The Bombay High Court has clarified the legal threshold for declaring findings in a domestic enquiry as 'perverse', emphasizing that mere disagreement with the Enquiry Officer's inference does not amount to perversity. The judgment reinforces that so long as some credible evidence supports the conclusion, the findings must stand, even if the evidence is circumstantial or limited.
Background & Facts
The Dispute
The petitioner, Abhyudaya Co-operative Bank Ltd., initiated disciplinary proceedings against its employee, Smita Virendra Patil, following allegations of misconduct related to her response to a transfer order and her complaints to external authorities. The Bank dismissed her from service on 28 January 2015 after a domestic enquiry found two charges proved. The Respondent challenged the dismissal before the Labour Court, which, while upholding the fairness of the enquiry, held the Enquiry Officer’s findings on both charges to be perverse. The Industrial Court affirmed this view. The Bank now seeks to set aside these orders under Article 227 of the Constitution.
Key Facts
- The Respondent was appointed as a Clerk in Citizens Cooperative Bank, Pune, and her services were absorbed by the Petitioner-Bank w.e.f. 3 July 2006 after amalgamation.
- She was transferred from Pune to Mumbai’s Accounts Department on 8 June 2011.
- On 16 May 2012, she was transferred to the Vashi Branch, with instructions to report on 18 May 2012.
- On 17 May 2012, the Respondent arrived at the Bank’s HRM office with two policemen and approached Mr. H.D. Bhat, Manager, alleging harassment due to transfer.
- The policemen questioned Mr. Bhat about the transfer; he clarified it was routine, and they left.
- The Respondent reported to the Vashi Branch on 18 May 2012 at 7:45 a.m.
- A show cause notice was issued on 18 May 2012; she did not reply and was suspended on 22 May 2012.
- A charge-sheet dated 16 April 2013 alleged: (1) bringing policemen to the office to question her transfer and intimidating Mr. Bhat; and (2) filing frivolous complaints to Banking Ombudsman, RBI, Human Rights Commission, Chief Minister, Deputy Chief Minister, and other unrelated authorities.
- The Enquiry commenced on 22 July 2013 and concluded on 9 April 2014.
- The Enquiry Officer submitted his report on 6 December 2014, holding both charges proved.
- The Bank issued a final show cause notice on 12 January 2015; the Respondent did not respond.
- Dismissal order was passed on 28 January 2015.
- The Respondent filed ULP Complaint No. 58 of 2014 on 18 May 2014 seeking restraint on the enquiry; interim relief was rejected on 10 July 2014.
- On 17 June 2017, she applied to amend her complaint to challenge the dismissal; amendment was allowed on 11 June 2018.
Procedural History
- 16 April 2013: Charge-sheet issued
- 22 July 2013: Domestic enquiry commenced
- 9 April 2014: Enquiry concluded
- 6 December 2014: Enquiry Officer’s report submitted
- 12 January 2015: Final show cause notice issued
- 28 January 2015: Dismissal order passed
- 18 May 2014: ULP Complaint No. 58 of 2014 filed
- 10 July 2014: Labour Court rejected interim relief
- 17 June 2017: Application for amendment of ULP complaint filed
- 11 June 2018: Amendment allowed by Labour Court
- 1 September 2023: Labour Court held enquiry fair but findings on both charges perverse
- 11 June 2024: Industrial Court dismissed revision under Section 44 of MRTU & PULP Act
- 18 June 2026: Bombay High Court delivered judgment
The Parties' Positions
For the Petitioner-Bank
The Bank contended that the Labour and Industrial Courts erred in holding the Enquiry Officer’s findings as perverse. It argued that the Respondent’s act of bringing policemen to the office to interrogate a senior officer constituted grave misconduct, regardless of whether violence or abusive language occurred. It further argued that filing complaints to unrelated authorities like the Chief Minister and Ministry of Agriculture, which compelled the Bank to respond, amounted to prejudicial conduct damaging its reputation. It relied on Hitachi v. Niraj Kadu to show that even non-violent acts can constitute misconduct if they undermine institutional discipline.
For the Respondent
The Respondent argued that she had obeyed the transfer order and reported on time. She claimed the police were merely consulted for safety concerns during her commute to Vashi. She denied any misbehaviour or intimidation. Regarding complaints, she asserted they were legitimate grievances about service conditions and not malicious. She contended that the Labour Court correctly found no evidence of reputational damage and that the Industrial Court rightly declined to interfere under its limited revisional jurisdiction.
Relief Sought
The Petitioner seeks: (i) setting aside the Labour Court’s order dated 1 September 2023 and the Industrial Court’s order dated 11 June 2024 on the issue of perversity; (ii) declaration that the Enquiry Officer’s findings (except the unproved charge of misbehaviour) are valid; and (iii) direction to the Labour Court to decide the proportionality of punishment expeditiously.
The Legal Issue
The central question was whether the findings of the Enquiry Officer, holding the Respondent guilty of misconduct based on the act of bringing policemen to the office and filing complaints to external authorities, could be termed 'perverse' merely because the Labour Court disagreed with the inference drawn from the evidence, or whether such findings could be set aside only in the event of a total absence of evidence.
