Criminal Acquittal Does Not Invalidate Disciplinary Proceedings Conducted Under Different Evidentiary Standards: Kerala HC

Kerala High Court: A single judge bench consisting Justice Harisankar V. Menon quashed an arbitration award reinstating a terminated bank employee, holding that acquittal in criminal proceedings does not automatically invalidate findings of a domestic enquiry conducted under different standards of proof. The court emphasized that disciplinary proceedings operate independently of criminal trials, being based on preponderance of probabilities rather than proof beyond reasonable doubt. The court found the arbitration court's reliance solely on criminal acquittal while ignoring domestic enquiry findings to be arbitrary.

Background

Raghavan, a former employee of the Palakkad District Co-operative Bank, was terminated in 1989 after it was discovered that he had secured his job by submitting a forged employment certificate from a member society. A domestic enquiry was held, concluding that Raghavan had committed serious misconduct. In parallel, a criminal case was initiated against him, where he was charged with offences including forgery and cheating.

While the criminal trial resulted in Raghavan's acquittal on technical grounds, the Co-operative Arbitration Court ordered his reinstatement, relying on the acquittal. The arbitration court held that since Raghavan was acquitted of the criminal charges, he should be reinstated with back wages and other benefits. The bank challenged this arbitration award, arguing that the domestic enquiry was conducted independently of the criminal case and had conclusively established Raghavan's guilt.

Arguments

The bank, represented by senior counsel P. Ravindran, argued that the domestic enquiry had been properly conducted, with Raghavan being given ample opportunity to defend himself. The enquiry report clearly found that Raghavan had forged documents to secure employment, and this justified his termination. Further, it was contended that the acquittal in the criminal case was based on technicalities and did not absolve Raghavan of his misconduct, which was proven in the domestic enquiry. Citing Pravin Kumar v. Union of India [(2020) 9 SCC 471], counsel submitted that an acquittal in a criminal case does not preclude disciplinary action based on the same facts. The bank urged the court to set aside the arbitration award and reinstate the dismissal.

On the other hand, Raghavan, represented by K. Mohanakannan, argued that the arbitration award should be upheld as the criminal court had acquitted him. Counsel contended that since the criminal charges were dismissed, there was no basis for the bank's disciplinary action. Additionally, Raghavan had reached the age of superannuation and was entitled to back wages and other benefits as ordered by the arbitration court.

Court's Reasoning

The court clarified that while Raghavan had been acquitted of the criminal charges on technical grounds, this did not automatically invalidate the findings of the disciplinary process. The domestic enquiry had examined the facts independently, focusing on whether Raghavan used a forged document to secure his employment under the Member Societies quota.

The court relied on Ajit Kumar Nag v. Indian Oil Corporation Ltd. [(2005) 7 SCC 764], which held that disciplinary proceedings are distinct from criminal proceedings. The burden of proof in a criminal trial is “beyond reasonable doubt,” whereas in a departmental enquiry, the standard is the “preponderance of probability.” In this case, while the criminal court acquitted Raghavan due to procedural lapses and a lack of conclusive evidence, the domestic enquiry had determined—on a balance of probabilities—that Raghavan had indeed submitted a forged document. The court reiterated that the acquittal in the criminal case did not exonerate Raghavan from disciplinary action, as the two proceedings serve different purposes.

The court noted that the domestic enquiry had been properly conducted. Raghavan was given full opportunity to defend himself, including cross-examining witnesses and presenting evidence. Furthermore, the court observed that Raghavan had withdrawn an earlier industrial dispute challenging his termination, indicating that he had previously accepted the outcome of the disciplinary proceedings. His later attempt to use the criminal court's acquittal as a basis for reinstatement, some 22 years after his termination, was seen as an abuse of process. The court held that delay and laches were evident, as Raghavan had only sought reinstatement in 2011, five years after his acquittal and nearly two decades after his termination.

Justice Menon also referred to Pravin Kumar v. Union of India [(2020) 9 SCC 471], reiterating that criminal acquittals do not undermine the validity of disciplinary proceedings unless there is a direct conflict between the two. Since the domestic enquiry had followed due process and found Raghavan guilty, the court held that the arbitration court's reliance on the criminal acquittal to order reinstatement was unjustified and arbitrary.

Finally, while dismissing Raghavan's claim for reinstatement, the court acknowledged his long service with the bank from 1984 to 1989 and his current age and health condition. Therefore, it allowed Raghavan to submit a representation for compassionate benefits, though this was granted purely on humanitarian grounds, without any legal obligation on the part of the bank. The court concluded that the arbitration court's order lacked any legal basis, as it disregarded the well-established principles of disciplinary law and the valid findings of the domestic enquiry.

Case Title: Palakkad District Co-operative Bank Managing Committee v. Raghavan

Citation: 2024 LiveLaw (Ker) 673

Counsel for the Bank (Petitioner in WP(C) 40300 of 2017): Sri. P. Ravindran (Sr.), Smt. Aparna Rajan, Smt. Liza Meghan Cyriac

Counsel for Raghavan (Petitioner in WP(C) 25184 of 2019): Sri. K. Mohanakannan, Smt. A.R. Pravitha

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