The Delhi High Court dismissed a Central Government Industrial Tribunal award that had reinstated a bank employee, holding that the bank’s police complaint was not a "step to prosecute" under Paragraph 19.3 of the Bipartite Settlement and that the disciplinary dismissal was lawful and proportionate.
Background & Facts
The Dispute
The petitioner, Syndicate Bank, sought to set aside the award dated 07.05.2004 passed by the Central Government Industrial Tribunal (CGIT) in ID No. 189/1997, which had reinstated the respondent, B.K. Arora, a former clerk who had been dismissed for gross misconduct involving misappropriation of bank funds.
Key Facts
- Employment: Respondent joined as a clerk at the Mori Gate Branch, New Delhi, and between July 1988 and December 1989 also performed cashier duties.
- Incident: On 11.12.1989, while acting as cashier, he received a cheque for Rs.25,000 payable to G.D. Luthra. He was to adjust Rs.5,000 to Luthra’s OSL 2/88 account and pay Rs.20,000 in cash to A.K. Chaudhary, Assistant Manager.
- Misappropriation: He left the branch at about 3:40 PM on 11.12.1989 without making the payment, was absent on 12.12.1989, and was traced on 13.12.1989 at Gurugram.
- Admission: He sent a letter dated 13.12.1989 admitting receipt of Rs.25,000, failure to pay Rs.20,000, and undertook to remit the amount. He deposited Rs.10,000 on 13.12.1989 and the balance on 16.12.1989.
- Disciplinary Action: The bank suspended him on 28.12.1989, issued a charge-sheet on 25.05.1990 under Clause 19.5(j) of the Bipartite Settlement, and after a departmental enquiry (report dated 26.12.1992) dismissed him on 15.04.1993. The appellate authority affirmed the dismissal on 16.07.1993.
Procedural History
- 15.04.1993: Dismissal order passed by Disciplinary Authority.
- 16.07.1993: Appellate Authority upheld dismissal.
- Industrial dispute: Respondent filed an industrial dispute; CGIT heard the matter (ID No. 189/1997).
- 07.05.2004: CGIT award set aside dismissal, ordered reinstatement with continuity of service and consequential benefits, but without back wages.
- W.P.(C) 16509/2004: Bank filed writ petition under Articles 226 and 227 of the Constitution challenging the CGIT award.
- 05.08.2026: Delhi High Court delivered judgment, setting aside the award and restoring the dismissal order.
- CM APPL. 45940/2025: Respondent’s counter-application for further payment under Section 17-B of the Industrial Disputes Act was dismissed.
Parties' Positions
- Petitioner (Bank): Argued that the CGIT erred by treating the police complaint as “steps to prosecute” under Paragraphs 19.3 and 19.4, and that the disciplinary enquiry was fair, the misconduct proved, and the dismissal proportionate.
- Respondent (Workman): Contended that the enquiry was unfair, the evidence did not support the misconduct finding, the letter of admission was obtained under coercion, and the delay in the enquiry caused prejudice. He also claimed entitlement to reinstatement, back wages, and further payment under Section 17-B.
Relief Sought
- Bank: Set aside the CGIT award dated 07.05.2004 and restore the dismissal order dated 15.04.1993.
- Workman: Reinstate with continuity of service, award back wages, and claim additional payment under Section 17-B.
The Legal Issue
What is the correct interpretation of “takes steps to prosecute” in Paragraph 19.3 of the Bipartite Settlement, and does a mere police complaint for tracing an employee constitute such a step, thereby rendering the disciplinary dismissal unlawful?
Arguments Presented
For the Petitioner/Bank
- The complaint lodged on 12.12.1989 was solely to trace the employee and recover the entrusted amount; it did not reflect an intention to invoke criminal prosecution.
- Paragraph 19.3 requires a conscious decision by the employer to pursue criminal prosecution, not merely a request for police assistance.
- The disciplinary enquiry complied with the Bipartite Settlement and natural-justice principles; the misconduct was proved by the employee’s admission, repayment, and alteration of the cash scroll.
- Dismissal was proportionate to the breach of fiduciary duty, and judicial review of punishment is limited to cases of perversity, lack of evidence, or manifest illegality.
