Holding

Under Sec. 11‑A of the Industrial Disputes Act, the arbitrator and the Supreme Court may re‑appraise the evidence of a domestic enquiry, and the charge of negligence in keeping a private cheque‑book is not misconduct; the enquiry findings were perverse and unsupported, rendering the dismissal unlawful.

Summary

Rajinder Kumar Kindra, a salesman, was dismissed after a domestic enquiry found him guilty of misconduct for allegedly negligently keeping his private cheque‑book unattended, which the employer claimed enabled the manager‑cum‑cashier to defraud the company. The dispute was referred to an arbitrator under Sec. 10(A)(1) of the Industrial Disputes Act; the first arbitrator held the enquiry findings perverse and without legal evidence, while the second upheld the dismissal. The Delhi High Court dismissed the appellant’s writ petition, stating that courts could not re‑appraise evidence. The Supreme Court held that under Sec. 11‑A of the Industrial Disputes Act, both an arbitrator and the Court may re‑appraise the evidence of a domestic enquiry, that negligence in keeping a private cheque‑book does not constitute misconduct, and that the enquiry findings were perverse and unsupported. Consequently, the dismissal was unlawful, the second arbitrator’s award was set aside, and the appellant was reinstated with full back‑wages and consequential benefits.

Issues considered

The scope of power of an arbitrator and the Supreme Court under Art. 136 to re‑appraise evidence of a domestic enquiry under Sec. 11‑A of the Industrial Disputes Act.
Whether negligence in keeping one’s private cheque‑book unattended amounts to misconduct within the meaning of the Industrial Disputes Act.
Whether the findings of the domestic enquiry were perverse and based on no legal evidence.
Whether the appellant is entitled to reinstatement and back‑wages despite alleged gainful employment during the period of dismissal.

Legislation cited

Constitution of Indias. Article 136, s. Article 226
Industrial Disputes Act, 1947s. 10(A)(1), s. 11-A

Subjects

industrial disputedomestic enquirymisconductarbitrationperverse findingsreinstatementback wagesSection 11-Aevidence appraisalcheque‑book negligence

Judgment

~66

A

RAJ!NDER KUMAR KINDRA

v.
DELHI ADMINISTRATION THROUGH
B
SECRETARY (LABOUR) AND ORS.

September 27, 1984

(D. A. DESAI AND D,P. MADON, JJ.]
c Industrial Disputes Act, 1947-Section 11-A-Arbitrator and Court
ca!J reappraise evidence led in domestic enquiry to satisfy whether misconduct
against work1nan Is t!stablishtd. Arbitrator and the Court can reject evidence of
111isconduct based on no legal evidence.

Constitution of' India-Article 136-Supreme C'ourt can reject findings
D of misconduct based on no legal evidence.

Words and Phrases-Misconduct-Whether keeping one's own cheque-
book unattended a1nounts to misconduct on the part oft Ire e111ployee.

Gainful employment-What is-Jn the absence of employment staying
E with and helping one's father-in-law in Ids wor.'c ;snot gainful e1nploy111ent.

The appcllaot was working as a salesman at a show room or a com·
pany. The company charge-sheeted the appellant Inter a/ia on the ground or
misconduct. The misconduct imputed to the appellant was that he was
negligent in keeping his cheque-book in relation to his own private account
in such a manner that it enabled the Manager-cum-Cashier of the show roorn
F or the company in which the appellant was a salesman at the relevant time
to misuse the cheque forms and thereby derraud the company. An Inquiry
Officerwas appointed to enquire into the charges. T~c 1;ompany examined son1e
witbesses and adduced evidence. The Inquiry Officer found the appellant
guilty of all the charges. On the basis of the findiogs of the Inquiry Officer
the con1pany dismissed the appellant from service. The appellant raised an
industrial dispute and the same was, by agreement, referred by the appro-
priate Government to an arbitrator as provided under Sec. lO(A)(l) of the
G Industrial 'Disputes Act, 1947. The company submitted that the arbitrator
cannot sit in appeal over the findings of the inquiry. In his award, the
arbitrator held that the findings of the Inquiry Officer were based on no
legal evidence and were, t hereforc, perverse and the enquiry was therefore
vitiated. Before a formal final order could be made by the arbitrator, he
was elevated as a Judge of the Delhi High Court. That led to a second
reference. The second arbitrator found the appellant guilty of all the
charges and held that the dismissal of the appellant was not wrongful. The
H appellant filed a wr.it petition under Art. 226 in the High Court question·
&. K. KINDRA v. DGLHi ADMN. 867

iog the correctness, validity and the legality of the award of the second A
arbitrator. A Division Bench of the High Court dismissed the matter in
limine observing that the matter depends upon assessment of evidence and
the Court cannot reappraise the same under Art. 226 of the Constitution.
Hence this appeal by special leave.

