2000 (4) TMI 796 - SC - Indian Laws

Supreme Court rules in favor of Bank in termination case under Bipartite Settlement

The Supreme Court allowed the appeal, setting aside the judgments of the High Court and the Tribunal. It ruled that the termination of the workman's ... Deemed voluntary retirement for prolonged unauthorised absence - service of notice - postal endorsement and presumption of delivery - principles of natural justice read into service rules - domestic inquiry and opportunity to be heard - reinstatement and continuity of service as discretionary relief - Clause 16 of the Bipartite Settlement (service discipline provision)Deemed voluntary retirement for prolonged unauthorised absence - Clause 16 of the Bipartite Settlement (service discipline provision) - principles of natural justice read into service rules - Validity of the Bank's action treating the employee as having voluntarily retired under Clause 16 of the Bipartite Settlement - HELD THAT: - The Court found that the employee had been absent for the requisite period of 90 or more consecutive days and that the Bank issued the notice required by Clause 16 calling upon him to report within the stipulated period. Clause 16 itself incorporates the essential elements of natural justice by requiring notice and an opportunity to explain. The employee offered no satisfactory explanation and did not report within the notice period. On these facts the Bank acted in good faith, fairly and reasonably in treating the employee as having voluntarily retired; therefore no prior domestic inquiry was necessary where the employee neither responded to the notice nor asserted a cogent explanation that required investigation. The Tribunal's conclusion that the notice was not served because the postman was not examined was contrary to the evidentiary inference arising from the postal endorsements that the registered covers were returned as 'refused' or 'not found during delivery time'; a presumption in favour of effective service arose and the Tribunal's reliance on the absence of the postman as a witness was held to be incongruous.Bank's action under Clause 16 was valid; the Tribunal's Award reinstating the employee was unsustainable on this ground.Domestic inquiry and opportunity to be heard - principles of natural justice read into service rules - reinstatement and continuity of service as discretionary relief - Whether the Tribunal was justified in ordering reinstatement with continuity of service (and in refusing back wages) - HELD THAT: - The Court held that the Tribunal erred in applying the principle from D.K. Yadav to require a domestic inquiry in the circumstances of this case where Clause 16's procedure had been followed and the employee defaulted in answering the notice. Although principles of natural justice must be read into service rules, they were satisfied here by the notice and opportunity mechanism contained in Clause 16. Given the employee's prolonged unauthorised absence, the Bank's conduct and the postal evidence, the Tribunal should not have directed reinstatement with continuity. The High Court's single Judge had modified the Tribunal's Award by denying continuity and back wages; the Division Bench improperly declined to examine merits. The Supreme Court found the Tribunal's grant of reinstatement with continuity to be a miscarriage of justice and set aside the Award.Tribunal's direction for reinstatement with continuity of service was set aside; the Award dated September 26, 1994 was quashed.Service of notice - postal endorsement and presumption of delivery - Evidentiary effect of returned registered notices endorsed 'refused' or 'not found during delivery time' where the addressee's correct address was used - HELD THAT: - The Court treated the postal endorsements on the registered covers as giving rise to a clear presumption in favour of the Bank that the notices were delivered or at least that the employee had refused receipt. The Tribunal's insistence on production of the postman as a witness to negative that presumption was held to be unnecessary and the Tribunal's contrary finding was described as incongruous. The employee's denial of receipt, three years after the impugned order, was held to be inherently unreliable against the contemporaneous postal endorsements and surrounding conduct.Postal endorsements returning the registered notices as 'refused' or 'not found during delivery time' supported the Bank's case that the Clause 16 notice had been effectively sent; the Tribunal's finding to the contrary was set aside.Final Conclusion: The appeal is allowed; the Award of the Central Government Industrial Tribunal dated September 26, 1994 and the impugned judgment of the High Court are set aside. The Bank was justified in treating the employee as having voluntarily retired under Clause 16 of the Bipartite Settlement; reinstatement with continuity of service ordered by the Tribunal cannot be sustained. Wages paid under Section 17 B are not to be recorded or adjusted by the Bank; no order as to costs. Issues Involved:1. Justification of the Bank's action in terminating the services of the workman under Clause 16 of the Bipartite Settlement.2. Adherence to principles of natural justice by the Bank.3. Validity of the Tribunal's and High Court's orders for reinstatement and continuity of service without back wages.4. Applicability of the precedent set by D.K. Yadav v. J.M.A. Industries Ltd.Issue-wise Detailed Analysis:1. Justification of the Bank's action in terminating the services of the workman under Clause 16 of the Bipartite Settlement:The Bank terminated the services of the workman, Dayananda, under Clause 16 of the Bipartite Settlement due to his unauthorised absence for more than 90 consecutive days. The Bank sent notices to Dayananda, which were returned with postal endorsements 'refused' and 'not found during delivery time.' The Tribunal and High Court questioned the validity of these notices due to the absence of the postman's testimony. However, the Supreme Court found that the Bank had fulfilled the requirements of Clause 16 by sending notices to the correct address and that Dayananda's claim of non-receipt was not credible. The Supreme Court concluded that the Bank's action was justified and that Dayananda had voluntarily retired from service.2. Adherence to principles of natural justice by the Bank:The Supreme Court emphasized that the principles of natural justice, which include the right to know the nature of the complaint, the opportunity to state one's case, and the requirement for the management to act in good faith, were inbuilt in Clause 16 of the Bipartite Settlement. The Bank had met these criteria by sending notices to Dayananda and providing him the opportunity to explain his absence. The Supreme Court held that the Tribunal and High Court had unduly relied on the principles of natural justice without understanding their scope, leading to a miscarriage of justice against the Bank.3. Validity of the Tribunal's and High Court's orders for reinstatement and continuity of service without back wages:The Tribunal ordered the reinstatement of Dayananda with continuity of service but without back wages, citing his unauthorised absence and lack of convincing evidence for his claimed illness. The High Court modified this order, denying Dayananda continuity of service and back wages. The Supreme Court found that the Tribunal's and High Court's reliance on the principles of natural justice was misplaced and that the Bank's action under Clause 16 was justified. Consequently, the Supreme Court set aside the orders of the Tribunal and High Court, ruling that there was no basis for reinstating Dayananda.4. Applicability of the precedent set by D.K. Yadav v. J.M.A. Industries Ltd.:The Tribunal and High Court relied on the precedent set by D.K. Yadav v. J.M.A. Industries Ltd., which required adherence to principles of natural justice in termination cases. However, the Supreme Court distinguished the present case from D.K. Yadav, noting that in D.K. Yadav, the workman had been prevented from joining duty and had not been given a fair opportunity to explain his absence. In contrast, Dayananda had been given notices and the opportunity to respond, which he failed to do. Therefore, the Supreme Court concluded that the principles of natural justice had been adequately observed by the Bank, and the precedent set by D.K. Yadav was not directly applicable.Conclusion:The Supreme Court allowed the appeal, set aside the judgments of the High Court and the Tribunal, and ruled that Dayananda had voluntarily retired from the Bank's service under Clause 16 of the Bipartite Settlement. The wages paid to Dayananda under Section 17-B of the Industrial Disputes Act, 1947, were not to be recovered or adjusted by the Bank. No order as to costs was made.