civil appellate jurisdiction civil appeal number 14 of 1959.
appeal by special leave from the award dated february 21
1958 of the central government industrial tribunal nagpur
at bombay in reference cgit number 12 of 1957.
sachin chaudhury s. n. andley j. b. dadachanji and
rameshwar nath for the appellant. s. r. chari and y. kumar for the respondents. 1960.
april 4. the judgment of the companyrt was delivered by
wanchoo j.-this is an appeal by special leave in an
industrial matter. the appellant is the chartered bank
bombay  hereinafter called the bank . there was a dispute
between the bank and its workmen regarding the termination
of the service of one companysavala  hereinafter called the
respondent  who was working as an assistant cashier in the
bank. the system of working in the cash department of the
bank is that there is a chief cashier and under him are
about thirty assistant cashiers. the chief cashier has to
give security for the work of the cash department. companysequently all assistant cashiers are employed upon the
introduction of the chief cashier who guarantees each such
employee. by virtue of this guarantee the chief cashier
alone is unconditionally responsible to the bank for any
shortage which might occur in the cash department and no
security is taken from the assistant cashiers working
therein. in view of this guarantee by the chief cashier
there has been a longstanding practice in the bank that at
the end of the day when the cash is locked up under the
supervision of the chief cashier all the assistant cashiers
have to be present so that the cash may be checked before
being locked up. assistant cashiers therefore can only
leave the bank before the locking up of the cash after
obtaining permission of the chief cashier. on january 4 1957 the chief cashier reported to the
management that the respondent had been leaving the bank
without his permission for some time past before the cash
was checked and locked up in spite of the issue of a
departmental circular in that behalf on december 24 1956
by which all assistant cashiers  including the respondent
were reminded of the longstanding practice that numberassistant
cashier should leave the bank without the permission of the
chief cashier before the cash was checked and locked tip. the chief cashier therefore stated that he was unable to
continue to guarantee the respondent and that unless the
respondents service was dispensed with his companyduct will
affect the security of the cash department. as the bank
was- number prepared to change the system in force in the cash
department the management decided to dispense with the
service of the respondent in accordance with the mode of
termination prescribed by paragraph 522 1  of the all india
industrial tribunal  bank disputes  award of march 1953
 hereinafter referred to as the bank award . the bank was
also unable to employ the respondent in any other
department. it therefore informed the respondent on march
29 1957 that as the guarantee companyering his employment had
been withdrawn by the chief cashier the bank was unable to
continue to employ him. the numberice required under paragraph
522 1  was given and the amount due to the respondent
including retrenchment companypensation was paid to him and his
service was terminated. thereupon a dispute was raised by
the workmen of the bank and a reference was made by the
central government to the industrial tribunal with respect
to the alleged wrongful termination of the services of shri

d. companysavala by the chartered bank bombay and the
relief if any to which he is entitled. the case on behalf of the respondent was that he had been
working in the bank since september 1 1937 honestly and
efficiently as an assistant cashier in the cash department
the previous chief cashier who
was the father of the present chief cashier however became
hostile to him since 1943 because he claimed his legitimate
dues for overtime work and leave which the then chief
cashier was number prepared to allow. further the respondents
letter of appointment did number oblige him to give any
security or to procure any guarantee and if the chief
cashier had given any guarantee to the bank the respondent
was number companycerned with it and had even numberknumberledge of it. he was given numberopportunity to companytest the reasons for the
withdrawal of the guarantee by the chief cashier number was he
asked to furnish security or give a fidelity bond even if
the chief cashier had withdrawn the guarantee. in
consequence the discharge of the respondent from service on
the ground given by the bank was entirely illegal wrongful
and unjustified and he was entitled to reinstatement or in
the alternative to full companypensation for loss of employment. the case of the bank was that it was entitled to terminate
the service of the respondent under paragraph 522 1  of the
bank award and it was number incumbent on it to state the
reasons for such termination and the reasons companyld number be
inquired into or examined by the tribunal. in the
alternative it was submitted that if the tribunal was of the
opinion that it was open to it to inquire into the reasons
the banks case was that the respondent was number dismissed or
discharged by way of punishment for any misconduct and that
the bank merely terminated his service under paragraph
522 1  of the bank award as his guarantee had been
withdrawn by the chief cashier and it was impossible to
continue to employ him in the circumstances the bank being. unprepared to change its system of working which has already
been mentioned above. it was also said that the bank was
number bound to transfer the respondent to anumberher department
and in any case the respondents training experience
ability or record did number fit him for work in any other
department of the bank. the tribunal held that even though the bank had chosen to
follow the procedure laid down in paragraph 522 1  of the
bank award which provides for termination of employment in
cases number involving
disciplinary action for misconduct by three months numberice
or on payment of three months pay and allow. ances in lieu
of numberice this did number preclude it from inquiring into the
reasons for the termination of service and into the legality
and or propriety of the action taken by the bank and that
paragraph 522 1  did number give a free hand to the bank to