Allowing the appeal,
B
HELD : The charge levelled against the appellant is a composite
charge and has two limbs. The first limb of the charge refers to negligence
io handling his private cheque-book so that in conspiracy with the Manager
cheque forms contained in the cheque-book issued to the appellant for
operating bis private account were used by the Manager to defraud the com-
pany. When a chequc-bo.ok is issued to a holder of an account by the bank,
there is no law which requires him to keep his cheque-book in safe custody. c
He may keep his cheque book anywhere he likes and even if it is not in safe
custody he does so at his own peril. Some one so minded to forge cheque
and to withdraw money from some on_•s account may use aoybol)y's
chequewbook. In such a situation, the owner of the cheque-book unless be
has participated in the c:,nspiracy in any manner for facilitating withdrawal
of the amount cannot be attributed any 1nisconduct for keeping his cheque-
book unatte:lded or not in safe custody. Therefore first limb of the charge D
can be rejected as per se untenable without anything more. The second limb
of the charge that since the appellant left his chequewbook unattended the
appellant was negligent and .guilty of wilful disobedience in performance of
his duties as a salesman, has no force. Keeping one's own cheque-book
unattended is no part of performance of duties of the employees and there
was no order by the employer 'how appellant should handle his private
chc:·que-book. Therefore, t\-.e charge apart from being frivoluus is ludicrous E
and could not have been even framed. Even if the allegation in the charge

_, is left unquestioned it does not constitute miscrinduct. The employer could
not have framed such charges without any evidence in support of thcn1 yet
and the second arbitrator bolds tbem Qroved. Therefore the second arbitra-
tor accepted the findings of the Inquiry Officer which were per se perverse.
Not only the second arbitrator did not apply bis mind to the submission of
the appellant that the findings were perverse but he merely recorded his ipse
dlxit without in any manner analysing or examining or applying his mind to
the evidence only to find out whether there was any evidence to substantiate
the charge and whe1her any reasonable man would arrive at the conclusion
which the Inquiry Officer had reached. The award of the second arbitrator,
apart from the fact that it is based on no legal evidence suffers from the
additional infirmity of total non-application of mind. Any finding of miscon-
duct based on total absence of evidence must fall.
(875 B-C; D·E; G-H; 878 H; 879 A-BJ G

The contention that once the second arbitrator came to the conclusion
that the appellant was given full opportunity to participate in the domestic
enquiry neither High Court under Art. 226 nor this Court under Art. 136 1

can sit in appeal over the findings of the Inquiry Officer and reappraise the
evidence, has no force. In exercise of the jurisdiction conferred by Sec.11-A
of the Industrial Disputes Act, 1947 both arbitrator and this Court can
reappraise the evidence led in the domestic enquiry and satisfy itself whether H
868 SUPRllME COURT REPORtS [1985) l s.c.R
A the evidence led by the employer established misconduct against the
workm1n. It is too late in the day to co!ltend that the arbitrator has only
the power to decide whether the conclusions reached by the Inquiry Officer
were plausible one deducible from the evidence led i[]; enquiry and not to
reappreciate the evidence itself and to reach the conc!usion whether the
misconduct alleged against the workman has been established or not.
[879 C·E]
B
1'Vo·kmen of M/s Fire.~tone Tyre and Rubber Company of India rp) Ltd.
v. Management and Otlters, [1973] 3 SCR 587, referred to.

It is well-settled that where the findings of misconduct are based on
no legal evidence and the conclusion is one to which no reasonable man
would come, the arbitrator appointed under Sec. 10~.i\ or this Court in
c appeal under Art. 136 can reject such finding-, a~ perv~rse·. H0lding that the
findings 2.re perverse docs not constitute reappraisal of evidenc~, though this
Court would have been perf.:!ctly justified in exercise of P·.:>wors conf-:rred by
Sec. I IA to do so. [880 A-B]

Gujarat Steel Tubes Ltd. v. Gujarat Steel Tube~ Mazdoor Sabha, [1980]
D 2 SCR 146, referred to.

It is equ:;i.lly well-settled that where a quasijudicia.1 tribunal or arbit·
rator records findings based on no legal evidence and th.~ findings are ei ther
his ipse dixft or based on conjectures and surmises, the :nquiry suffers from
1

the additional infirmity of non·application of mind and stands vitiated. The
E industrial tribunal or the arbitrator or a -quasi.judicial authority can reject
not only such findings but also the conclusion based on no legal evidence or
if it is merely based on surmises and conjectures unrel<tted to evidence on
ihe ground that they disclose total aon.application of mind. [880 C-D]

Io the instant case, viewed from either angle, the conclusion of the
Inquiry Officer as well as of the second arbitrator are wholly perverse and
' -
F
hence unsustainable. The High Court was clearly in error in declining to
examine the contention that the findings were perverse 0111 the short, specious
and wholly untenable ground that the matter depends on appraisal of
evidcnee. [880 E)

Between appraisal of evidence and total lack of e:vidence there is an
appreciable difference which could never be lost sight of and the .High Court
G ought not to have short circuited the writ petition. [880 F]

