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Judgment
K. Chandru
The petitioners are trade unions. One is Maduranthagam Cooperative Sugar Mills Anna Thozhilalar Sangam represented by its General
Secretary Mr. A. Yuvaraj and the other is Maduranthagam Cooperative Sugar Mills Staff Association represented by its General Secretary P.K.
Jothi. Both trade unions have come forward to challenge the award passed by the Industrial Tribunal, Chennai dated 16.11.2006 made in I.D. No.
18 of 2002. By the impugned award, the 1st respondent Industrial Tribunal justified recovery from the wages made by the 2nd respondent
Maduranthagam Cooperative Sugar Mills. The award covered seven workers, out of which four are Store Keepers and three are working as
Clerk in the Stores of the Mill. When the Writ Petition came up on 18.9.2007, this Court ordered Notice regarding admission to the 2nd
respondent mill. Subsequently, on 28.10.2010, the Writ Petition was admitted. On notice from this Court, the 2nd respondent Sugar Mill has filed
a counter affidavit dated 5.1.2012. The petitioner has also filed an additional typed set of papers, containing the enquiry proceedings held against
the individual workman.
The facts leading to the dispute are as follows:
(3.1) On 22.10.1998 one D. Rangarajan, who was formerly the Store Keeper in the 2nd respondent Sugar Mill gave a complaint to the Special
Officer of the Mill stating that 45 bearings were found missing from the Stores. As per the complaint given by him on 21.10.1998 at 3 p.m., though
he found the bearings missing, he was not aware of the date from which the bearings were actually missing. He also stated that front gate and lock
were intact and inside the mill stores, the screws of the padlock of the mill stores office door have been found tampered with. Without opening the
front gate, the office door of the mill stores could not be opened. Therefore, it was his opinion that burglary must have been committed in the mill
stores. It is also brought to the notice that each bearing weighs from 8 Kgs. to 10 Kgs. A person who has lifted the bearings would have taken
them out through the main gate where security personnel will be searching each employee before leaving the office.
(3.2) On receipt of the complaint, the 2nd respondent management issued a show cause memo to all the staff working in the Stores as well as to
the four security staff at the gate. The value of the bearings was estimated to around Rs. 1,60,544.48p. On the basis of the charge memo issued to
them, Mr. D. Rangarajan was suspended on 17.12.1998. The other employees including the said Mr. D. Rangarajan gave explanation on
17.03.1999. The suspension made against D. Rangarajan was revoked with effect from 10.6.1999 without prejudice to the pending disciplinary
action pending against them.
(3.3) Thereafter, replacing the Store Keeper in-charge D. Rangarajan, one V. Srinivasan was asked to take charge. The said Srinivasan, who
subsequently became Store Keeper (incharge) gave another complaint that there were 21 bearings found missing. Again he gave a further
complaint on 1.3.1999 stating that 2 more bearings were found missing.
(3.4) The allegation made against the workmen was that there was negligence in their work and it was due to their carelessness, the bearings were
found missing. They were also alleged to have committed misconduct in terms of Certified Standing Order 16 (l) and 16(r). Under Standing Order
16(l), habitual negligence or neglect of work is listed as misconduct. Under Standing Order 16(r), damage, whether willful or due to irresponsible
action, or damage due to negligence or carelessness to work in process or to any property of the establishment or any instigation or abetment is
listed as misconduct.
(3.5) After getting explanation on the other incidences of spare parts found missing and as the explanations were not satisfactory, a retired
Assistant Commissioner of Labour one V.S. Chandrasekaran was appointed as enquiry officer to conduct enquiry against the workmen. The
enquiry officer found the workmen guilty of the charges. A show cause notice was given to them on 7.7.1999 based upon the enquiry proceedings.
It was contended by the workmen that the enquiry was opposed to the principles of natural justice and they were not given fair opportunity to
defend themselves.
(3.6) However, the management by order dated 25.5.2000 found the workmen guilty and ordered for recovery of the money value of the items
lost from the Stores. The amount that was ordered to be recovered in respect of 7 workmen were as follows:
S. No. Name Amount to be recovered
1 D. Rangarajan (former Store Keeper) Rs. 34,368.00
2 V. Srinivasan (Store Keeper ) Rs. 1,286.00
3 K. Balakrishnan, Clerk Rs. 50,348.00
4 M. Thulasi, Clerk Rs. 49,067.00
5 M. Raman, Clerk Rs. 1,067.00
6 A. Yuvaraj (former Store boy) Rs. 42,038.00
7 N. Sriramulu, Store boy Rs. 42,038.00
Total Rs. 2,20,212.00
(3.7) Against the penalty order, the petitioners took up the workmens'' cause by raising industrial dispute u/s 2(k) of the Industrial Disputes Act.
The matter was taken before the Assistant Commissioner of Labour, Chennai-108 and the Conciliation Officer could not bring about mediation.
