Holding

The Supreme Court held that the authority’s orders under Section 28‑A were not barred by res judicata, the employee was not debarred from invoking Section 28‑A despite the civil suit, and the authority had jurisdiction to reinstate the employee.

Summary

The manager of a village cooperative Samiti (the second respondent) was dismissed on charges of embezzlement. Claiming that the dismissal order was never served, he filed a civil suit for injunction, which was later withdrawn, and also lodged a complaint under Section 28‑A of the Rajasthan Shops and Establishment Act. The prescribed authority held that the dismissal order was only communicated on 2 January 1985, thus the complaint was within the limitation period, and reinstated the respondent, finding the dismissal illegal and the enquiry biased. The bank appealed, arguing that the authority’s orders were barred by res judicata and that the employee, having approached the civil courts, was debarred from invoking Section 28‑A. The Supreme Court held that the earlier civil proceedings did not create a res judicata bar, that the employee was not prohibited from filing a Section 28‑A complaint, and that the authority had jurisdiction to examine the dismissal. Consequently, the authority’s orders were upheld and the bank’s appeal dismissed.

Issues considered

The applicability of res judicata to the authority’s orders in view of the earlier civil suit and its interlocutory orders.
Whether a employee who has instituted civil proceedings is barred from filing a complaint under Section 28‑A of the Rajasthan Shops and Establishment Act.
The jurisdiction of the prescribed authority under Section 28‑A to entertain the complaint and set aside the dismissal order.
The validity of the dismissal order on the ground of non‑service and lack of proof of misconduct.

Legislation cited

Code of Civil Procedure, 1908s. 11, s. Order 39 Rule 1, s. Order 39 Rule 2, s. section 10

Subjects

dismissalservice of noticeres judicataSection 28-Acooperative societyembezzlementreinstatementjurisdictioncivil suitinterim injunction

Judgment

A THE AJMER CENTRAL COOPERATIVE BANK LTD. AJMER, THROUGH
THE~AGING DIRECTOR
v.
THE PRESCRIBED AUTHORITY UNDER THE RAJASTHAN SHOPS AND
CO. ESTABLISHMENT ACT, AIMER AND ORS.
B JANUARY 5, 1996

Rajasthan Shops and Establishment Act, 1958 : Section 28-
A-Prescribed authority-Orders passed by-Validity of
c
Code of Civil Procedure, 1908: Section 11-Res Judicata-Applicability

Appeal--Raising offresh plea-Permissibility o.f.

D Co-operative society-Manager-Allegation of embezzlement-
Enquiry-Disn1issal-Service of Dismissal order-Finding that order was not
served but communicated only when employee himself requested-Suit by
'
employee restraining employer .fro1n imposing punishment--Rejecaon o.f in-
terim injunction in suit by trial as well as appellate court-Application by
E employee under Section 28-A lvas not tilne barred--Reinstate1nent order with
consequential benefits-Appeal-Held order of authority was not barred by
Res Judicata--Held e1nployee having elected to move civil court was not
debarred from n1oving Authorities under Section 28-A.

The second respondent-Manager of a village level Samiti was dis-
F missed from service on the basis of an enquiry held against him i.n which
he was found guilty of embezzlement and misuse of funds of Society. He
contended that he was not served with the dismissal order and filed a suit
seeking injunction against the appellant-Bank from imposing any kind of
punishment. In this suit, which was withdrawn later, an application filed by
the second respondent under Order 39 Rule 1 and 2 of the Code of Civil
G Procedure, 1908 was dismissed by the Civil Court as well as by the first
appellate C?urt. Having failed to obtain interim injunction during the
pendency of the suit, the second re.spondent filed a complaint before the
competent authority under section 28-A of the Rajasthan shops and Estab-
lishment Act, 1958. By its order dated 14.8.1986 the Authority held that
H the termination order dated 1.7.1983 was communicated to the second
160
CO-OPERATIVE BANK v. RAJASTHAN SHOPS & CO., ESTABLISHMENT, ACT, AJMER161

- respondent only on 2.1.1985 when he himself had requested for its service
on him. Therefore, the application filed under section 28-A was not time
barred. Further by its order dated 18.6.1987 the authority reinstated the
second respondent with all consequential benefits holding that the termi-
nation order was bad because (i) the charge of embezzlement had not been
A

proved; (ii) the Enquiry Officer and the Management had proceeded with
B
a biased attitude.