If there is absolutely no evidence in support of the only allegation of
misconduct namely negligence in not keeping one's. private cheque-book in
· safe custody, the conclucioo is not only not a plausible cine but it in wholly
perverse and this Court is in complete agreement with the findings recorded
by the first arbitrator that the findings or Inquiry Officer were pervor&e and
H tho eoquirJ was wholly vitiated. [880 G)
R. K, KiNDRA v. DELHi ADMN. 869

Where the order of dismissal is sought to be sustained on a finding in A
the domestic enquiry which is shown to be p~rvcrse and the enquiry is
vitiated as suffering from non-application of mind the only course open to
court is to set it aside and consequently relief of reinstatement must be
granted. [880 G]

The submission of the company that since the a;Jpellant was gainfully B
employed during the period of his dismissal, he should not be awarded
back-wages must fail. The only evidence was that during bis forced absence
from employment since the date of termination of his service, the appellant
and .the members of his family were staying with his father-in-law and
during this period the appellant was helping his father-in-law who had a
coa1·depot. On this evidence it cannot be said that the appellant was
gainfully employed so as to reject the claim for back-wages. If this is c
gainfully employment as contended by the company, the employer can contend
that the dismissed employee in order to keep bis body aud soul together had
taken to begging and that would as we11 be thJ gainful employment. There-
fore, the appellant would be entitled to full back-wages and all conse-
quential benefits. [881 C-E]

D
CIVIL APPELLATE JURISDICTION : C'ivil Appeal No. 2386 of
1984.
Appeal by Special leave from the Judgment and Order dated
the 2nd March, 1983 of the Delhi High Court in Writ Petition
No. 314. of 1983. '

Miss Marnia Sarin for the Appellant. E

-. Pawan Kumar Jain and K .. K. Gupta, for Respondent No. 2.

The Judgment of the Court was delivered by
F
DESAI. J. Appellant Rajinder Kumar Kindra was inducted as
a peon by M/s Raymond Woolen Mills Ltd. ('employer' for short).
In 1972 he was promoted as a Salesman and at the relevant time
he was serving at the Raymond's retail showroom in Karol Bagh,
New Delhi. One Shri R. S. Negi was the Manager-cum-Cashier of
the Karol Bagh Show-room of the employer under whom the
appellant was working. He was served with a charge-sheet dated G
December 11, 1975 which reads as under :

"That you, Shri Rajinder Kindra, is hereby informed
that you, while working as a salesman at Raymonds' Retail
Show-room, 2397 JI, Hardhian Singh Road, N eW Dclhi-5
870 SUPREME COURT REPORTS (1985) I s.c.R.

A have misappropriated cash and funds from the amounts
of Raymonds' Woolen Mills Ltd., to the extent of Rs.
32, 196/88 or a part thereof during the period ! 0.6.75 to
17.10.75 by manipulating false accounts, submitted bogus
cheques into the Mills Account or by taking cash from
the chest of the Retail Depot along with Shri R. S. Negi,
B Manager-cum-Cashier of Raymonds' Retail Show-room,
2397 /l, Hardhian Singh Road, Karol Bagh, New Delhi.

That you Shri Rajinder Kumar Kindra while acting
as a salesman aided, abeted, connived and conspired with
the Manager-cum-Cashier Shri R. S. Negi of th• said
c show-room and issued vanons cheqnes in the amount of
Rs. 15, 027 /75 from your cheque book with the ulterior
motive and design to defraud the Company of the said
amount by submitting these bogus cheques into the Mills'
Account and thereby causing unlawful gain to yourself and
D causing unlawful loss to the Company in ''ol!usion with
Manager-cum-Cashier Shri R. S. Negi.

That you Shri Rajinder Kumar Kindra has willfuly/
negligently permitted the user of the cheques in order to
defraud the company of the amount of Rs. 15,027 /75 in
E conspiracy with Shri R. S. Negi and you have been habi-
tually negligent and willfully disobedient in the performance
of your duties as salesman."

One Shri Y. K. Soni was appointed as l!nquiry Officer to
enquire into the afore-mentioned charges. In the 1:ourse of enquiry,
·-
the appellant denied the charges levelled against him. He stated
that the cash used to remain with Manager-cum-Cashier Shri R. S.
Negi and it is for him to explain about some cheques drawn and
the statement of account submitted by him. He denied himself
having issued any cheque. He denied that he was negli£cnt in
performance of his duty. The employer examined Shri 0. D.
G Sharma, Shri G. L. Kapur, Shri V. K. Malhotra and Shri Nandan
Singh as witnesses for the management. The appellant gave evidence
on his b·half and he was cross-examined on behalf of the employer.
He also examined one Shri A. K. Godbole as his witness.

