Rajasthan High Court: In a petition filed to challenge the order dated 17-11-2022, passed by the Court of Prescribed Officer under Rajasthan Shops and Commercial Establishment Act, 1958 (‘1958 Act’) whereby termination of services of Respondent 1 by the petitioner was held illegal, Arun Monga, J., opined that a stigmatic order passed on ground of alleged misconduct could not be sustained unless a proper enquiry in accordance with law had been conducted. Any stigma on the delinquent would red flag him for the rest of his life and also, would render him unemployable in the future. The Court further opined that deprivation of livelihood violated the very fundamental right of a citizen enshrined under Article 21 of the Constitution and thus, the petitioner must circumspect before summarily taking away the livelihood of an employee on stigmatic grounds. Thus, the Court dismissed the petition and directed the petitioner to comply with the impugned order, failing which the bank would be liable for the consequences.
Background
In an instant case, the petitioner was a duly registered banking company with its office in Mumbai and Respondent 1 was appointed as Senior Manager, Jodhpur Branch from 02-07-2018. Further, based on a purported confession letter of another employee of the petitioner, who was working under the supervision of Respondent 1, the petitioner stated that Respondent 1 was involved in fraudulent activities and was working against the bank interests. Thus, the management decided to terminate the services of Respondent 1 by invoking the power under Clause 19 of the terms and conditions which were conveyed to Respondent 1 vide bank letter dated 22-05-2021.
Subsequently, vide bank letter dated 17-01-2022, the services of Respondent 1 were summarily terminated and upon receipt of the termination letter, Respondent 1 filed a complaint before Respondent 2, the Labour Commissioner. Thereafter, a notice was issued to the petitioner, and order dated 17-11-2022, was passed by the Court of Prescribed Officer under 1958 Act whereby termination of services of Respondent 1 by petitioner was held illegal and it was directed to reinstate him with consequential benefits.
Thus, the petitioner filed the present petition. The petitioner contended that the impugned order dated 17-11-2022 was illegal and passed without jurisdiction. The petitioner further contended that Respondent 1 was working as Senior Manager and did not fell within the definition of a workman under Section 2(5) of the Act and instead, the case was covered under Section 2(6) of the 1958 Act. Therefore, Respondent 2 had no authority to decide the complaint filed by Respondent 1. Further, it was contended that Respondent 2 without perusing the appointment letter and giving any finding on the illegality of the termination order, simply allowed the complaint without application of mind, which resulted in a miscarriage of justice.
Analysis, Law, and Decision
The Court opined that the definition of an employee as per Section 2(5) of the 1958 Act had to be read in conjunction with the definition of ‘commercial establishment’ under Section 2(3) of the 1958 Act and as per the provisions, the petitioner was a commercial establishment under Section 2(3) of the 1958 Act and Respondent 1 was an employee of the bank under Section 2(5) of the 1958 Act. The Court opined that once it was established that the 1958 Act was applicable to the petitioner and its employees, its applicability had to be strictly adhered by the petitioner.
The Court opined that Section 28-A of the 1958 Act and Rule 24A(2) of the Rajasthan Shops and Commercial Establishments Rules, 1959 clearly reflected that in the event of an employer dispensing with the services of an employee for misconduct, the same had to be supported by satisfactory evidence by conducting an enquiry specifically for the purpose of proving the misconduct in the prescribed manner, in accordance with law. However, in the present case, no such enquiry had been conducted by the petitioner and therefore, the impugned order was liable to be set aside.
Further, the Court opined that regardless whether an employee was a workman or not, there was no quibble on the fact that the impugned order was stigmatic in nature and the same was passed without affording any opportunity to Respondent 1 to put forth his defense and it was settled position of law that a stigmatic order was passed in violation of natural principles of justice.
The Court opined that a stigmatic order passed on ground of alleged misconduct could not be sustained unless a proper enquiry in accordance with law had been conducted. Any stigma on the delinquent would red flag him for the rest of his life and also, would render him unemployable in the future. The Court further opined that deprivation of livelihood violated the very fundamental right of a citizen enshrined under Article 21 of the Constitution and thus, the petitioner must circumspect before summarily taking away the livelihood of an employee on stigmatic grounds. Thus, the Court dismissed the petition and directed the petitioner to comply with the impugned order, failing which the petitioner would be liable for the consequences.
Further, the petitioner stated that liberty should be granted to conduct an inquiry against Respondent 1 and proceed thereafter, the Court opined that the conduct of the petitioner clearly reflected prejudice against the delinquent employee and in any case, the post-decisional inquiry would certainly prejudice the delinquent employee as the as the same would not be conducted in an impartial manner.
Kotak Mahindra Bank Ltd. v. Aaraj Sharma, 2023 SCC OnLine Raj 3874, Order dated 07-11-2023
Advocates who appeared in this case :
For the Petitioners: Vinay Jain and Darshan Jain, Advocate;
For the Respondents: Siddhart Tatia, Advocate.
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