Employer Must Substantiate Misconduct Charges With Documentary Evidence, Mere Allegations Without Proof Insufficient: Madras HC

Madras High Court: A Division Bench of Justices M.S. Ramesh and C. Kumarappan upheld a Labour Court order reinstating an employee terminated on charges of theft and misconduct, holding that disciplinary action must be supported by substantial evidence rather than mere allegations. The Court emphasized that the employer's failure to produce essential records like stock registers to prove charges of theft and fabrication of accounts rendered the termination unjustified, despite the argument that criminal acquittal standards differ from disciplinary proceedings.

Background

The appellant, Anthiyur Consumer Co-operative Store, dismissed R. Parthiban in 2008, following charges of theft of essential commodities like rice and sugar, fabricating false accounts, and generating bogus bills. An FIR was filed, and Parthiban was acquitted in 2010. The respondent challenged his termination before the Labour Court, Salem, which set aside the dismissal, finding that the charges were not proven based on available evidence.

The Management appealed the Labour Court's decision, arguing that the acquittal in the criminal case did not affect the validity of the dismissal, as disciplinary standards differ from criminal standards of proof. They contended that Parthiban's misconduct, including stock deficits and fabrication of records, justified the termination.

Arguments

Counsel for the Management contended that the dismissal was justified, based on the findings of a domestic inquiry. They argued that the criminal acquittal had no bearing on the dismissal, as the standards of proof in a criminal trial and a domestic inquiry are not identical. They further emphasized that the Labour Court had failed to consider the inquiry report which found Parthiban guilty of theft and misconduct.

On the other hand, Parthiban's counsel submitted that the charges were frivolous and unsupported by documentary evidence. He pointed out that the Management had failed to produce any material, such as stock registers, to substantiate the claims of stock deficit and the fabrication of bills. He also emphasized that Parthiban's acquittal in the criminal case reinforced his innocence.

Court's Reasoning

The court closely examined the evidence and agreed with the Labour Court's assessment that the charges against Parthiban were unsubstantiated. Regarding the theft charge, the court observed that the Management did not produce essential records, such as stock registers or documented proof of missing commodities. The reliance on a police inspector's letter was inadequate to establish such serious charges. Without concrete evidence, the charge of theft could not stand.

Similarly, the court noted that the Management's failure to provide stock records undermined the second charge of stock deficit. During the Labour Court proceedings, a key witness from the Management admitted that without proper stock registers, it was impossible to confirm any deficit. This admission weakened the Management's case significantly. As for the charge of fabricating false accounts, the court found that simply presenting a list of allegedly bogus bills did not substantiate the claim. The Labour Court had rightly determined that unless the specific falsification of bills could be demonstrated with evidence, the charge was unproven.

The court cited B.C. Chaturvedi v. Union of India (1995) 6 SCC 749 and Deputy General Manager v. Ajai Kumar Srivastava (2021) 2 SCC 612 to reiterate that judicial review of disciplinary actions is limited to examining whether procedural fairness was followed. In this case, both the Labour Court and the Single Judge found that the inquiry was flawed due to a lack of substantial evidence. The court ruled that there was no basis to overturn these factual findings, as they were neither perverse nor unsupported by evidence. Thus, the court dismissed the appeal and upheld the Labour Court's order reinstating Parthiban with back wages.

Date of Judgment: October 17, 2024

Citation: 2024 LiveLaw (Mad) 397

Case Title: The Management v. R. Parthiban

Counsel for the Appellant: Mr. M.R. Balaramesh

Counsel for the Respondent: R. Parthiban

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