The Enquiry Officer Shri V. K. Soni submitted his report
dated June 22, 1976. In the report, he inter a/ia held that the
a appellant had been guilty of ~ross negligence and mis~onduct i11 the
R. K. KINDRA v. DELHI ADMN. (Desai, J,) 871

discharge of his duties and he was 'actively responsible for commit!- A
, g the fraud on the Company with Shri R. S. Negi to the extent
~f Rs. 15027.75 and all the charges as contained in the charge-sheet
against the appellant were held proved. The employer. accepted the
report and dismissed the appellant from service with effect from
August 25, 19 7 6.
B
The appellant raised an industrial dispute inter alia contending
that the findings of the enquiry officer were perverse and there was
no evidence in respect of either the charge of negligence or embazzle-
• ment of funds and that the dismissal from service was wholly
unjustified. The employer and the appellant by a written agreement
agreed to refer the existing industrial dispute arising out of the
c
dismissal from service of the appellant to an arbitrator, as provided
by Sec. 10 (A) (I) of the fod~stria~ Dispute• Act (Act for short).
1he first respondent Delhi Admm1strat10n pur;uant to aforemention-
ed written agreement referred the following dispute to Shri G. c.
Jain, Presiding Officer of the Labour Court, Delhi who was selected D
by the parties to be the arbitrator. It reads as under :-

"(!) Whether the services of Shri R. K. Kindra were ter-
minated illegally and unjustifiably ?

(2) Whether the enquiry proceedings were initiated by the
principles of natural justice and equity ? E

(3) To what relief if any, is the worker entitled ?"

The employer contended before the arbitrator that the enquiry
held by him is fair and just and full opportunity was afforded to the
appellant to participate in the enquiry, to cros. examine witnesses F
•• produced by the management and to lead his evidence. It was
further contended that the conclusions reached by the enquiry
officer and findings recorded by him are borne out by the evidence
and permissible inferences drawn from the evidence and they are
such that any reasonable person would reach on the evidence th
conclusion of guilt of the appellant. It was submitted that the
G
arbitrator cannot sit in appeal over the findings of the enquir;
officer. It was further con.tended that at any rate there is satis-
factory evidence to show that the appellant negligently kept his
cheque book in relation to his private banking account in such a
manner as to be accessible to any one to misuse the same and this
was done intentionally, so as to facilitate the commission of fraud
ff
872 SUPREME COURT REPORTS [1985] I s.c.R.

A presumably by Manager-cum-Cashier Shri R. S. Negi. In the ulti-
mate analyses this was the only misconduct attributed to the present
appellant.

The arbitrator held that none of the witnesses of the employer
has stated that the appellant misappropriated any amount of the
B Company or he had manipulated false accounts or had submitted
bogus cheques in the account of the employer or had taken away
any amo·mt from tb.e chest of the retail depot or had abeted, aided,
conspired or connived with Shri R. S. Negi or issued any cheque to •
defraud the Company. Thus the employer failed to lead any
evidence before the arbitrator to impute any misconduct to the
c appellant as alleged in the charge-sheet. The arbitrator concluded
that there was no evidence in support of charge No. 1 and 2 and
there was no evidence to prove Charge No. 3. The conclusion
• reached by the arbitrator may be extracted :

D "In conclusion, I hold that the findings of the Inquiry
Officer were based on no legal evidence and were, there-
fore, perverse. The enquiry is, therefore, vitiated. I hold
accordingly."

On these findings nothing remains save and except the conse-
E
quential order that the dismissal from service of the appellant must
be quashed and set aside and the appellant be reinstated in service
with all consequential benefits unless of course the employer had
sought an opportunity to lead evidence before the arbitrator_ to
substantiate the charges. No such opportunity was sought and
therdore as held by this court in Shanker Chakraborte v. Britannia
F B'scuits Co. Ltd.,<1l nothing further was required to be done and
the award reinstating the appellant should have followed. Unfor-
tunately making of this consequential order was postponed. The
finding of the arbitrator is dated May 24, 197f. It appears that
soon thereafter Shri G. C. Jain arbitrator was elevated as a Judge
of .the Delhi High Court and he consequently before taking his oath
G did not make the final order which was merely a formal part of his
duties. That unfortunately led to a second reference. This time
reference was made under Sec. 10 (A) (I) to Shri N. L. Kakkar,
retired Additional District and Sessions Judge, Delhi as an arbitra·
tor. The same three points were referred to Shri Kakkar for his
decision. Shri Kakkar after narrating the evidence that was led
H bef\)re the enquiry officer summed up his findings as under :-

(!) (1979) SCR, 116,.
R. IC. !CINDRA v. DELHI ADMN. (Desai, J.) 873
(a) "That the services of Shri R. K. Kindra, were not ·
terminate illegally or unjustifiably but on account of
charges having been successfully proved against him,
especially the third charges that is with regard to will·
fully ;negligently pet mit the user of cheques in order to
defraud the company in conspiracy with Shri R.-S.
Negi and negligence in the performance of bis duties B '•
as a salesman.

(b) That the enquiry proceedings were not vitiated by the
principles of natural justice and equity as full opportu-
nity was given to the workman and no prejudice was C )
caused to him by any act of the management, although
he was given full opportunity to lead his evidence and
to cross ~xamine the witnesses of the management and
particularly there was no enmity between the work-
man and the enquiry officer and the dismissal as such
was not wrongful. D .