The appellant unsuccessfully challenged both the orders before the
High Court which (i) refused to interfere with the first order on the ground
that it involved a question of fact and (ii) upheld the second order by
rejecting the appellants' contention that as the second respondent had a C
right of appeal against the order of dismissal his complaint under section
28-A was not maintainable.

In appeal to this court it was contended for the appellant that (i) the
impugned orders of the authority, both on the question of limitation and
on merit, were barred by the principles of res judicata; (ii) having elected D

- to move the Civil Court the second respondent was debarred from moving
the Authority under section 28-A; (iii) the impugned order is against the
settled scope of jurisdiction of the administrative Tribunal to interfere with
punishment imposed on the delinquent employee.
E
Dissmissing the appeal, this Court

HELD: 1. There is no point on the basis of which the appellant can seek
upsetting of the impugned order of the High Court and that of the Authority
under the Rajasthan Shops and Establishment Act, 1958. [169-B]
F
2. The observations and the decisions made by the civil Court,
original as well as appellate, which might have been favourable to the
appellant, in the nature of their jurisdiction, were never final and were
meant to merge back or subsume in the final result of the suit. It cannot
be said that the matters therein were 'directly and substantially" in issue,
which debarred the Authority to determine the controversy between the G
parties on merit. Additionally the stand taken in the written statement,
before the Authority was to claim the stay of the proceedings on the
premise that in order of time, the suit stood filed earlier. Specifically
section 10 of the Civil procedure Code was invoked to make such claim.
No bar of res judicata was pleaded. Therefore, it is too late for the H
162 SUPREME COURT REPORTS [1996) 1 S.C.R.
A appellant to contend that the orders of Authority were barred by Res
Judicata. [167-E-G]

3. No procedural defect on the question of the Authority condoning
the delay in entertaining the petition nuder Section 28-A could be pointed
out from the order of the High Court, when it termed it to be a factual
B dispute as to when the order of termination of service stood communicated
to the second respondent. That th<e Authority had jurisdiction to go into the
matter is otherwise apparent from a bare reading of Section 28-A. No basis
has been suggested on the premises of which it could be ruled that the
authority had no jurisdiction to go into the matter. There is no provision
C in the Act barring the jurisdiction of the Civil Court and conversely there
is no provisions under the Code of Civil Procedure barring the jurisdiction
of the Authority under the Act. [168-A-E)

Sukhi Ram v. State of Haryana, (1982) Lab. & Ind. Cases 1282, held
inapplicable. [168-A-E)
D 4. The contention that as the second respondent had agreed to make
good the loss of the appellant in a certain manner means that he had
admitted the guilt and consequently the Authority should have maintained
the order of dismissal, is not maintainable. In the first place, if that were
so, the dismissal at the instance of the appellant should have proceeded
E straightaway, without resort to an enquiry into other embezzlements, as
was done by the appellant. Secondly this matter was neither projected in
a proper manner before the Authority and none at all before the High
Court. Therefore, this aspect of the case is not fit for deep consideration
at this stage. [168-F-G]

F 5. In this case the second respondent has not been found guilty by the
Authority. Therefore, the question of its imposing a proper punishment did
not arise. The supposition of the occasion is misconceived. [169-A)

Union of India v. Parma Nanda, AIR (1989) S.C. 1185, held inappli·
cable.
G
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3032 of 1990.

From the Judgment and Order dated 21.9.87 of the Rajasthan High
Court in C.W. No. 2333 of 1987.

H N.C. Sikri, V.K. Rao, A. K. Sikri and Ms. Madho Sikri for the Appellant.
C().0PERATIVE BANK\', RAJASTHAN SHOPS & en. ESTABLISHMENT, ACT. AJMER IPUNCHHl, J.J 163
Sushi! Kumar Jain for Respondent No. 2. A

The Judgment of the Court was delivered by

PUNCHHI, J. This appeal by special leave against the judgment and
order of a Division Bench of the Rajasthan High Court (Jaipur Bench) dated
September 21, 1987 in Civil Writ Petition No. 2333 of 1987 is a coiled cause, B
swollen in mass, requiring enough of load-shedding so as to get to the core
of the controversy.

