labour Court also relied on the decisions of this Court in Rama Kant Misra v. State of U.P. wherein it was held that the punishment of dismissal was excessive where the employee was found to have uttered indecent words and used abusive language and substituted it by the lesser punishment of stoppage of two annual increments. The said decision depended on its special facts and may not apply to this case. The recent trend in regard to scope of interference with punishment in matters involving discipline at the workplace has been different. We may refer to some of the recent decisions._ _**27.** In this case, we have already found that the charge established against the employee was a serious one. The Labour Court did not record a finding that the punishment was harsh or_ W.P.C.No.25797/2011 27 _disproportionately excessive. It interfered with the punishment only on the ground that the employee had worked for four years without giving room for any such complaint. It ignored the seriousness of the misconduct. That was not warranted. The consistent view of this Court is that in the absence of a finding that the punishment was shockingly disproportionate to the gravity of the charge established, the Labour Court should not interfere with the punishment. We, therefore, hold that the punishment of dismissal did not call for interference.”_ 20. Having regard to the aforesaid position of law the question to be considered is whether it would be open for this Court to interfere with the findings made by two authorities. 21. The learned counsel for the petitioner however would emphasize that the main reason for imposing such a punishment is based on the findings in charge No.4 which is totally perverse. The learned counsel relied upon Ext.P16 especially clause No.6 to contend that there was no illegality W.P.C.No.25797/2011 28 or violation of rules in the matter relating to the employee of a society in being participating in a charitable organisation. Reference is made to Clause 6 of Ext.P16 which reads as under: _“6. No employee of the Society shall by canvassing or otherwise use his influence in any way in an election to a legislative body constituted under the Govt. of India Act, or to any institution constituted under the Act of the Kerala Govt. provided that he may record a vote if he is qualified to do so. In that case, he shall as far as possible, avoid giving any indication before hand of the manner in which he intends to vote._ _1. No paid employee shall be a member, representative or Officer of any association representing or purporting to represent nonofficial Co-operative employees unless such association satisfies the following conditions._ _(a) The association should be recognised by the Registrar of Co-operative Societies Kerala._ _(b) Membership of the association shall be confined to only the employees of Co-op. Institutions._ W.P.C.No.25797/2011 29 _(c) The activities of the association shall be confined to the betterment of prospects of employment service condition, emoluments and the welfare of its members generally._ _(d) The association shall not in any way be connected with or affiliated to (1) any association which does not or (2) any federation of associations which do not satisfy the condition (a)”._ 22. Ext.P16 is part of the bye law of the society. It indicates that no paid employee shall be a member of any association representing or purporting to represent “nonofficial” co-operative employees unless such association satisfies the conditions stated in sub clauses (a) to (d). In other words, an employee who receives salary from the society shall not become a member of any co-operative employees other than the associations which are permitted as per sub clauses (a) to (d), that is, either it should be an association recognized by the Registrar of Co-operative Societies that the membership of an association shall be W.P.C.No.25797/2011 30 confined to only the employees of co-operative institutions, that the activities of the association shall be confined to the betterment of prospects of the conditions of employment and welfare of the members and the association shall not be in any way connected with or affiliated to any association which does not satisfy the conditions in sub clause (a). The question is whether the Jacobite Christian Service Society in which the petitioner is admittedly a member comes under any of the permitted categories. In fact, I am of the view that all the four sub clauses (a) to (d) have to apply in respect of an association if an employee of the bank has to become member of the said association. Otherwise it should be an 'Official' association which is permitted by the society. Petitioner's contention is that he has only participated in the functioning of a charitable society where the objects of the bank is similar to that of the society and by doing charity there is no violation of clause 6(1). According to him, such charitable activities will not affect the interest of the W.P.C.No.25797/2011 31 respondent bank in any manner and therefore there is no basis for such an allegation. When the bye law of the bank clearly indicates that an employee shall not be a member of an association which is not permitted as per the rules of the bye law, failure to adhere to such directions will amount to a misconduct as per the service conditions of the petitioner. It is found by the Arbitration Court that there is no evidence to show that the petitioner was involved in a charitable organisation and such a ground is also not available to the petitioner. Further, though it is argued that in respect of the first charge, the findings are perverse, no material is placed before this Court to indicate that such findings of fact by the two authorities is in any manner perverse. Same is the situation with respect to other charges as well. 23. In the result, on a factual consideration of the materials on record, I do not think that the authorities below have committed any illegality or perversity to enable this Court to interfere with the findings thereon. W.P.C.No.25797/2011 32 24. Coming to the question of punishment, the disciplinary authority had directed dismissal from service whereas the Co-operative Tribunal had interfered with the findings and directed compulsory retirement from service with all terminal benefits. The Tribunal had set aside the punishment imposed by the Arbitration Court. The Arbitration Court had found that the petitioner should be given reduction in rank. As rightly held by the Tribunal, reduction in rank is not possible in respect of a person who was directly recruited to the post of Secretary. In respect of the direction to pay the entire back wages the Tribunal found that such a direction cannot be issued as a matter of course and it is based on the materials on record and evidence that has been adduced to prove the charges and the gravity of the charges proved, that it could be decided to impose punishment. Therefore, having set aside the punishment which was modified by the Arbitration Court, the Tribunal interfered with the punishment of dismissal and W.P.C.No.25797/2011 33 directed compulsory retirement without back wages, but with a direction to grant terminal benefits. 25. Having regard to the nature of allegations proved against the petitioner, I do not think that any interference is possible in respect of the punishment now directed to be imposed by the Tribunal. In the result, there being no merits in the above writ petition, the same is dismissed. (sd/-) **(A.M.SHAFFIQUE, JUDGE)** jsr