(c) That the wo,·kman is not entitled to any relief, and is
not entitled to re-instatement with back wages and
continuity of service since he has been gainfully em-
ployed with Shri Tara Chand at his coal depot ever
since his dismissal. E ·

The reference by way of award is answered accor-
dingly."

". The appellant filed a writ petition nnder Art. 226 in the High
Court of Delhi questioning the cor ;ectness, validity and the legality F
of the award made by Shri Kakkar. A Division Bench of the High
Court dismissed the m1tter in limine, observing that the matter
depends upon assessment of evidence and the Court cannot reapp-
raise the same under Art. 226 of the Constitution. Hence this appeal
by special leave.

Let it be made absolutely clear at the outset that the only G
misconduct imputed to the appellant was that he was negligent in
keeping his cheque-book in relation to his own private account in
such a manner that it enabled Sbri R. S. Negi, Manager-cum-
Cashier of the Branch in which the appellant was a salesman at the
relevant time to misuse the cheque forms and thereby defraud the
~mployer. Mr. P. ~· Jain learned counsel for employer sprcifically
R
•
874 SUPREME COURT REPORTS [1985] l s.c.a.

A conceded that the only misconduct alleged against the appellant
consists of his negligence in keeping his own cheque-book by which
he could operate his own private account in such manner as to
enable someone so-minded to misuse the cheque forms. He was
repeatedly asked what law, rule, regulation or a standing order, if
there be any, which requires an employee to keep his own private
B
cheque-book under lock and key or safe custody so that no one
except himself can have access to it and we waited for the answer
in vain. It was conceded that the appellant is not guilty of any
embezzlement or misappropriation of funds of the employer though
a grandiose albeit flamboyant charge was framed that he misappro-
c priated cash and funds from the accounts of the employer to the
extent of Rs. 32,196.88 p. or part thereof during the period June
10, 1975 to October 10, 1975 by manipulating false accounts, sub-
mitting bogus cheques into the employer's account or by taking
cash from the chest of the branch alongwith Shri R. S. Negi,
Manager-cum-Cashier of the Branch. There is not a tittle of
D evidence in support of the allegation of misappropriation or embez-
zlement of funds or manipulation of accounts by the appellant. This
was in terms conceded. The allegation, to be specific, of the
employer is that Shri R. S. Neg1, Manager-cum-Cashier misused
the cheque forms from the cheque-book of the appellant in respect
of his private account and embezzled funds of the employer. It
E was not the case of the employer that applicant drew cheques or
embezzled cash from the chest. Another allegation was that the
appellant abetted, aided, connived at or conspired with Mamger-
cum-Cashier Shri R. S. Negi, in charge of the branch and
issued various cheques in the amount of Rs. 15,027.75 p. drawn
on forms of cheques contained in the cheque· book of the appellant
F issued to him for operatmg his own private account with ulterior
motive of defrauding the employer by submitting bogus cheques into
the account of the employer and thereby caused wrongful gain to
himself and wrongful loss to the employer, in collusion with Shri
R, S. Negi. Again it was conceded that there is absolutely not an
iota of evidence wbich could indicate that the appellant issued any
G cheques himself or that he aided or abetted someone to issue the (.
bogus cheques. These were the allegations in charges Nos. I and
2 and the finding by Mr. Kakkar that they are proved can be styled
as perverse on the admission of the employer himself because not:
a single witness in the course of domestic enquiry so stated. Mr.
Jain, learned counsel for the respondent could not point out one
single sentence of evidence in support of these two charges.
R. K. KINDRA v. Dl!LHI ADMN. (Desai, J.) 875

Mr. P. K. Jain urged that the third charge which was to the A.c
effect that the appellant permitted the use of the cheques from the
cheque-book is1ued to him by the Bank in which he was maintain·
ing his own private account to defraud the employer to the tune
of Rs. 15,027.'15 p. in conspiracy with Shri R. S. Negi and that he
was negligent and was guilty of wilful disobedience in performance
of his duties as a sales man was substantiated. It is a composite B
charge. The first limb of the charge refers to negligence in handling
his private cheque book so that in conspiracy with Shri R. S. Negi
cheque forms contained in the cheque book issued to the appellant
for operating his private account were used by Shri R. S. Negi to
defraud the employer. Rejecting the language improperly used the
charge is that the appellant kept his private cheque book unattenderl c
or not in safe custody so that Mr. R S. Negi misused the cheque.
forms from this cheque book. In support of this allegri ti on,
the evidence is that the appellant did not keep his cheque book
under lock and key or in safe custody so that no one else except
himself will have access to the same. We have not been able to D
understand apart from appreciating this charge. When a cheque
book is issued to a holder of an account by the Bank, there is no
law which requires him to keep bis cheque book in safe custody.
He may keep it in any manner and if in the process some one
misuses the cheque and withdraws money from the account of the
holder, the bank will be able to disown its liability pleading negli· E
geoce of the holder of the account. A man can keep his cheque
book anywhere he likes and even if it is not in safe custody he do.es
so at his own peril. In the event of misuse as a result of negligent
handling of the cheque book, the Bank will be able to disown its
' liability if someone by misuse of the forms'"bf cheques withdraws
any amount from the account in respect of which the cheque book
is issued. Tliat is not the case here. The accusation is that the F
appellant kept his cheque book in such a manner as to be accessi-
ble to any one and that some one unscrupulously removed the forms
of cheques from the cheque book of the appellant and used them
to withdraw money not from the appellant's account but from the
e~ployer's account. Some one so ipinded to forge cheque and to
withdraw money from some on~'s account may use anybody's cheque G
book. In such a situation, the owner of the cheque book unless
h~ has participated in the conspiracy in any manner for facilitating
withdrawal of the amount cannot be attributed any misconduct for
keeping his cheque book unattended or not in safe custody. There·
fore first limb of the charge No. 3 can be rejected as per se unten·
~ble without anything m<;>re,
H
876 SUPREME COURT REPORTS [1985) l s.c.a.

