Delhi High Court Restores Bank Clerk’s Dismissal for Misappropriation; Holds Police Complaint to Trace Employee Is Not ‘Taking Steps to Prosecute’ Under Bipartite Settlement
Delhi High Court Sets Aside Labour Court Award; Holds Bank Validly Conducted Departmental Enquiry Despite Police Complaint
Facts
The respondent joined Syndicate Bank as a Clerk and was occasionally assigned cashier duties. On 11 December 1989, while acting as Cashier, he received a cheque for ₹25,000, out of which ₹20,000 was to be paid in cash to the Assistant Manager after adjusting ₹5,000 towards another account. According to the Bank, the respondent neither made the payment nor returned the money, left the branch without permission and remained absent thereafter. The Bank initially attempted to trace him and eventually lodged a police complaint. After being traced, the respondent acknowledged receipt of the amount and subsequently repaid the entire sum. Following a departmental enquiry, he was dismissed from service. Although the Central Government Industrial Tribunal (CGIT) set aside the dismissal and directed reinstatement with continuity of service, the Bank challenged that award before the Delhi High Court.
Issues
- Whether the Bank’s complaint to the police amounted to “taking steps to prosecute” under Paragraphs 19.2 to 19.4 of the Bipartite Settlement.
- Whether the departmental enquiry and dismissal were legally valid.
- Whether the CGIT was justified in setting aside the dismissal and directing reinstatement.
Petitioner’s Arguments
The Bank contended that the police complaint was lodged solely to trace the respondent after he disappeared with entrusted cash and did not amount to initiation of criminal prosecution. Consequently, Paragraphs 19.3 and 19.4 of the Bipartite Settlement were inapplicable, and the disciplinary proceedings were rightly conducted under the provisions governing departmental enquiries.
It was further submitted that the departmental enquiry was fair, the respondent was afforded full opportunity to defend himself, and the charge of misappropriation stood proved through documentary and oral evidence, including the respondent’s own written admission and subsequent repayment. The Bank argued that dismissal was proportionate considering the fiduciary duties of bank employees and that the Labour Court exceeded its jurisdiction by interfering despite upholding the enquiry and findings of misconduct.
Respondent’s Arguments
The respondent argued that once the Bank approached the police alleging acts constituting a criminal offence, it had taken “steps to prosecute” within the meaning of the Bipartite Settlement. Consequently, the Bank could not dismiss him without complying with the safeguards contained in Paragraphs 19.3 and 19.4, including payment of three months’ pay and allowances.
He further contended that the disciplinary proceedings suffered from delay, the punishment of dismissal was disproportionate since the money had ultimately been repaid, and the Labour Court rightly exercised its powers under Section 11-A of the Industrial Disputes Act to grant reinstatement.
Analysis of the Law
The High Court examined the scheme of Chapter XIX of the Bipartite Settlement governing disciplinary proceedings against bank employees. It held that Paragraphs 19.2 to 19.4 apply only where the employer consciously elects to invoke and pursue criminal prosecution. The expression “takes steps to prosecute” requires something more than merely approaching the police for assistance.
The Court emphasised that an employer may legitimately approach the police to trace an absconding employee, recover entrusted property or seek immediate assistance without thereby initiating criminal prosecution. Construing every police complaint as criminal prosecution would render the independent disciplinary mechanism under Paragraphs 19.5 to 19.12 largely redundant. The Court also reiterated that judicial review under Articles 226 and 227 is supervisory in nature and does not permit reappreciation of evidence where findings are supported by relevant material.
Precedent Analysis
The Court relied upon:
- Syed Yakoob v. K.S. Radhakrishnan, reiterating that writ courts exercise supervisory jurisdiction and cannot reappreciate evidence as appellate courts.
- Indian Overseas Bank v. I.O.B. Staff Canteen Workers’ Union, holding that High Courts cannot substitute their own factual conclusions where the Tribunal’s findings are based on evidence.
- Canara Bank v. V.K. Awasthy and Syndicate Bank v. Venkatesh Gururao Kurati, holding that procedural irregularities do not vitiate disciplinary proceedings absent demonstrated prejudice.
- Deputy General Manager v. Ajai Kumar Srivastava, Janatha Bazar, KSRTC v. A.T. Mane, and other Supreme Court decisions recognising that financial dishonesty by bank employees justifies dismissal because such misconduct destroys the employer’s confidence.
Court’s Reasoning
The Court found that the Bank first searched for the respondent internally and approached the police only after he could not be traced. The complaint was therefore intended to secure police assistance in locating the respondent and recovering entrusted money rather than to initiate criminal prosecution. Significantly, no FIR, charge-sheet or criminal proceedings were ever initiated, and the Bank consistently proceeded only through departmental action under Paragraph 19.5(j) of the Bipartite Settlement.
The Court also held that the departmental enquiry fully complied with the principles of natural justice. The respondent was represented by a defence representative, cross-examined witnesses, examined his own witness and received copies of all relevant documents. The findings of misconduct were supported by his written admission, alteration of the cash records, subsequent repayment and surrounding circumstances. The Court further held that repayment after detection did not erase the misconduct or restore the Bank’s lost confidence in an employee entrusted with public funds. Consequently, the Labour Court committed an error of law by setting aside the dismissal solely on an incorrect interpretation of the Bipartite Settlement.
Conclusion
The Delhi High Court allowed the writ petition and set aside the CGIT’s award. It held that a police complaint lodged merely to trace an absconding employee or recover entrusted funds does not amount to “taking steps to prosecute” under the Bipartite Settlement. The departmental enquiry was found to be fair, the misconduct stood proved, and the punishment of dismissal was upheld considering the serious breach of financial trust by the bank employee.
Case Details
Case: Syndicate Bank v. B.K. Arora
Court: High Court of Delhi
Case Number: W.P.(C) 16509/2004
Judge: Hon’ble Ms. Justice Shail Jain
Date: 05 August 2026
Result: Writ Petition allowed; CGIT Award directing reinstatement set aside; dismissal order and appellate order restored.