Arguments Presented
For the Appellant/Petitioner
The Petitioner argued that the Labour Court misread the charge-sheet by conflating the allegation of misconduct with non-compliance of transfer order. It emphasized that the charge was not about disobedience but about the manner of protest - bringing police to the workplace to interrogate a superior. It cited Hitachi v. Niraj Kadu to show that even non-violent, non-abusive conduct can amount to misconduct if it disrupts workplace discipline. Regarding the complaints, it argued that filing grievances to unrelated authorities like the Chief Minister and Ministry of Agriculture, which triggered official responses, inherently damaged the Bank’s reputation and constituted prejudicial conduct under service rules. It stressed that the Enquiry Officer’s findings were based on unchallenged documentary evidence and that the Labour Court erred in requiring proof of actual reputational harm.
For the Respondent/State
The Respondent argued that the Labour Court correctly appreciated that no violence, abuse, or altercation occurred. She contended that approaching police for safety during a long commute was reasonable and not misconduct. She asserted that her complaints were service-related grievances, not malicious, and that the Bank failed to prove any tangible harm to its reputation. She relied on the principle that concurrent findings of two lower courts should not be disturbed under writ jurisdiction unless there was a clear error of law. She maintained that the Industrial Court rightly declined interference under Section 44 of the MRTU & PULP Act.
The Court's Analysis
The Court undertook a rigorous analysis of the legal standard for perversity in domestic enquiry findings. It held that perversity arises only when a finding is based on no evidence or evidence so unreliable that no reasonable person could accept it. The Court emphasized that domestic enquiries operate under relaxed evidentiary norms, and the Indian Evidence Act does not strictly apply. As held in State of Haryana v. Rattan Singh, any material logically probative for a prudent mind may be considered, including hearsay, provided it has reasonable credibility.
"A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse."
The Court found that the Enquiry Officer’s findings on the first charge were not perverse. Although the allegation of misbehaviour with Mr. Bhat was not proved, the act of bringing two policemen to the Bank’s office to interrogate a manager about a routine transfer was clearly misconduct. The Court noted that Mr. Bhat’s testimony was unchallenged on the core fact: the Respondent brought police to the office and caused them to question a superior officer. The Labour Court’s focus on absence of violence or abusive language was legally irrelevant, as the charge did not allege those elements.
Regarding the second charge, the Court held that the Enquiry Officer had sufficient evidence to conclude misconduct. The Respondent had filed complaints with multiple authorities, including the Ministry of Agriculture and the Chief Minister’s office, which were unrelated to banking regulation. The Bank was compelled to respond to these complaints, and the Respondent did not cross-examine the witness or challenge the documentary evidence. The Court distinguished between legitimate internal grievances and external complaints that burden the employer with unnecessary scrutiny. It cited M.H. Devendrappa v. Karnataka State Small Industries Development Corporation to affirm that any act detrimental to the employer’s prestige undermines discipline.
The Court further held that the Labour Court’s conclusion that mere filing of complaints cannot amount to misconduct was legally flawed. The test is not whether reputational damage was proven, but whether the conduct was prejudicial to the employer’s interests. The Court observed that the Enquiry Officer’s findings were supported by unchallenged documents and were not based on speculation.
The Court rejected the argument that the Industrial Court’s limited revisional jurisdiction under Section 44 of the MRTU & PULP Act insulated the Labour Court’s error. It held that writ jurisdiction under Article 227 permits correction of legal errors, including misapplication of the perversity standard.
The Verdict
The Petition succeeded. The Bombay High Court set aside the Labour Court’s order dated 1 September 2023 and the Industrial Court’s order dated 11 June 2024 on the issue of perversity. The Court held that the Enquiry Officer’s findings on both charges - except the unproved allegation of misbehaviour with Mr. Bhat - are not perverse and are supported by evidence. The Labour Court is directed to decide the proportionality of the dismissal order within six months, uninfluenced by this Court’s findings. No costs are awarded.
What This Means For Similar Cases
Perversity Requires Total Absence of Evidence
- Practitioners must now argue that a finding is perverse only if no credible evidence supports it, not merely because the inference is debatable.
- Labour Courts cannot substitute their own view for that of the Enquiry Officer unless the evidence is non-existent or patently unreliable.
- The burden shifts to the employee to show that the evidence relied upon is fabricated or wholly implausible.
External Complaints Can Constitute Misconduct
- Filing grievances to authorities outside the organizational hierarchy - especially those unrelated to employment law - may constitute misconduct if it compels the employer to respond and damages its standing.
- Employers need not prove actual reputational harm; the act of burdening the organization with external scrutiny may suffice.
- Employees must distinguish between internal redressal mechanisms and public escalation of service disputes.
Domestic Enquiry Evidence Standards Are Flexible
- Hearsay, unchallenged documents, and circumstantial evidence are admissible in domestic enquiries.
- Cross-examination failure or non-rebuttal of documents strengthens the Enquiry Officer’s findings.
- Courts must avoid applying rigid evidentiary rules from civil or criminal trials to departmental proceedings.