A The second limb of the third charge is that the appellant was
negligent and guilty of wilful disobedience in performance of his
duties as a salesman. Not a single witness has spoken of any negli·
gence on the part of the appellant in performance of his duties.
There is not the remotest suggestion in the evidence to that effect.
Not a single witness has spoken about any wilful disobedience in
B
performance of duty. Some flamboyant charges appears to have
been cooked up by the employer without any regard for truth or
without any regard for responsibility in making such heinous allega::.
tion and levelling serious accusation without an iota of evidence in
support of it We repeatedly asked Mr. P. K. Jain, learned counsel
c for the employer to show from the evid~nce Jed before the inquiry
officer which order of .the employer was disobeyed much less un·
wilfully by the appellan\, as also acts of omission and comm1ss1on
in performance of duty to spell out negligence. The only reply
we received was that the appellant kept his cheque book unattended.
Keeping one's own cheque book unattendej is no part of perfor·
D mance of duties of the employee and there was no order by the
employer how appellant should handle his private cheque book.

Let is be made distinctly clear that this Court in this appeal
is not re·appieciating evidence. Mr. G. C. Jain, the first Arbitrator
who completed a major part of the enquiry in the reference made
ll to him under sec. lO (A) (l) after m~ticu!ously examining the
evidence led on behalf of the employer in the enquiry proceedings
concluded as under :-

"22. I have carefully examined this entire evidence.
None of the witnesses has stated that Shri Kindra had
misappropriated any amount of the Company or he had
F manipulated false accounts, or had submitted bogus cheques
in the mills account and had taken away any amcunt from
the chest of the retail depot or had abeted, aided conspired
or connived with Shri R. S. N egi or issued any cheque to
defraud the company. What PW-I to PW-3 said is that
Shri Negi used five cheques from the cheque book of this
G
workman to defraud the company. There is no evidence
to show any fraud on the part of Shri Kindra or to connect
him with misappropriation by Shri Negi. The mere fact
that his cheques were used is not sufficient to hold that he
had entered into conspiracy with Shri Negi or that he wil·
fully or negligently permitted the use of the cheques in
ff order to defraud the company to the amount of Rs.
il. K. KINDRA v. DELIU ADMN. (Desai, J) 877

15,027 .75 p. or part thereof. Management's own witness A
have stated that these cheques were utilised either with the
conniavance of Shri R. K. Kindra or because of bis negli-
gence in respect of the ,ame. None of them has stated
with certainty that Shri Kindra was a party to this mis-
appropriation. No doubt the evidence shows that he was
not very careful in keeping his cheque book under lock and B
key. But this circumstance is not sufficient to hold that
he had entered into any conspiracy with Shri R. S. Negi
or was a party to the misppr6priation. Thus there was no
evidence in support of charge No. I and 2. There is no
evidence that Shri Kindra wilfully permitted the user of
his cheque book. There is no evidence that his negligence c
in keeping the cheque book in a drawer without a lock
was with a view to defraud the company. There is no
evidence that he was habitually negligent or wilfnlly dis-
obedient in the discharge of his duties. The manner of
keeping his personal cheque book was not a part of bis
D
duties as salesman. Thus there was no evidence to prove
charge No. 3 as well."

He further concluded in paragraph 23 of his award that the
findings of the enquiry officer were based on no legal evidence and
were therefore perverse and the enquiry was vitiated. The employer E
never sought an opportunity to lead evidence before arbitrator to
substantiate the charges. In fact on the conclusion recorded by
Mr. G. C. Jam he .should have ·made a consequential order of
setting aside the order of dismissal and directing reinstatement with
back wages but he unnecessarily procrastinated and then before he
could attend to the remainder of the work, he was elevated to the
bench of the Delhi High Court leaving the a ppellaut to face the F
music of a fresh enquiry aud a ·complete sommer sault by the new
arbitrator.