The appellant-bank is an apex body. It is a central Cooperative Society
registered under the Rajasthan Cooperative Societies Act, 1965, operating in
the District of Ajmer. There are village level cooperative societies (in short
c
called the "Samitis") and those too are registered under the aforesaid Act. The
village level Samitis are members of the appellant bank. They obtain loans
from the appellant-bank and lend them over to their agriculturist members.
The Samitis are headed by Managers who are appointed under the relevant
rules framed under the aforesaid Act. Those rules provide the method in D
which disciplinary action can be taken against the employees of the Samities,
including the Managers.

The second respondent, Bhagwan Singh was the Manager of one such
Samiti in village Kayad,. It appears that there were complaints against him
of mis-use and embezzlement of funds of the Samiti. Initially, in some E
instances, he was asked to make good the money of the supposed mis-use or
embezzlement. Some payments apparently were agreed to be made by the
second respondent. Still there were others in which there arose disputes. The
second respondent in the meantime was suspended and charge-sheets were
served on him. An Enquiry Officer was appointed and an enquiry held. The F
Enquiry officer submitted his report. Some of the charges were reported
proved against the second respondent. A second notice-was given to him to
show cause why he be not dismissed from service. On July 1, 1983, order for
dismissal of service was passed against the second respondent. According to
the appellant it was dispatched to the second respondent the same day vide
G
Registered A.D. but according to the second respondent no such dispatch was
made as he was never served with the dismissal order. On July 4, 1983, the
second respondent filed a Civil Suit No. 422 of 1983 for injunction in the
Court of the Munsiff, Ajmer City (East), Ajmer, impleading the appellant as
the sole respondent. His 1nain attack in the suit was against the initiation of
the enquiry, the manner in which it was conducted and the procedural H
164 SUPREME COURT REPORTS [1996] I S.C.R.
A illegalities with which it was rifo. The following relief was claimed in the
suit:

(a) decree for permanent mandatory injunction order restraining the
defendant, its officers, agents, employees etc. from removing, termi-
nating or awarding any kind of punishment on the plaintiff in
B pursuance of the enquiry conducted on the basis of charge-sheets
dated !O.l.1982 and 22.9.1982;

(b) costs of the suit; and

(c) any other relief which the Hon'ble Judge deems fit in the facts
c and circumstances of the case.

Simultaneous to the filing of suit, an application under Order 39 Rule
1 and 2 C.P.C. was laid before the Trial Court but the same after contest was
dismissed on 23.l l.1984. The second respondent preferred an appeal against
the said order before the Court of the District Judge, Ajmer which too was
D dismissed vide order dated 22.12.1984. Apparently, thereafter, the suit file got
stuck up in the appellate Court and its arrival was awaited, whereafter on
12.8.1985, t.he Trial Court passed the following order (translated) :

''The case present. The file has bi;en received. The plaintiff does not
E want to press the suit. Therefore, the suit is dismissed without any
cost. The file is sent to record room.

Sd/-
Munsif and Judicial Magistrate
!st Class, Ajmer City (East)"
F
Before-hand, however, the second respondent on 7 .1.1985, while the
suit was pending, and having failed to obtain a temporary injunction, moved
the Authority under Rajasthan Shops & Establishments Act, 1958 by present-
ing a complaint under section 28-A of the Act impleading the appellant as
the sole respondent. On service, the first question raised before the Authority
G was whether the complaint was within time. The Authority considered the
matter and came to the view that since the order of termination dated
t
I.7.1983 had been communicated to the second respondent only on 2.1.1985,
when he himself had requested for its service on him, the application before
it under section 28-A of the aforesaid Act was within time and not barred by
H limitation. This order was passed on 14.8.1986. The main application under
CO-OPERATIVE BANK 1·. RAJASTHAN SHOPS & CO .. ESTABLISHMENT. ACT. AIMER [PUNCHHI. J.I 165
section 28-A was put to trial. A
Before we go any further, it would be apposite to take stock of section
28-A of the aforesaid Act which is reproduced hereafter :

"28-A. NOTICE OF DISMISSAL OR DISCHARGE BY EMPLOYER
- (I) No employer shall dismiss or discharge from his employment B
any employee who has been. in such employment continuously for
a period of not less tharr 6 months except for a reasonable cause and
after giving such employee at least one month's prior notice or on
paying him one month's wages in lieu of such notice :

Provided that such notice shall not be necessary where the C
services of such employee are dispensed with for such misconduct,
as may be defined in the rules made by the State Government in this
behalf, and supported by satisfactory evidence, recorded at an
enquiry held for the purpose in the prescribed manner.