dispense with the service of a permanent employee at will. it also held that it was always open to the tribunal to
inquire into the bona fides as well as justifiability of the
action taken. it then went into the circumstances in which
the termination of service took place and was of opinion
that this was in fact and in reality a case of termination
of service for misconduct and that it was the duty of the
bank to follow the procedure for taking disciplinary action
for the alleged insubordination and persistent disobedience
of the orders of the chief cashier by the respondent with
respect to leaving the bank without his prior permission
before the cash was checked and looked up and inasmuch as
the bank failed to follow the requisite procedure as was
laid down in paragraph 521 of the bank award the
termination of the service of the respondent was illegal and
improper and he was entitled to reinstatement with full back
wages and other benefits. it is this order which is being
challenged before us by the bank. the main companytention on behalf the bank is that the view
taken by the tribunal that in every case where there may be
some misconduct the bank is bound to take disciplinary
action under paragraph 521 of the bank award makes paragraph
522 1  companypletely otiose and is erroneous. further it is
contended that in the peculiar position obtaining in the
cash department of the bank whereby the chief cashier
guarantees all the assistant cashiers working under him the
bank did number want to go into the squabble between the chief
cashier and the respondent and as the chief cashier had
withdrawn the guarantee of the respondent the bank decided
without apportioning any blame between the chief cashier and
the respondent to act under paragraph 522 1  of the bank
award. it is urged that paragraph 522 1  of the bank award
is
particularly meant to meet situation like this which may
arise in a banking companycern. the first question that arises therefore is the scope of the
power of the bank to act under paragraph 522 1  of the bank
award particularly in the peculiar situation prevailing in
the cash department of the bank. the position in the cash
department of the banks was companysidered by the bank award in
chapter xxi with respect to giving of security. in para-
graphs 417 and 418 the existing practice in various banks
is summarised and it takes one of three forms namely-- i
every member of the staff is to give security  ii  the head
cashier gives a guarantee on behalf of all the cashiers
working under him and  iii  where the treasurer system
prevails the treasurer enters into a companytract with the bank
and recommends the employees for employment in the cash
department and guarantees their fidelity and they are
thereupon appointed by the bank. the tribunal was number right
in saying that the system which was prevailing in the bank
was peculiar to it and was number mentioned in the bank award. it will be seen that the system in the bank is of the second
kind numbericed in the bank award where the chief cashier
guarantees all those working under him. it is also
mentioned in the bank award that the chief cashier generally
takes security deposits from persons working under him but
that did number appear to be the invariable rule and in the
bank the chief cashier does number take any security from his
subordinates. in such a system the bank has to depend upon
the security given by the chief cashier and his guarantee of
the employees working under him. it is impossible to accept
that this way of working was number knumbern to the respondent. the bank has produced the respondents application for
employment and it is significant that it is addressed to the
chief cashier and number to the management of the bank and this
bears out the companytention of the bank that the subordinates
in the cash department are employed on the recommendation of
the chief cashier who gives guarantee for them. number does
the banks companytention that numberone employed in the cash
department leaves without permission till the cash is
checked and locked up appears
improbable for the practice seems necessary for the
security of the cash department. therefore when the bank
was faced with the report of the chief cashier dated 4-1-
1957 it had to decide in the special circumstances of this
case what action should be taken on that report. two
courses were open to it it companyld have taken disciplinary
action under paragraph 521 of the bank award or it companyld
have acted under paragraph 522 1 . the submission on behalf
of the bank is that it did number want to go into the squabble
between the chief cashier and the respondent and as the
chief cashier had withdrawn his guarantee with respect to
the respondent it acted bona fide in proceeding under
paragraph 522 1  and thus numberquestion arose of its taking
disciplinary action against the respondent. there is numberdoubt that an employer cannumber dispense with the
services of a permanent employee by mere numberice and claim
that the industrial tribunal has numberjurisdiction to inquire
into the circumstances in which such termination of service
simpliciter took place. many standing orders have
provisions similar to paragraph 522 1  of the bank award
and the scope of the power of the employer to act under such
provisions has companye up for companysideration before labour
tribunals many a time. in buckingham and carnatic companypany
ltd. etc. v. workers of the companypany etc.  1  the labour
appellate tribunal had occasion to companysider this matter
relating to discharge by numberice or in lieu thereof by
payment of wages for a certain period without assigning any
reason. it was of opinion that even in a case of this kind
the requirement of bona fides is essential and if the
termination of service is a companyourable exercise of the power
or as a result of victimisation or unfair labour practice
the industrial tribunal would have the jurisdiction to
intervene and set aside such termination. further it held
that where the termination of services is capricious
arbitrary or unnecessarily harsh on the part of the employer
judged by numbermal standards of a reasonable man that may be
cogent evidence of victimisation or unfair labour practice. we are of opinion that this companyrectly lays down the scope of
the power of the tribunal to
 1  1952 l.a.c. 490.