A fresh reference was made to Sh. N. L. Kakkar, Mr. P. K.
Jain, learned counsel for the employer/contended that this Court ' "
is only concerned with the award of Mr. Kakkar and the findings
recorded by Mr. G. C. Jain are not relevant. We have serious G
reservations about this submission, but it .is not necessary in this
case to decide that point. We would now confine ourselves to the
award of Shri Kakkar.

In Paragraph I to 5, the history 'of the dispute and the charges H
'

818 [198~ 1 s.c.k.
A framed against the appellant have been set out by Mr. Kakkar.
Paragraph 6 deals with what the enquiry officer did. Paragraph 7
reproduces the contentions on behalf of the appellant. Paragraph
8 summarises the contentions on behalf of the employer. Paragraphs
9, 10 and 11 deal with the manner in which the enquiry 11-as held.
Paragraph 12 refers to the written arguments submitted on behalf
B of the employer. In the concluding paragraph 13, Mr. Kakkar
states that the circumstances of the case and the evidence produced
by the parties before the enquiry officer as well as in the present
proceedings and on the consideration of the documents filed and
proved, it is held as thorein stated. He then recorded his ipse
c dixit not discussing the evidence or the total absence of it. It may
be pointed out that in the course of the enquiry held against
the appellant by Mr. U. K. Soni, enquiry officer, the emloyer
had examined 4 witnesses namely Shri O. D. Sharma, Shri G.L.
Kapur, Shri V,K. Malhotra and Shri Nandan Singh. No witness
was examined before Shri G.C. Jain and the employer relied upon
I) the report of the enquiry officer and the evidence of the four wit-
nesses recorded by the enquiry officer. Wl1en the matter came up
before Mr. Kakkar, the employer had not examined any witness
but had submitted the report of the enquiry officer and the e.vidence
of the aforementioned witnesses. Therefore when it was contended
before the arbitrator th.at even accepting the evidence of the four
E witnesses, as if unchallenged, no reasonable man could ever come
to the conclusion that the misconduct imputed to the appellant
in charges No. 1, 2 and 3 could be said to be proved, it was incum-
bent upon him to examine the evidence. We invited Mr. P.K. Jain
to point ont to us which evidence is being relied upon in support 1
F
of the charge of embezzlement and the charge relating to al!eged
misappropriation of funds. He could not lay his hand on any pieco
I
of evidence. Conceding that there is no evidence in support of
the charge of embezzlement and misappropriation of funds simul-
taneously conceding that charges No. I and 2 are not proved, he
repeatedly emphasised that the only conducts of which appellant
1s guilty is that the appellant had so deliberately left his cheque
G book unattended as to be accessible to anyone who may misuse
it and this constitutes negligence in performance of duty. Even
at the cost of the repetition, we must point out that keeping
one's private cheque book in any manner is no par. of the perfor-
mance of the duty of the employee. To say the least the charge
apart from being frivolous is ludicrous and could not have even
framed. Even if the allegation in the charge is left unquestioned
H it does not constitute misconduct. The employer could not have
framed such charges without any evidence in support of them yet
il.. ic. KlNDRA v. bliLHI ADMN. (Desai; J.)

Mr. K.akkar holds them proved. Therefore Mr. K.akkar accepted A
· the findings of the enquiry officer which were per se perverse. Not
only Mr. Kakkar did not apply his mind to the submission of the
appellant that the findings were perverse but he merely recorded
his ipse dixit without in any manner analysing or examining or
applying his mind to the evidence only to find ont whether there
was any evidence to substantiate the charge and whether any reason- B
able man would arrive at the .conclusion which the enquiry officer
had reached. The award of Mr. Kakkar, apart from the fact that
it is based on no legal evidence suffers from the additional infir-
mity of total non-application of mind. Any finding of misconduct
based. on total absence of evidence mnst fail. ·
c
Mr. Jain contended that once Mr. Kakkar came to the con-
clusion that the appellant was given full opportnnity to participate
in the domestic enquiry neither High Court under Art. 226 nor
this Court under Art. 136 can sit in appeal over the findings of the
enquiry officer and reappraise the evidence. We have not at all D
attempted to reappreciate the evidence though in exercise of the
jurisdiction conferred by sec. 11-A of the Iiidustrial Disputes Act,
1947 both arbitrator and this court can reappraise the evidence led
in the domestic enquiry and satisfy itself whether the evidence led
by \he employer established misconduct against the workman. · It'is
too late in the day to contend that the arbitrator has only the power E
to decided whether the conclusions reached by the enquiry officer
were plausible one deducible from the. evidence led in the enquiry
and not-to reappreciate the evidence itself and to reach the conclu-
sion whether the misconduct .alleged against the workman ·has been
ostablished or not. This courhn Workmen of M/s Firestone Tyre
Rubber Company of India (P) Ltd. v. Management & Others,( 1) held F
that since the introduction of sec. 11-A in the Industrial Disputes
Act, ·1947, the Industrial . tribunal is now equipped with the powers
to reappraise the evidence in· the d.omestic enquiry and satisfy
itself Whether the said evidence relied up,on by the empl~yer esta-
blishes the misconduct alleged a.gains! the. workman. It is equally
well-settled that the arbitrator app~inted under Sec. 10-A is compre· G
handed in sec. 11-A. This court in Gujarat Steel ,Tubes Ltd. v.
Gujarat Steel Tubes. Mazdoor Sabha,(2) held that an arbitrator appo-
0

inted under sec. 10-A of the Industrial Disputes Act, 1947 is compre-
hended ip sec. 11 A and the arbitratal reference apart from sec. 11-A
is plenery in scope. Therefore it would be within the. jurisdiCtion
H
(I) [1973] :i SCR 587.
(2) (1980] 2 SCR 146.
sso SUPREME COURT REPORTS [19s511 s.c it.

