T.D. Digambar vs Central Bank of India and Another

Raju, J.—The above writ petition has been filed for a writ of certiorari to call for and quash the proceedings of the second respondent in

RO:PRS.AD:82/116, dated 8.7.1982, the memo by which the petitioner was informed that his services were terminated with effect from

17.7.1982 that the termination did not amount to retrenchment, and that notwithstanding the same, the petitioner was being given retrenchment

compensation which he would have drawn if the termination had amounted to retrenchment and that a pay order for Rs. 3,982.17 being the three

months pay and allowances was being also attached.

The petitioner was appointed as Shroff-cum-Collection Clerk in the services of the respondent-bank on 17.11.1968. On 4.11.1979, the

petitioner sought permission from the first respondent for filing an insolvency petition as he had incurred debts of Rs. 20,000 at high rate of interest,

on 15.4.1980, the petitioner appears to have been suspended on the basis of the above letter while he was working as clerk and he was allowed

to draw an amount equal to 1/3 of his salary and all other subsistence allowances as per the orders of the Divisional Manager, Coimbatore

Division. Subsequently, on 30.8.1980 having regard to the entitlement of the petitioner, he was ordered to be paid half salary and allowances and

subsistence allowances. The petitioner has been issued with a charge memo on 13.1.1981 which included the charge of issuing cheques H.S.S.

withdrawals on his account without keeping sufficient funds. By his communication dated 4.11.1979 to the Divisional Manager, the petitioner

confessed that he contracted loans approximately of Rs. 20,000 and was paying exorbitant interest and seeking permission as referred to above to

file an insolvency petition. The petitioner did actually file an insolvency petition on 8.11.1979. The charge memo also contained charge of violation

of Section 10(1)(b)(iii) of the Banking Regulation Act, 1949 and the petitioner was alleged to have committed misconduct involving moral

turpitude. I.P. No. 54 of 1979 filed by the petitioner, in the court of the Subordinate Judge of Tiruchirapalli was said to have been withdrawn on

28.7.1980 and it is, therefore, claimed that the petitioner, was not adjudged as an insolvent.

The management appears to have conducted an enquiry on 23.2.1981 and on the basis of the findings of the Inquiry Officer, a show cause

memo dated 26.8.1981 was issued by the Disciplinary Authority (Chief Manager, Coimbatore) holding charges 1 and 2 proved and proposing to

impose a consolidated punishment of stoppage of increment for three years permanently. The petitioner appears to have submitted a written

submission on 1.9.1981 accepting guilt and also made oral submission on 4.9.1981 and on 4.9.1981 itself. The punishment proposed by the

Disciplinary Authority was said to have been imposed. On 8.9.1981, the Chief Manager revoked the suspension order and reinstated the

petitioner in service from the date he would report for duty at Pattivatithalai Branch. The petitioner appears to have joined on 11.9.1981 and had

been served with the impugned proceedings. Aggrieved, the above writ petition has been filed.

Mr. A.L. Somayaji, learned Counsel for the petitioner, contended as follows: (a) The impugned order is in substance one of punishment for a

misconduct and consequently, the same was passed without complying, with the procedure contemplated under paragraph 521 of the Sastry

Award and subsequently made the subject of Bi-partite Settlement, (b) The provisions contained in paragraph 522 of the Sastry Award which as

before part of the Bi-partite Settlement is violative of Article 14 of the Constitution of India and is liable to be struck down and consequently, the

order, purported to have been passed thereunder also stood vitiated (c) The provisions contained in Para. 522 of the Bi-partite settlement has no

application to the case on hand since the question of loss of confidence involves a misconduct and consequently, the order amounts to a punitive

one in character.

Mr. M.R. Narayanaswami, learned Senior Counsel appearing for the respondents, contended that having regard to the history of the Sastry

Award, the nature and character of the same and the authority under which it has been made and the manner in which it was subsequently made a

Bi-partite Settlement accords to it a statutory force and they are not unilateral rules devised by the respondent or animation. Consequently, it is

contended on behalf of the respondents that the plea of alleged violation of Article 14 of the Constitution of India has no relevance and such a plea

cannot be raised against the settlement which had its origin as a judgment of a Tribunal. The learned Counsel submitted that the impugned order

was not made by way of any punishment for any alleged misconduct and the contention that the order was punitive in character was neither correct

nor sustainable. It is also contended that the provisions of Para. 522 have been rightly applied to the case of the petitioner and if the submissions of

the petitioner are to be accepted, the vital difference between Paras. 521 and 522 would be not only wiped out, but paragraph 522 would virtually

be rendered otiose. The learned Counsel submitted that whether the order of termination should be considered to be one for a misconduct or that

the order impugned was punitive in character and if so, whether it is vitiated on that account are matters more appropriate for being considered

before the adjudicating authorities under the Industrial Disputes Act by means of appropriate reference and that the same cannot be advanced and

sought to be adjudicated in these proceedings under Article 226 of the Constitution of India.

