Court’s Decision
The Supreme Court allowed the appeal filed by Canara Bank, setting aside the award of the Central Government Industrial Tribunal and the judgment of the Karnataka High Court which had directed reinstatement of a bank employee compulsorily retired for misconduct. The Court held that once the domestic enquiry was found to be fair and proper, the Tribunal had no jurisdiction to re-appreciate evidence and substitute its own findings. It further observed that the employee’s acts of falsifying records, coercing the manager, and benefiting from irregular loans had resulted in loss of confidence, making reinstatement untenable.
Facts
The respondent joined Canara Bank in 1990 as daily wage staff and was later confirmed as Sub-staff. Between 1997 and 2004, while posted at V.G. Doddi branch, irregularities surfaced. A preliminary investigation revealed that loans were advanced to his wife without sanction, unauthorized debits were made in the accounts of customers, and records were falsified. The employee admitted in 2004 to some of these acts.
He was suspended, charge-sheeted in April 2005, and subjected to a domestic enquiry. The Enquiry Officer found all charges proved. After giving him an opportunity of hearing, the Disciplinary Authority imposed the penalty of compulsory retirement on 15 March 2006. His departmental appeal was rejected in November 2006.
The employee raised an industrial dispute. The Tribunal, though earlier holding the enquiry fair in 2013, in its final award of 2019 re-appreciated evidence and held there was no proof that he authored the disputed entries. It ordered reinstatement with continuity but without back wages. The High Court affirmed this award in 2022. Canara Bank appealed to the Supreme Court.
Issues
- Whether the Tribunal, after holding the enquiry fair, could re-appreciate evidence under Section 11A of the Industrial Disputes Act.
- Whether the penalty of compulsory retirement was disproportionate in light of the proved misconduct.
- Whether the High Court was justified in affirming the Tribunal’s order of reinstatement.
Petitioner’s Arguments
The Bank argued that the Tribunal exceeded its jurisdiction by acting as an appellate authority despite earlier upholding the fairness of the enquiry. It contended that 19 documents and witness depositions proved the charges. The employee had admitted to unauthorized debits, falsification of records, and coercion of the manager.
It was submitted that strict rules of evidence do not apply to domestic enquiries and findings are to be judged on the preponderance of probabilities. The Bank stressed that misconduct in handling public money undermines trust, and once confidence is lost, reinstatement is impermissible. Reliance was placed on Ajai Kumar Srivastava (2021), Standard Chartered Bank v. R.C. Srivastava (2021), and Indian Overseas Bank v. Om Prakash Lal Srivastava (2022).
Respondent’s Arguments
The employee argued that no direct evidence established he made the disputed entries. Two crucial witnesses, the customer and the manager, were not examined. No handwriting expert was consulted to prove authorship.
He contended that his admissions were involuntary, obtained under coercion. Being educated only till 7th standard, it was improbable that he manipulated complex banking records. He asserted that the manager was primarily responsible and that the punishment was harsh and disproportionate.
Analysis of the Law
The Court reiterated that under the Industrial Disputes Act, while Section 11A empowers Tribunals to interfere with punishment, such power arises only if the enquiry is vitiated or the punishment is shockingly disproportionate. Once the enquiry is held fair, findings cannot be reopened.
It stressed that disciplinary proceedings are not bound by strict rules of the Evidence Act. Admissions, corroborative documents, and circumstantial evidence suffice to establish misconduct on a balance of probabilities.
The Court emphasised that in banking, “loss of confidence is itself a valid ground for imposing penalty”, since public trust is paramount.
Precedent Analysis
- Ajai Kumar Srivastava (2021) 2 SCC 612 – Tribunals cannot re-appreciate evidence once enquiry is held fair; only proportionality of punishment can be tested. Applied here.
- Standard Chartered Bank v. R.C. Srivastava (2021) 19 SCC 281 – Misconduct in banking leading to loss of confidence justifies severe punishment.
- Indian Overseas Bank v. Om Prakash Lal Srivastava (2022) 3 SCC 803 – Courts should not lightly interfere with penalties imposed in banking sector misconduct.
These authorities reinforced the Court’s view that the Tribunal and High Court erred.
Court’s Reasoning
The Court found that the Tribunal contradicted its earlier finding of fairness by reassessing evidence. It noted that documentary proof, admissions, and corroborative testimony established that the employee coerced the manager, availed irregular loans in his wife’s and father’s names, and falsified records.
The Court held: “The Tribunal and the High Court, by substituting their own findings, travelled beyond jurisdiction. Once the domestic enquiry was held fair, interference with the penalty imposed was wholly impermissible.”
It also rejected the plea of disproportionate punishment, observing that in sensitive sectors like banking, even partial involvement in tampering with customer accounts justifies compulsory retirement due to erosion of trust.
Conclusion
The Supreme Court allowed the appeal, set aside the Tribunal’s award and the High Court’s judgment, and restored the Bank’s order of compulsory retirement. It underscored that reinstatement was inappropriate given the gravity of misconduct and loss of confidence.
Implications
The ruling strengthens employer authority in banking and financial institutions by affirming that misconduct involving falsification of records, even without proven pecuniary loss, undermines confidence. It narrows the scope for Tribunals to interfere once enquiries are held fair and reaffirms proportionality principles in industrial law.
It also serves as a precedent that reinstatement is not automatic and may be denied when misconduct causes irretrievable loss of trust.
FAQs
Q1. Can a Tribunal re-appreciate evidence after holding a domestic enquiry fair?
No. Once an enquiry is found fair, Tribunals cannot act as appellate bodies by reassessing evidence.
Q2. Is loss of confidence a sufficient ground for compulsory retirement in banking misconduct cases?
Yes. In sensitive sectors like banking, even minor proven irregularities justify strict penalties due to erosion of trust.
Q3. Did the Supreme Court consider the punishment disproportionate in this case?
No. It held that compulsory retirement was appropriate considering the seriousness of the misconduct and the need to maintain public faith in banks.