A both of the arbitrator as well as this court to reappreciate the
evidence though it is not necessary to do so in this case. It ts thus
well-settled that where the findings of misconduct are based on no
legal evidence and the conclusion is one to which no reasonable
man would come, the arbitrator appointed under sec. 10-A or this
court in appeal under Art. 136 can reject such findings as perverse.
II Holding that the findings are peaverse does not constitute reapprai-
sal of evidence, though we would have been perfectly justified in
exercise of powers coferred by sec. 11-A to do so.

It is equally well-settled that where a quasijudicial tribunal or
c arbitrator records findings based on no legal evidence and the
findings are either his ipse di xi t or based on conjectures and surmises,
the enquiry suffers from the additional infirmity of non-application
of mind and stands vitiated. The industrial tribunal or the arbitra-
tor or a quasi-judicia I authority can reject uot only such findings but
also the conclusion based on no legal evidence or if it is merely based
D on surmises and conjectures unrelated to evidence on the ground
that they disclose total non-application of mind. Viewed from either
angle, the conolusion of the enquiry officer as well as of the arbitra-
tor Mr. Kakkar are wholly perverse and hence unsustainable. The
High Court, in our opinion, was in clearly error in declining to
examine the contention that the findings were perverse on the short,
E specious and wholly untenable ground that the matter depends on
appraisal of evidence.

Between appraisal of evidence and total lack of evidence there
is an appreciable difference which could never be lost-sight of and
the High Court ought not to have sho~t circuited the writ petition.
F
If there is absolutely no evidence in support or the only allega-
tion of misconduct namely negligence in not keeping one's private
cheque book in safe custody, the conclusion is not only not a plausi-
ble one but it is wholly perverse and we are in complete agreement
with findings recorded Mr. G.C. Jain that the findings of enquiry
officer were perverse and the enquiry was wholly vitiated,
G

Where the order of dismissal is sought to be sustained on a
finding in the domestic enquiry which is shown to be perverse and
the enquiry is vitiated as suffering from non-application of mind the
only ·course open to us is to set it aside and consequently relief of
reinstatement must be granted and nothing was pointed to us why we
u should not grant the same.
it. k. klNDRA v. DELHi ADMN. (Desai, j,) 881

It was next contended on behalf of the appellant that reinstate- A
ment with full back-wages be awarded to him. Mr. P.K. Jain,
learned counsel for the employer countered urging that there is
evidence to show that the appellant was gainfully employed since the
termination of service and therefore he was not entitled to back
wages. In support of this submission Mr. Jain pointed out that the
app,llant in his cross·examination has admitted that during his B
forced absence from employment since the date of termination of
his service, he was maintaining his family by helping his father-in-
law Tara Chand who owns a coal depot, and that he and the members
of his family lived with his father-in-Jaw and that he had no alterna-
tive source of maintenance. If this is gainful employment, the
employer can contend that the dismissed employee in order to keep
c
his body and soul, together had taken to begging and that would as
well be a gainful employment. The gross perversity with which the
employer had approached this case has left us stunned. If the
employer after an utterly unsustainable termination order of service
wants to deny back-wages on the ground that the appellant and the D
members of his family were staying with the father-in-law of the
appellant as there was no alternative source of maintenance and
during this period appellant was helping his father-in-law Tara
Chand who had a coal-depot, it cannot be said that the appellant was
gainfully employed. This was tho only evidence in support of the
submission that during his forced absence from service he was
gainfully em :,Joyed. This cannot be said to be gainful employment E
so as to reject the claim for back-wages. There·is no evidence on the
record to show that the appellant was gainfully employed during the
period of his absence from service. Therefore, the appellant would
be entitled to full back-wages and all consequential benefits.

Accordingly, the appeal is allowed and the award of the F
arbitrator Shri K~kkar is set aside and the appellant is re-instated in
service with ful~ back-wages and consequential benefits to which he
would have been entitled had he not been unlawfully thrown out
from service, and the costs of this appeal quantified at Rs. 3,000,
The back-wages payable to the appellant and the costs awarded
0
herein shall be paid to him within 2 months from today. The appel-
l~nt shall be physically re-instated in service within a week from
today. The appellant shall be entitled to all the consequential benefits
of his continuous service.

H.S.K. Appeal allowed.