He sent a failure report u/s 12(4) of the Industrial Disputes Act. The State Government by G.O. (D) No. 312, Labour and Employment
Department dated 15.4.2002 referred the following issue for adjudication by the Industrial Tribunal by exercise of power u/s 10(1) of the Act:
Whether the action of the Management in deducting from the wages of the following workmen for the 68 bearings found missing in the
Maduranthagam Cooperative Sugar Mills Stores (Spare parts) is justified? If not, what relief the workmen are entitled to?
D. Rangarajan(former Store Keeper) Rs. 34,368.00
V. Srinivasan (Store Keeper) Rs. 1,286.00
K. Balakrishnan, Clerk Rs. 50,348.00
M. Thulasi, Clerk Rs. 49,067.00
M. Raman, Clerk Rs. 1,067.00
A. Yuvaraj (former Store boy) Rs. 42,038.00
7 N. Sriramulu, Store boy Rs. 42,038.00
The 2nd respondent filed a counter statement before the Industrial Tribunal. On behalf of the trade unions, 35 documents were filed and marked
as Ex.W.1 to Ex.W.35. On the side of the 2nd respondent management, 59 documents were filed and marked as Ex.M.1 to Ex.M.59. The
Tribunal tried the validity of the enquiry as a preliminary issue and the Tribunal found that the departmental enquiry initiated against the workmen
was vitiated. Since the management reserved their liberty to lead fresh evidence, an opportunity was given to the management to lead evidence in
support of the charges and the workmen were also permitted to give rebuttal. Taking advantage of the same, the management examined Mr. T.S.
Manoharan, Senior Manager as M.W.1 and marked 59 documents referred to above. On the side of the workmen, one Mr. P.K. Jothi, who was
the General Secretary of the 2nd petitioner trade union, was examined as W.W.1.
The Tribunal on the basis of evidence (both oral and documentary) held that the implied term of contract under common law is the obligation on
the part of the employee to account for in respect of Monies and Properties received by him either from his employer, or, from anybody else on his
behalf. The Tribunal also held that negligence in duty may amount to misconduct in certain cases where the consequences may be directly
attributed to the negligence of the delinquent resulting in heavy loss. Even assuming that a particular act is by negligence and not a ''misconduct''
such negligence which amounts to dereliction or deviation from duty cannot be excused. The Tribunal also took exception to the examination of
W.W.1, who was the General Secretary of the 2nd petitioner trade union, as he is not a workman directly connected with the Department. It also
took exception as to why the workmen never got into the boxes to speak about the role in the missing of the spare parts.
The Tribunal also dealt with Ex.M.57, which is an Office Order dated 1.8.1996 listing out the duties and responsibilities of the Store Keeper,
Assistant Store Keeper and the Clerks working in the Stores Department and it found that as per the said Office Order, the workmen in the Stores
will have to handle all the materials in Stores and the materials received in packing should be opened carefully in the presence of Store Keeper or
Store staff, who keep will the materials in rack in order. The Tribunal found that though individual responsibility is fixed, all are jointly responsible
for shortage of materials items since all were handling receipt and issue of materials in the Stores. Thereafter, the Tribunal found that since the
workmen covered by the reference were directly in-charge of the materials, the charges alleged against them were found proved and since 68
bearings were lost and the total value of the same amounts to Rs. 2,20,212/-, each workman will have to share the responsibility for shortage of
material items and upheld the damages recovered from them as noted above. Challenging this award dated 16.11.2006, the present Writ Petition
came to be filed.
The contention raised by the petitioners was that the office order in Ex.M-57 cannot be the sole basis for fixing the responsibility on the
workmen and no individual role of the workmen have been fixed by the management. A police complaint had also been given about the theft of the
materials and the investigation was still pending. Therefore, it would not have been proper for the management to fix the responsibility on the store
employees alone. The only interest of the management was to somehow fix the responsibility on the store staff, who are in no way responsible for
the theft.
Countering the said stand taken by the petitioner, in the counter affidavit filed by the second respondent mill, it was stated that the store manager
and the store staff are exclusively responsible for the safe custody and accounting of the stores items fastened on them by office order dated
01.08.1996. It was stated that all the materials were kept in hall which was separated by door which could be locked exclusively and the adjoining
store keeper''s room could be securely closed by the doors and kept under lock and key. There was also an iron grill gate serving as common
entrance to the entire stores enclosure. The keys of lime, sulphur, gunny godowns and main stores (hall) were kept in the room of the store-
keeper''s room and they were under the custody of the store-keeper. The iron grill gate was closed and locked at the close of working hours and
the key of the grill gate was handed over to the Watch and Ward section at the factory main gate every day after the stores was closed for the day.
Likewise, the Stores boy collects key for the main entrance gate key during commencement of work and hands over the same to the watch and
ward after the closing of the work.
When the complaint was received from stores keeper, subsequent inspection found that the screws of the padlock of the mill stores office door
have been found tampered with. An inventory was conducted and it was found that as many as 45 bearings were missing and a police complaint
was preferred and the investigation was pending. Because of laxity in the security, the security staff were also given charge memo and they were
suspended. But since the departmental Inquiry Officer found that the security staff had no role, the suspension made against them was revoked.
