Holding

When an employee does not challenge the legality or validity of a disciplinary inquiry, the Labour Court cannot interfere with the inquiry’s findings or reduce the punishment; dismissal is the proper penalty for misappropriation of funds.

Summary

Vinod Kumar, a bus conductor employed by U.P. State Road Transport Corporation, was found to have collected fare from passengers without issuing tickets, amounting to misappropriation of funds. An internal disciplinary inquiry led to his dismissal, which was challenged in an industrial dispute before the Labour Court. The Labour Court, noting that the punishment of removal was excessive, substituted it with a stoppage of one increment and ordered reinstatement with full back wages. The High Court upheld the Labour Court’s view but reduced the back‑wages to 50%. On appeal, the Supreme Court held that because the employee did not contest the legality or validity of the inquiry, the Labour Court could not interfere with the inquiry’s findings or lessen the punishment; dismissal is the appropriate penalty for misappropriation, and courts must not temper it with misplaced sympathy. Consequently, the Supreme Court set aside both the Labour Court and High Court orders and restored the dismissal without back‑wage liability.

Issues considered

Can the Labour Court interfere with the findings of a disciplinary inquiry and reduce the punishment when the employee has not challenged the legality of the inquiry?
Is dismissal/removal the appropriate punishment for a workman found guilty of misappropriation of funds?
May the High Court modify the back‑wages awarded by the Labour Court in such a case?

Subjects

labour lawdisciplinary actiondismissalmisappropriation of fundsindustrial disputeLabour CourtSupreme Courtpunishmentback wagessympathyemployer confidence

Judgment

A U.P. STATE ROAD TRANSPORT CORPORATION
v.
VINODKUMAR
-
DECEMBER 6, 2007
B
(ASHOK BHAN AND D.K. JAIN, JJ.]

'
Labour Law:

c Workman-Bus Conductor-Inquiry against for not giving
tickets to passengers though charging from them-Removal from
service-Labour Court holding the punishment to be harsh and
substituting the same by stoppage ofone increment without cumulative
effect and directing reinstatement with full back wages-High Court
reducing the back wages to 50ro-Held: Since workman did not
D
challenge correctness and legality of inquiry conducted, it was not
}
open to Labour Court to go into findings ofInquiry Officer regarding
misconduct committed by delinquent-RemovaVdismissal from service
is appropriate punishment for an employee found guilty of
misappropriation of funds-Courts should be reluctant to reduce
E
punishment on misplaced sympathy for such an employee.
The respondent-workman, a bus conductor, was removed from
service after an inquiry into the charge, inter alia, that he had /"
!
collected the fare from 8 passengers in his bus, but did not give them
F the tickets. On an industrial dispute being raised, the matter was
referred to the Labour Court. The workman did not press the legality ~-

and fairness of the inquiry proceedings and confined his case only
to the conclusions reached by the Inquiry Officer and the quantum
of punishment. The Labour Court, however, held that the punishment
G of removal imposed upon the workman was excessive in comparison
to the charges levelled against him. It substituted the punishment
of removal by stoppage of one increment without any cumulative
effect and directed his reinstatement with full back wages. In the
w1it petition filed by the workman, the High Court uphold the order
H 1018
~
\

U.P.STATEROADTRANSPORTCORPORATIONv. 1019

- VIN OD KUMAR [ASHOK BHAN, J.]
passed by the Labour Court, but reduced the back wages to 50%, A
Aggrieved, the Department filed the instant appeal.
Allowing the appea~ the Court
HELD: 1. Since the respondent had not challenged the
~ -1 correctness, legality or validity of the inquiry conducted, it was not B
open to the Labour Court to go into the findings recorded by the
Inquiry Officer regarding the misconduct committed by the
respondent. This Court in a number of judgments has held that the
punishment ofremoval/dismissal is the appropriate punishment for
an employee found guilty of misappropriation of funds and the c
Courts should be reluctant to reduce the punishment on misplaced
sympathy fora workman; that, there is nothing wrong in the employer
losing confidence or faith in such an employee and awarding
punishment of dismissal; that, in such cases, there is no place for
.J
~ generosity or misplaced sympathy on the part of the judicial forums D
and interfedng with the quantum of punishment.
(Para 10] (1022-B-D]
Divisional Controller, N. E. K. R. TC. v. H Amaresh, (2006] 6 SCC
187, relied on.
E
1.2. The judgment of the High Court as well as the order passed
by the Labour Court are set aside. Consequently, the order passed
by the disciplinary authority dismissing/removing the respondent
from service is restored. [Para 11] [1023-E]
c---\.
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5660 F
of2007.
From the Judgment and final Order dated 03.08.2005 of the High
Court ofUttaranchal at Nainital in Writ Petition No. 603(M/S) of 2002.
Pradeep Misra for the Appellant. G