On behalf of the petitioner, reliance was placed on the decision in Chandulal v. The Management of Pan American World Airways (1985) 2

L.L.J. 181 , to contend that loss of confidence cast stigma and constitutes misconduct and consequently, the holding of an enquiry is necessary for

terminating the services of a worker on that ground. In my view, though the decision of the Apex Court was concerned with the termination of

services of the worker in that case, on the ground of loss of confidence, it could be seen having regard to the facts of the said case that the

declaration of law in the said decision should be confined to the nature of the case under the consideration of the Supreme Court. That was a case

where the worker was considered to have been indulging in certain mal-practices noticed in paragraph 3 of the judgment and it was only in that

context when the management terminated on the basis of such malpractices but stating the ground of loss of confidence it was considered to cast

stigma on the worker necessitating an enquiry before such termination. In my view, where the basic materials or the relevant facts which were

responsible to make the employer to come to a conclusion of loss of confidence perse constituted acts of misconduct, the employer cannot avoid

the conduct of an enquiry by merely using the pretext of loss of confidence to terminate the services of an employee. The case on hand would not

be one such as could be seen from the consideration to follow hereinafter.

On behalf of the respondents, the decision of this Court in Ramiar v. State Bank of India, Madras (1963) 2 L.L.J. 304, which was confirmed on

appeal by a decision of Ramish v. State Bank of India Madras (1968) 2 L.L.J. 424, was relied upon to contend that loss of confidence is a matter

to be understood in the light of the circumstances of each case and that even in a case where an enquiry has been initiated and conclusions have

been arrived at on the basis of the enquiry yet the employer may either choose to punish the employee on a finding of misconduct or it may choose

for what may seem to the authority to be valid reasons to terminate the employment under the contract instead, and that the choice of one of the

alternatives cannot be denied to the management. On the basis of the said principle, it is contended that loss of confidence and the consequent

termination under paragraph 522 cannot be said to be one for any misconduct.

The learned Senior Counsel for the respondents while relying upon Section 10(i)(b) of the Banking Regulations Act, 1949, contended that the

termination for loss of confidence was fully supported by the stipulation contained therein, and that Section 10(i)(b)(i) of the Act provides that no

Banking Company shall employ or continue the employment of any person who is, or at any time has been adjudicated insolvent, or has suspended

payment or has compounded with his creditors, or who is, or has been convicted by a criminal court of an offence involving moral turpitude. The

learned Counsel submitted that the action of the petitioner in submitting the application for leave to file an insolvency petition, the admissions

contained therein and the actual petition filed and the contents thereof themselves constitute sufficient proof of ""has suspended payment"" and

consequently, no exception could be taken to the termination on account of the loss of confidence for the above reason. On behalf of the

petitioner, reliance was placed on the decision in Chatram Puttappa Sons Vs. K. Amarchand and Others, , to contend that inability to pay does

not amount to suspension of payment. The decision will have no application to the case on hand inasmuch as on the facts of the case, it is not

merely inability to pay that was on record. u/s 6(1)(f) of the Provincial Insolvency Act, the very fact that one person seeks by filing a petition to be

adjudicated as an insolvent under the Act constitutes an act of insolvency. The question as to when a person can be said to have ''suspended

payment'' has come up for consideration often while considering the scope of Sections 6 and 9 of the Provincial Insolvency Act. In Kishore v.

Netherlands Training Society A.I.R 1930 Cat. 555, a Division Bench of the Calcutta High Court held that where a judgment-debtor rough before

the court at the instance of the judgment creditors u/s 55, C.P.C. intimates to the court that he intends to apply for an adjudication as an insolvent

within one month and asks for an order of release, it amounts to giving notice that he is about to suspend, payment of debts, thereby committing an

act of insolvency within the meaning of Section 9 of Presidency Towns Insolvency Act. Suspension of payment of debts generally and not to any

particular debt, was said to constitute an act of insolvency within the meaning of Section 9. The question as to whether the contents of the notice

for the action of the debtor constitutes an act of insolvency was always considered to be one of fact to be decided in each case in the light of the

fact produced on the mind of the creditors by such notice or action and in a case of an employer visa-vis an employee it must be considered from

the point of view of the effect of action upon the mind of the employer.

The filing of an insolvency petition in the present case having the same principle and causing the issue of notice and publication made in the

Gazette as well as service of notice on some of the respondents to the petition would, in my view, constitute sufficient basis to substantiate the

claim of the respondent that the petitioner ''suspended payment'' within the meaning of Section 10(1)(b)(i) of the Act. Consequently, in my view, de

hors any other materials on the very admitted conduct and course of action adopted by the petitioner and having regard to the stipulation contained

in the Banking Regulation Act, 1949 referred to supra, the termination on account of loss of confidence cannot be said to be one involving any

misconduct and consequently, the non-compliance with paragraph 521 of the Bi-partite settlement does not vitiate the order of termination.