Therefore, the management, on the basis of the enquiry report, came to the conclusion that it was only the workmen who were responsible for the
loss of the materials and what was recovered was only the actual loss.
Mr. M. Ramamoorthi, learned counsel for the petitioners after referring to the Certified Standing Orders stated that the finding that the
petitioners were guilty of standing order No. 16(d) was wholly inappropriate as there was no evidence to hold that they were either having
complicity in the theft or they have committed any fraud in connection with the employers'' property and it was also not a case of habitual
negligence and irresponsible action on the part of the staff. Therefore, fixing the responsibility on the store staff was wholly inappropriate. He place
reliance upon the judgment of the Supreme Court in Inspector Prem Chand vs. Govt of NCT of Delhi and ors. [2007 (3) Supreme 717] for
contending that the Disciplinary Authority, to arrive at a finding of fact, must record the employee''s guilty of an unlawful behaviour in relation to
discharge of his duties and service which was wilful in character. An error of judgment per se is not a misconduct. Like wise, negligence simplicitor
also would not be a misconduct. But in the very same case, the Supreme Court in paragraph 13 observed as follows :
In a given case, what should have been done, is a matter which would depend on the facts and circumstances of each case. No hard and fast
rule can be laid down therefor.
In fact, Supreme Court took care enough to observe in paragraph 16 that the finding rendered by them was to the peculiar facts and
circumstances of the case. The relevant portion reads thus :
We, therefore, are of the opinion that in the peculiar facts and circumstances of this case, the appellant cannot be said to have committed any
misconduct.
In the present case since the second respondent society is a Cooperative society and if there is any loss to the society, the society has powers
even to initiate surcharge proceedings u/s 87 of the Cooperative Societies Act for the purpose of effecting recovery of loss and it does not even
require a disciplinary action and if the loss can be ascertained and if there is finding of fact that property of the employee has been expressly
entrusted to the safe custody by the workmen u/s 7(2)(c) of the Payment of Wages Act, 1936, it provides for recovery of the amount to the extent
of the loss of goods expressly entrusted to the employee for custody. Therefore, even in the absence of any fraud, misconduct being alleged against
the workmen, a separate liability can be fixed for the extent of loss and the same could be recovered from the employees salary. Merely because
the Tribunal referred to Certified Standing Orders 16(l) and 16(r) that by itself will not vitiate the conclusion reached by the Tribunal. It must be
noted in the present case that the enquiry conducted by the employer viz., the second respondent was set aside by the Tribunal by preliminary
award and thereafter, the entire issue was before the Tribunal. While the second respondent Management examined the senior manager and
marked documents, nothing prevented any of the workers to depose about either their innocence or about the possibility of the loss being caused
by some other person. Therefore, the Tribunal was right in observing in paragraph 56 as follows :
Out of the seven employees, who are concerned in the present dispute, no one was examined. As a matter of fact, the seven employees concerned
in this dispute, were either former store-keeper, or store-keeper or clerks. It is not known as to why they have not come before this Tribunal to
tender evidence, when in fact, recovery was effected from them in monetary terms.
Though before the Tribunal reliance was placed upon Rule 39 of the Tamil Nadu Industrial Disputes Rules, 1958, that the Tribunal can admit
evidence on the basis of the equity and good conscience, the Tribunal did not accept that evidence of P.K. Jyothi, who was the General Secretary
of the second respondent, as legal evidence in respect of the charges levelled against individual workers. It must be noted that when domestic
enquiry is found to be valid, while appreciating the question of evidence recorded, even if two views are possible, unless the contrary is proved, the
Court cannot substitute the views of a Domestic Enquiry Officer. But in the present case, the workmen had the benefit of leading evidence for the
first time before the Labour Court but they did not utilize the opportunity. When the matter was at large before the Tribunal, the workmen,
represented by two unions, should have made an endeavour to lead the best evidence that was possible to deny or rule out either civil or criminal
liability fixed on the store staff. On the other hand, the entire attempt made by the Union before the Tribunal was to project a case that they were in
no way responsible for the loss and that the police investigation was still pending. In essence, the workmen did not help the Tribunal in arriving at a
correct fact in finding out whether they were in any way responsible for the loss and even in the absence of any particular overt act on their part,
whether they are liable to make good the loss. Even in the absence of a domestic enquiry, based upon misconduct, invoking the provisions of the
Payment of Wages Act, more particularly, Section 7(2)(c) and also Section 87 of the Cooperative Societies Act the employer could recover the
amount to the extent of loss suffered by them and for the purpose of such recovery, one has to prove whether the property has been entrusted to
the safe keep by the workmen. In this case, the Tribunal believed the evidence of M.W.1 and relied upon the documents which have been
produced to show that even after the police investigation, theft out materials have not been recovered and the security personnel were found to be
innocent of the charges and therefore, fixed collective responsibility on the workmen. This is not a fit case where the High Court could substitute its
views invoking the powers under Article 226 of the Constitution of India even though the other view is possible. This Court does not find any
irregularity or illegality in the impugned award passed by the Tribunal. Hence the writ petition stands dismissed. No costs.