-- Dinesh Kumar Garg for the Respondent.
The Judgment of the Court was delivered by
BHAN, J. I. Leave granted H
1020 SUPREME COURT REPORTS [2007) 12 S.C.R.

A 2. This appeal is directed against the final judgment and order dated
3.8.2005 passed by the High Court ofUttaranchal at Nainital in Writ
Petition No. 603 (MIS) of2002. By the impugned order, the High Court
upheld the findings recorded by the Labour Court to the effect that the
punishment of removal imposed upon the respondent was excessive in
B comparison to the charges levelled against him. The High Court while
maintaining the findings recorded by the Labour Court that the punishment
of removal was excessive in comparison to the charges levelled against
the workman, reduced the back wages to 50%.
3. Respondent-workman was appointed as a Conductor in the U.P.
C State Road Transport Corporation (the appellant herein) on 26.9.1991.
Respondent was conducting the bus on Kalsi-Chhani route, which was
checked and, on inspection it was found that out of 45 passengers, 28
passengers from Kalsi to Chhani were without ticket The Inspecting Tearn
,-
found that the Conductor had already recovered fare from 8 such without-
D ticket passengers. That he had issued 6 tickets which were not in seriatim
and their original copies were not completely filled. That entry of these
tickets was not made in the Way Bill. The inspecting tean1 made an
endorsement to this effect on the Way Bill and got the signatures of
respondent as a proof thereof. On the report of the inspecting team,
E charge-sheet was issued to the respondent and he was placed under
suspension. Later on, respondent was reinstated in service subject to the
final result of the disciplinary proceedings initiated against him.
4. The Enquiry Officer, after holding the enquiry, submitted his report
F wherein it was held that the charges were partially proved against the
respondent. The enquiry report was considered by the Punishing Authority,
which disagreed with certain conclusions arrived at by the Enquiry Officer.
After recording detailed reasons for disagreement with the conclusions
arrived at by the Enquiry Officer, the Punishing Authority issued a show-
cause notice to the respondent enclosing therewith a copy of the enquiry
G report. It was provided in the said notice that the workman can inspect
the record or obtain the copy thereof, ifhe so desires. Respondent filed
its reply to the said show-cause notice. Considering the entire material
on record including the reply to the show-cause notice submitted by the
respondent, Punishing Authority passed the detailed order, removing the
H
U.P. STATEROADTRANSPORTCORPORATION v. 1021
VINODKUMAR[ASHOKBHAN,J.]
respondent from service. Balance salary for the period of suspension was A
also forfeited.
5. Respondent raised an industrial dispute. The State Government
referred the following dispute to the Labour Court, Dehradun for
adjudication:-
B
"Whether the termination of the services of the applicant/
workman Shri Vinod Kumar S/o Shri Ravi Ram Singh, Conductor
by the employers from 31.07.1999 is unjustified and/or illegal? If
so, to which benefit/compensation the applicant/workman is entitled
and to what extent?" c
6. Both the parties filed written statement, rejoinders and documents
before the Labour Court.
7. Respondent did not press the legality and fairness of the enquiry
proceedings and confined his case only to the conclusions reached by the D
Enquiry Officer as well as the quantum of punishment.
8. Labour Court, without appreciating the fact that in the absence
of challenge to the legality or fairness of the inquiry report the Court should
be reluctant to either interfere with the finding recorded by the Punishing
Authority or the quantum, held that the charge of misappropriation has E
not been proved against the respondent and, thus, punishment of removal
from service is harsh. It substituted the punishment of removal by stoppage
of one increment without any cumulative effect and directed reinstatement
of respondent with full back-wages. The said award was published. The
appellant challenged the said award by filing Writ Petition No. 603 (Ml F
S) of2002 before the High Court ofUttaranchal at Nainital. The High
Court, without appreciating the fact that once it was held that respondent
was carrying passengers without ticket and had also recovered fare from
8 passengers which was a serious misconduct, upheld the order passed
by the Labour Court. It agreed with the findings recorded by the Labour G
Court that punishment inflicted upon the respondent was excessive and
disproportionate to the charges levelled/proved, but reduced the back-
wages to 50%. The award of the Labour Court was modified to that
extent.
H
1022 SUPREME COURT REPORTS [2007) 12 S.C.R.