(2) Every employee so dismissed or discharged may make a
D
complaint in writing in the prescribed manner to a prescribed
authority within 30 days of the receipt of the order of dismissal or
discharge on one or more of the following grounds, namely-

(a) that there was no reasonable cause for dispensing with his E
services; or

(b) that no notice was served upon him as required by sub-
section (!); or

(c) that he had not been guilty of any misconduct :
F
Provided that the prescribed authority may condone delay in
filing such a complaint, if it is satisfied that there was sufficient
cause for not making the complaint within the prescribed time.

(3) The prescribed authority shall cause a notice to be served on
G
the employer relating to the said complaint, record briefly the
evidence produced by the parties, hear them and make such enquiry
as it may consider necessary and thereafter pass orders in writing
giving reasons therefor.

(4) While passing an order under sub-section (3 ), the prescribed H
166 SUPREME COURT REPORTS [1996] l S.C.R.
A authority shall have power to give relief to the employee by way of
re-instatement or by awarding money compensation or by both.
"·
(5) The decision of the prescribed authority under this section
shall be final and binding both on the employer and the employee."

B Significantly, by providing this machinery for redressal of grievance,
neither the jurisdiction of the Civil Court nor that of the Courts under the
Industrial Disputes Act have been barred under any provision of the present
Act. The Authority went into the matter unquestioned, as if undertaking a
regular trial, elaborately dealing with each and every question of fact and Jaw
raised before it, for coming to the conclusion that the dismissal of the second
c respondent was bad and the charges of embezzlement had not been proved,
as also that the conclusion of the Enquiry Officer was perverse, and further
that the Enquiry Officer and the management had proceeded with a biased
attitude. This order was passed on 18.6.1987 declaring the dismissal as illegal
and void. The Authority reinstated the second respondent to his service with
D all benefits of wage and other allowances from the date of dismissal to the
date of reinstatement. For the arrears of wages from 1.7.1983 to the date of
reinstatement, it ordered interest at the rate of 12-1/2 per cent on the failure
of payment being made within three months.

The appellant challenging both the orders dated 14.8.1986 and
E 18.6.1987 moved the High Court of Rajasthan by means of two writ petitions
which were rejected by the common order under appeal.

To the challenge of validity of the order dated August 14, 1986,
holding the complaint under section 28-A of the said Act to be within
limitation, the High Court took the view that since the Authority had found
F
that the order of July 1, 1983 had not been received by the second respondent
till it was communicated to him on January 2, 1985, it involved a question
of fact, which it was not inclined to go into. On merits the High court repelled
all the contentions raised before it by the appellant. The contention of the
appellant that it was not the employer of the second respondent and its
G impleadment as a respondent in the proceedings before the Authority made
the complaint non-maintainable was repelled by the High Court holding that
the question as to whether the second· respondent was an employee of the ~
appellant was a que.stion of fact, not agitable for the first time in writ
proceedings, Moreover, it was noticed and found by the High Court that the
H charge-sheets on the basis of which the services of second respondent were
CO-OPERATIVE BANK 1·. RAJASTHAN SHOPS & CO .. ESTABLISHMENT. ACT. AJMER [PUNCHHI, J.I 167
terminated, were themselves issued by the appellant. The second contention A
that the second respondent had a right of appeal against the order of dismissal
and in view of the availability of that right complaint under section 28-A of
the Act was not maintainable, the High Court ruled that since this objection
had not been raised before the Authority, it could not permit the same being
raised before it for the first time. Additionally. the High Court observed that
B
it had not been pointed out any provision which barred the complaint being
entertained on. lhe ground that an appeal Jay against the disch~ge or
dismissal. Still further, the High Court took the view that section 28-A(2) of
the Act clearly postulated an order of dismissal or discharge being questioned
before the Authority by the aggrieved employee. making it incumbent on
him to move the Authority within a period of thirty days. But for these c
contentions, no other contention was raised by the appellant before the High
Com1. Resultantly, the writ petitions were dismissed summarily.

