Supreme Court Modifies Reinstatement Order in Bank Employee Dismissal Case

The Supreme Court of India recently adjudicated an employment dispute between Allahabad Bank & Ors. and Krishan Pal Singh. The case revolved around the wrongful dismissal of a bank employee and the appropriate relief for him. The judgment is a crucial reference point in matters of employee reinstatement, back wages, and compensation when termination is deemed unjustified.

Background of the Case

Krishan Pal Singh was appointed as a Clerk-cum-Cashier at Allahabad Bank on September 23, 1985. His employment was confirmed on March 24, 1986. In February 1989, while posted at the Aurangabad Branch in Lakhimpur Kheri, Uttar Pradesh, a fire broke out, destroying bank records. The bank suspected his involvement and placed him under suspension on February 13, 1989. A departmental inquiry ensued, leading to his dismissal on August 22, 1991. His appeals before the bank’s appellate authorities were dismissed.

Singh raised an industrial dispute, which was referred to the Central Government Industrial Tribunal (CGIT) in Kanpur. The CGIT found that while there was suspicion, no concrete evidence proved his misconduct. It ruled that the bank had lost confidence in him and awarded a compensation of Rs.30,000 instead of reinstatement.

Aggrieved, Singh moved the Allahabad High Court, which ruled in his favor on April 25, 2019. The High Court quashed the CGIT order and directed his reinstatement with full back wages and consequential benefits.

Arguments by the Petitioner (Allahabad Bank)

The bank argued that although there was no direct proof of wrongdoing, there was strong suspicion about Singh’s involvement.
The Industrial Tribunal had correctly observed that the bank had lost confidence in him, which is a valid ground for termination.
Reinstating Singh after nearly three decades would be impractical and against the interest of the bank.
The High Court’s order of full back wages and reinstatement was excessive and beyond judicial propriety.

Arguments by the Respondent (Krishan Pal Singh)

Singh contended that there was no evidence against him, and the bank had dismissed him arbitrarily.
The Industrial Tribunal’s decision to award compensation instead of reinstatement was unjustified since the misconduct was not proven.
The High Court had rightly ruled that strong suspicion cannot substitute legal proof.
He was entitled to reinstatement with full back wages as he had been wrongly dismissed.

Supreme Court’s Analysis and Judgment

On the Validity of Dismissal

“The Industrial Tribunal has found that though there was a strong suspicion, there was no sufficient evidence to prove his misconduct to dismiss from service.”

The Supreme Court concurred that dismissal based on mere suspicion, without concrete proof, was not legally sustainable.

On the Award of Reinstatement and Back Wages

“Reinstatement with full back wages is not automatic in every case where termination or dismissal is found to be not in accordance with law.”

The Court held that reinstatement was not always the most appropriate relief, especially when a long time had elapsed since termination.

On Alternative Compensation

“Considering that the respondent was in effective service of the bank only for about six years and he is out of service since 1991, and in the meantime, has attained age of superannuation, we deem it appropriate that ends of justice would be met by awarding lump sum monetary compensation.”

Recognizing that Singh had only worked for six years before dismissal and had since reached retirement age, the Court deemed compensation to be a more suitable relief than reinstatement.

Final Judgment

The Supreme Court modified the High Court’s order as follows:

The reinstatement order was set aside.
Instead, Singh was awarded a lump sum compensation of Rs.15 lakhs.
The compensation was to be paid within eight weeks, failing which it would accrue interest at 6% per annum.

Implications of the Judgment

Limits on Reinstatement: This judgment reaffirms that reinstatement is not an automatic remedy for wrongful termination.
Focus on Practicality: Courts must consider practical implications, such as the passage of time, when awarding relief.
Recognition of Loss of Confidence: An employer’s loss of confidence can be a valid reason for termination, though it must be substantiated.
Monetary Compensation as Relief: The ruling highlights the increasing use of lump sum compensation instead of reinstatement.

Conclusion

The Supreme Court’s decision strikes a balance between legal propriety and practical considerations. While it recognized that Singh’s dismissal was not legally sustainable, it acknowledged that reinstatement was neither feasible nor justified. The judgment reinforces that monetary compensation is often a more suitable remedy in long-pending employment disputes, ensuring fairness to both the employee and the employer.

Petitioner Name: Allahabad Bank & Ors..
Respondent Name: Krishan Pal Singh.
Judgment By: Justice R. Subhash Reddy, Justice Sanjiv Khanna.
Place Of Incident: Uttar Pradesh.
Judgment Date: 20-09-2021.

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