A 9. Counsel for the parties have been heard.
I 0. As stated in the preceding paragraphs, the respondent had
confined his case only to the conclusions reached by the Enquiry Officer
as well as the quantum of punishment. Therefore, since the respondent
B had not challenged the correctness, legality or validity of the enquiry •
conducted, it was not open to the Labour Court to go into the findings
recorded by the Enquiry Officer regarding the misconduct committed by
the respondent. This Court in a number of judgments has held that the
punishment of removal/dismissal is the appropriate punishment for an
employee found guilty of misappropriation of funds; and the Courts should
C be reluctant to reduce the punishment on misplaced sympathy for a
workman. That, there is nothing wrong in the employer losing confidence
or faith in such an employee and awarding punishment of dismissal. That,
in such cases, there is no place for generosity or misplaced sympathy on
the part of the judicial forums and interfering with the quantum of
D punishment. Without burdening the judgment with all the judgments of this >
Court on this point, we may only refer to a recent judgment in Divisional
Controller, NE.KR.TC. v. H Amaresh [2006] 6 SCC 187, wherein
this Court, after taking into account the earlier decisions, held in para 18
as under:-
E
"In the instant case, the mis-appropriation of the funds by the
delinquent employee was only Rs.360.95. This Court has
considered the punishment that may be awarded to the delinquent
employees who mis-appropriated the funds of the Corporation and
the factors to be considered. This Court in a catena of
F
judgments held that the loss ofconfidence is the primary factor
and not the amount of money mis-appropriated and that the
sympathy or generosity cannot be a factor which is
impermissible in law. When an employee is found guilty of
pilferage or of mis-appropriating the Corporation's funds,
G
there is nothing wrong in the Corporation losing confidence
or faith in such an employee and awarding punishment of
dismissal. In such cases, there is no place for generosity or
misplaced sympathy on the part of the judicial forums and
interfering therefore with the quantum of punishment. The
H
U.P. STATEROADTRANSPORTCORPORATION v. 1023
VINOD KUMAR [ASHOKBHAN, J.]
judgment in Karnataka State Road Transport Corporation v. A
B.S. Hullikatti [2001] 2 SCC 574 was also relied on in this
judgment among others. Examination of the passengers of the
vehicle from whom the said sum was collected was also not
essential. In our view, possession of the said excess sum of
money on the part of the respondent, a fact proved, is itself a B
mis-conduct and hence the Labour Court and the learned
Judges of the High Court misdirected themselves in insisting
on the evidence ofthe passengers which is wholly not essential.
This apart, the respondent did not have any explanation for having
carried the said excess amount. This omission was sufficient to hold C
him guilty. This act was so grossly negligent that the respondent
was not fit to be retained as a conductor because such action or
inaction of his was bound to result in financial loss to the appellant
irrespective of the quantum. "
}
[Underlining is ours] D
11. Respectfully agreeing and following the aforesaid decision of this
Court, we accept this appeal and set aside the judgment of the High Court
as well as the order passed by the Labour Court. Consequently, the order
passed by the Punishing Authority dismissing/removing the respondent from E
service is restored. No costs.
RP. Appeal allowed.

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