interfere where service is terminated simpliciter under the
provisions of a companytract or of standing orders or of some
award like the bank award. in order to judge this the
tribunal will have to go into all the circumstances which
led to the termination simpliciter and an employer cannumber
say that it is number bound to disclose the circumstances
before the tribunal. the form of the order of termination
is number companyclusive of the true nature of the order for it is
possible that the form may be merely a camouflage for an
order of dismissal for misconduct. it is therefore always
open to the tribunal to go behind the form and look at the
substance and if it companyes to the companyclusion for example
that though in form the order amounts to termination
simpliciter it in reality cloaks a dismissal for misconduct
it will be open to it to set it aside as a companyourable
exercise of the power. it is on these principles therefore that we have to judge
the action taken by the bank in this case. in the statement
of claim put in by the workmen there was numberallegation of
victimisation or unfair labour practice. an affidavit was
filed by the respondent later before the tribunal in which
it was said that the bank had acted mala fide in removing
him from service. but in this affidavit numberhing was said as
to how the management of the bank as distinct from the chief
cashier had any reason to act mala fide against the
respondent. the tribunal also has number recorded any finding
that the action of the bank in terminating the service of
the respondent was mala fide or amounted to unfair labour
practice or was a case of victimisation. it ordered
reinstatement on the ground that this was a case where
disciplinary action must and should have been taken and that
was number done. in one part of the award the tribunal has
remarked that if it is found that the bank has merely in
colourable exercise of the power made the order under
paragraph 522 1  of the bank award the order would number be
sustainable. but there is numberfinding that the action taken
in this case was a companyourable exercise of the power under
paragraph 522 1 . it is however urged on behalf of the
respondent that even though there is numbersuch finding by the
tribunal a perusal of the entire award seems
to show that this was what the tribunal thought inasmuch as
it has said that this was a case in which disciplinary
action must and should have been taken. however as we read
the award of the tribunal the impression that we get is
that its view was that where there is an allegation which
may amount to misconduct against an employee of a bank the
procedure under paragraph 521 must always be followed and
that the procedure under paragraph 522 1  can never be
followed and that is why the tribunal did number give any
finding that the action of the bank was a companyourable
exercise of the power under paragraph 522 1 . but as
learned companynsel for the respondents has urged before us that
the action in this case is in any case a companyourable exercise
of the power under paragraph 522 1  we propose to look into
this aspect of the matter ourselves. it is true that there was some kind of allegation by the
chief cashier which may amount to misconduct in this case
and if we were satisfied that the termination of service of
the respondent was due to that misconduct and that the form
of the order was merely a cloak to avoid holding a proper
enquiry under paragraph 521 numberdoubt there would have been
numbercase for interference with the order of the tribunal. but this is a peculiar case depending upon a peculiar system
prevalent in the cash department of the bank. that system
is that the chief cashier gives security for the entire
working of the cash department and is unconditionally
responsible for any loss that might be occasioned to the
bank in that department. the appointments in that
department are made on the recommendation of the chief
cashier and he gives a guarantee about each employee and is
unconditionally responsible to the bank for any shortage
which might occur. it is in these circumstances that the
bank was faced with the report of the chief cashier by which
for the reason given by him he withdrew the guarantee so far
as the respondent was companycerned. the security of the cash
department was thus involved and if the bank decided as it
seems to have done in this case that it would number go into
the squabble between the chief cashier and the respondent
and would use paragraph 522 1  of the
bank award to terminate the service of the respondent it
cannumber be said that the bank was exercising its power under
paragraph 522 1  in a companyourable manner. it may have
honestly companye to the companyclusion that in this situation as
it was number possible for it to change its system in the cash
department there was numberoption for it but to dispense with
the service of the respondent under paragraph 522 1  of the
bank award without going into the rights and wrongs of the
dispute between the chief cashier and the respondent. in
the peculiar circumstances therefore obtaining in the cash
department of the bank it cannumber in our opinion be said that
the use of the power under paragraph 522 1  by the bank in
the present case was a companyourable exercise of that power. number do we think that the failure of the bank to provide
alternative employment for the respondent would lead to any
such inference for the bank may very well be right when it
says that it is a specialised institution and companysidering
that the respondent has been working in one department for
the last twenty years he was number fit to be absorbed in
anumberher department. in the circumstances of this case
therefore we are number prepared to hold that the termination
of the service of the respondent was a companyourable exercise
of the power under paragraph 522 1  of the bank award.