For the Respondent/Workman
- The police complaint should be read as “steps to prosecute” under Paragraph 19.3, making the dismissal invalid for non-compliance with Paragraphs 19.3(c) and 19.4.
- The enquiry was delayed and the admission (Ex. MEX-6) was obtained under coercion, rendering the findings unreliable.
- The punishment of dismissal was excessive; the employee had repaid the amount and should be reinstated with back wages.
- The Tribunal was empowered under Section 11-A of the Industrial Disputes Act to re-appreciate evidence and assess proportionality of punishment.
The Court's Analysis
The Court first reiterated the limited scope of writ jurisdiction under Articles 226 and 227, emphasizing that a High Court is not an appellate body for findings of fact recorded by a Labour Court or Industrial Tribunal. It cited Syed Yakoob v. K.S. Radhakrishnan and Indian Overseas Bank v. I.O.B. Staff Canteen Workers' Union to underscore that interference is permissible only where findings are perverse, unsupported by evidence, or manifestly illegal.
"The learned Single Judge seems to have undertaken an exercise, impermissible for him in exercising writ jurisdiction, by liberally reappreciating the evidence and drawing conclusions of his own on pure questions of fact..."
The Court then examined the Bipartite Settlement’s Chapter XIX, focusing on Paragraphs 19.2-19.4. It held that the expression “takes steps to prosecute” must be read in its statutory context and cannot be equated with a mere police complaint. The Settlement distinguishes two mechanisms: (i) departmental action for gross misconduct (Paragraphs 19.5-19.6) and (ii) criminal prosecution (Paragraphs 19.2-19.4). The Court stressed that the jurisdictional fact for Paragraph 19.3 is the employer’s conscious decision to invoke the criminal process, which was absent here.
The factual chronology showed that the bank first attempted internal tracing, only lodged a police complaint on 12.12.1989 after those efforts failed, and the purpose was to locate the employee and recover the cash, not to initiate prosecution. No FIR, charge-sheet before a criminal court, or any evidence of prosecution was produced. Consequently, the Court concluded that the complaint did not satisfy the statutory requirement of “steps to prosecute.”
Regarding the disciplinary enquiry, the Court found that the employee was given full opportunity to defend himself, the charge was specific, and the enquiry report was reasoned and based on multiple corroborative pieces of evidence, including the employee’s written admission and the altered cash scroll. The Court applied the principle from Canara Bank v. V.K. Awasthy that procedural irregularities do not vitiate disciplinary proceedings unless they cause real prejudice, which was not demonstrated.
Finally, on the proportionality of dismissal, the Court reiterated the settled test that interference is warranted only when the punishment “shocks the conscience.” Given the fiduciary nature of banking duties and the employee’s misappropriation of entrusted funds, the dismissal was deemed appropriate. The Court therefore held that the CGIT erred in treating the complaint as “steps to prosecute” and that its award was unsustainable.
The Verdict
The Delhi High Court set aside the CGIT award dated 07.05.2004 and restored the dismissal order dated 15.04.1993. No reinstatement, continuity of service, back wages, or any consequential service benefits were granted to the respondent. The counter-application (CM APPL. 45940/2025) seeking further payment under Section 17-B of the Industrial Disputes Act was dismissed. No costs were awarded.
What This Means For Similar Cases
“Steps to prosecute” Requires Actual Criminal Prosecution
- A police complaint for tracing an employee does not satisfy Paragraph 19.3; employers must demonstrate a clear decision to pursue criminal prosecution.
- Courts will scrutinise the purpose and subsequent conduct of the employer, not merely the existence of a complaint.
Procedural Fairness in Departmental Enquiries Remains Paramount
- Specific, detailed charges and full opportunity to defend are essential; minor delays alone will not invalidate findings.
- Evidence must be corroborated; a single coerced statement without support will be disregarded.
Judicial Review of Punishment Is Narrowly Tailored
- Dismissal for breach of fiduciary duty in banking contexts is unlikely to be disturbed unless it is grossly disproportionate.
- Practitioners should focus on establishing actual prejudice or perverse findings to succeed in writ petitions.