The plea of violation of Article 14 of the Constitution of India and challenge to paragraph 522 of the Bi-partite settlement also do not merit my

acceptance. On behalf of the petitioner, reliance was placed on the decision in Central Inland Water Transport Corporation Limited and Another

Vs. Brojo Nath Ganguly and Another, , and Spencer and Company Limited v. B. Vajravelu (1989) 2 L.W. 53, (Summary of Cases) and it was

contended that the respondent which is a nationalized bank being ""State"" within the meaning of Article 12 of the Constitution of India is subject to

Article 14 of the Constitution of India and consequently, paragraph 522 which provides for arbitrary termination is label to be struck down as

being opposed to public policy and violation of the principles of natural justice too. In my view, having regard to the origin of the Sastry Award as

a judgment of a tribunal and its adoption throughout by means of Bi-partite statutory Settlement the principles enunciated in the Central Inland

Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, , will have no application to the case on hand. Spencer

and Company Ltd. v. B. Vajravelu (1989) 2 L.W. 53 (Summary of Cases), equally has no application having regard to the specific finding therein

that the order ex facie showed adverse imputation against the employees for misconduct which is not and could not be said to be the case herein.

For the respondents, the Supreme Court decision in Supreme Court Employees'' Welfare Association and Others Vs. Union of India (UOI) and

Another, , was relied upon to contend that when a particular decision has become final and binding between the parties, they would always be

bound by the said decision and it cannot be set at naught on the ground that such decision was violative of Article 14 of the Constitution of India. It

was also contended that the validity of paragraph 522of the Sastry Award in question was the subject matter of challenge and the Apex Court

repelled the same in the decision in The Chartered Bank, Bombay Vs. The Chartered Bank Employees'' Union, . In paragraph 7 of the said

judgment while construing the scope of power of the Bank under paragraph 522 of the Sastry Award, it was held as hereunder:

Two courses were open to it; it could have taken disciplinary action under paragraph 521 of the Bank Award or it could have acted under

paragraph 522(1). The submission on behalf of the Bank is that it did not want to go into the squabble between the Chief Cashier and the

respondent and as the Chief Cashier had withdrawn his guarantee with respect to the respondent it acted bona fide in proceeding under paragraph

522(1) and thus no question arose of its taking disciplinary action against the respondent.

Consequently, the provisions contained in paras.521 and 522 had different and distinct roles to play and had been held to be binding all along upon

the parties and the plea based on Article 14 of the Constitution of India, in my view, is wholly misconceived. The clause in question cannot be said

to have been either unilaterally thrust on the employee or that the employee was made to agree taking advantage of the dominant role the

management had at its command to play in the matter. As referred to already, the Bi-partite settlement had its origin in Sastry Award having been

rendered by a Judicial Tribunal, that the same was given statutory force and has all along been observed to be the charter of rights in respect of the

employer and employee relationship of the Bank and its employees and that the said award continued to bind the rights of parties by bilateral

settlement entered into under the Industrial Disputes Act, 1947. The challenge to such a provision pressing info service the principles enunciated in

the Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, , docs not carry any weight or merit.

The challenge, therefore, fails and shall stand rejected.

The reliance placed by the learned Counsel for the petitioner on the decisions in N.B. Shukla v. Bank of Baroda and Anr. (1979) 1 L.L.J.

291, of learned single Judge of the Bombay High Court and Bank of Maharashtra v. O.P. Singla, 1990 Bank J. 198, of a learned single Judge of

the Delhi High Court that notice should be given to the employee followed up by an enquiry, in my view, has no application to the case on hand.

Once again those were cases where the termination for loss of con-fidence was found to factually involve an element of stigma unlike the case on

hand as held by me supra. Consequently, the submission of the learned Counsel for the petitioner that paragraph 522 has no application to the

present case does not also merit my acceptance.

That apart, in my view, the objection that if the order is to be challenged on merits as to whether the termination was brought about for any

misconduct or and had the effect of casting stigma against the petitioner, an adjudication of such question would require and also depend upon

proper and sufficient oral and documentary evidence, and has got to be done on a reference to the competent forum merits my acceptance. In The

Chartered Bank, Bombay Vs. The Chartered Bank Employees'' Union, , the Apex Court was of the view that such questions have to be left to the

adjudication of the competent tribunal or court constituted for the purpose. In my view the petitioner if he so desires to challenge the order on such

factual grounds claims should have recourse only to the adjudicative machinery provided under the Industrial Disputes Act, 1947 and cannot raise

such issues in these proceedings under Article 226 of the Constitution of India.

For all the reasons stated above, the writ petition fails and shall stand dismissed. The petitioner should be at liberty if he so desires to work out

his remedies if any otherwise in accordance with law on those grounds or aspects. No costs.