It was urged on behalf of the appellant that the impugned orders of the
Authority, both on the question of limitation and on merit, were hit by the
principle of res judicata, and to support the argument, attention was invited D
to the two orders of the Civil Court, Original as also Appellate, whereby the
application for the second respondent under Orders 39 Rules l and 2 C.P.C.
were dismissed.·Certain precedents on general principles of res judicata were
cited but none to say that orders of the kind could be the base for plea of
res judicata. They obviously can be of no avail to the appellant. The E
observations and the' decisions made by the Civil Courts, Original as well as
Appellate, which might have been favourable to the appellant, in the nature
of their jurisdiction, were never final and were meant to merge back or
subsume in the final result of the suit. No one can be heard to say that the
matters therein were "directly and substantially" in issue, which debarred the
F
Authority to determine the controversy between the parties on merit. Addi-
tionally its stand, pertinently taken in the written statement, before the
Authority was to claim the stay of the proceedings on the premise that in
order of time, the suit stood filed earlier. Specifically section JO of the Civil
Procedure Code was invoked to make such claim. No bar of res judicata was
pleaded. It is too late in the day now to permit the appellant to be raising G
+ such plea and that too without any basis. The contention is thus rejected.

There could not have been even a stay of the complaint when the suit
stood withdrawn on 12-8-1985, while proceedings before the Authority were
pending. The cause for the stay of the suit by then had vanished. That the
H
168 SUPREME COURT REPORTS [1996] 1 S.C.R.
A Authority had jurisdiction to go into the matter is otherwise apparent from
the bare reading of section 28-A of the Act above-reproduced. No procedural
defect on the question of the Authority condoning the delay in entertaining
the petition under section 28-A, could be pointed out from the order of the
High Court, when it tenned it to be a factual dispute as to when the order
of termination of service stood communicated to the second respondent. On
B
the merits of the case no dispute seems to have raised and the effort now
made before us is of no consequence ..

It was then urged that the second respondent having elected to move
the Civil Court, he was debarred from moving the Authority under section
C 28-A of the Act. A Full bench of the Punjab and Haryana High Court in Sukhi
Ram v. State of Haryana, [1982] Labour & Industrial Cases 1282 was cited
to buttress the argument. That case is wholly inapplicable to the facts in
hand. Thal was a case in which it was ruled that an employee who does not
take the aid of Industrial Disputes Act, whereunder powers of the deciding
authorities were more extensive and wide than those of the Civil Court,
D Jurisdiction of the Civil Court was not barred for him. No basis has been
suggested to us and we find none ourselves, on the premise of which it could
be ruled that the Authority had no jurisdiction to go _into the matter. As said
earlier there is no provision in the Act barring the jurisdiction of the Civil
Court and conversely there is no provision under the Code of Civil Procedure
E barring the jurisdiction of the Authority under the Act. This contention of the
appellant too must fail.

It was then on merits contended that the second respondent had agreed
to _make good the loss of the appellant in a certain manner which means that
he had admitted his guilt and on the basis of which the Authority could and
F should ·have maintained the order of dismissal. In the first place, if that were
so, the dismissal at the instanc~ of the appellant should have proceeded
straightaway, without resort to an enquiry into other embezzlements, as was
done by the appellant. In complicating and coiling the matter the appellant
wove for itself the web. The appellant could not have expected the Authority
G to extricate this part of the case to maintain the order of dismissal. In any
event, this matter was neither projected in a proper mannei; before the
Authority and none at all before the High Court. This aspect of the case is
not fit for our deep consideration at this stage.

Lastly it was contended that this Court in Union of India v. Parma
H Nanda, AIR (1989) SC 1185 had spelled out the scope of the jurisdiction of
CO-OPERATIVE BANK 1'. RAJASTHAN SHOPS & CO., ESTABLISHMENT, ACT. AIMER [PUNCHHI, J.j 169
Administrative Tribunal in interfering with a punishment on the ground that A
)< it was not commensurate with the delinquency of the employee. Here the
second respondent has not been found guilty by the Authority; so the
question of its imposing a proper punishment did not arise. The supposition
of the occasion is niisconceived.

No point survives on the basis of which the appellant can seek. B
upsetting of the impugned orders of the High Court and that of the
Authority. The appeal, therefore, fails and is hereby dismissed.with costs.

T.N.A. Appeal dismissed.