# Buckingham and Carnatic Company Ltd v. Workers' of the

- **Citation:** [1960] 3 S.C.R. 441
- **Court:** Supreme Court of India
- **Decided:** 1958-02-21
- **Case number:** Civil Appeal No. 14 of 1959
- **Bench:** P. B. Gajendragadkar, K.N. W Anchoo, K. c. DAS GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/buckingham-and-carnatic-company-ltd-v-workers-of-the-1714
- **Pages:** 10

## Headnote

Industrial
Dispute -Chief Cashier of Bank withdrawing
guarantee in respect of Assistant Cashier-Termination of service of
Assistant Cashier by Bank without holding enquiry-Validity of-All
India Industrial Tribunal (Bank Disputes) Award, I95J, paras. 52I,
522(I).
The system of working in the cash department of the
appellant Bank was that there was a Chief Cashier and there
were about thirty Assistant Cashiers under him.
The Chief
Cashier had to give security for the work of the cash department;
the Assistant Cashiers were employed upon being introduced by
the Chief Cashier who guaranteed each such employee. There
was long standing practice in the Bank that at the end of the
day when the cash was locked up under the supervision of the
Chief Cashier, all the assistant cashiers had to be present so that
the cash could be checked before being locked up. In spite of
reminders C, an Assistant Cashier, had been leaving the Bank
without the permission of the Chief Cashier for some time before
the cash was checked and locked up. The Chief Cashier reported
the matter to the management, withdrew his guarantee in
respect of C and stated that unless the services of C were
dispensed with his conduct would affect the security of the cash
department. The Bank terminated the services of C in accordance with the provisions of para. 522(1) of the All India
Industrial Tribunal (Bank Disputes) Award, 1953, without holding any enquiry against C.
The Industrial Tribunal to which
the dispute was referred held that this was in fact and in reality
a case of termination of services for misconduct and the Bank
ought to have followed the procedure laid down in para. 521 of
the Bank Award for taking disciplinary action, that the
termination of service was. illegal and improper and that C
was entitled to reinstatement with full back wages and other
benefits:
Held, that the services of the Assistant Cashier were properly
terminated by the Bank. There was no doubt that an employer
could not dispense with the services of a permanent employee
by mere notice and claim that the industrial tribunal had no
jurisdiction to inquire into the circumstances of SJ!ch termination. Even in a case of this kind the requirement of bonafides
was essential and if the termination of service was a colourable
exercise of the power or as a result of victimisation or unfair
h.bour practice the tribunal had jurisdiction to interfere. Where
the termination of service ·was capricious, arbitrary or unnecessarily harsh that may be cogent evidence of victimisation or
unfair labour practice. In the present case the security of the
April 4.
442
SUPREME COURT REPORTS
[1960]
r960
Bank was involved and if the Bank decided that it would not go
into the squabble between the Chief Cashier and C and would use
Chartered Bank, para. 522(1) of the Bank Award to terminate the, services of Cit
Boinbay
could not be said the Bank was exercising its power under para.
v.
522(1) in a colourable manner. It was not necessary that in
Chartered Bank every case where there was an allegation of misconduct the
Eniptoyees' Union procedure under para. 52r for taking disciplinary action should
be followed.
Buckingham and Carnatic Company Ltd. v. Workers' of the
O!mpany, 1952 L.A.C. 490, approved.

## Text

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3 S.C.R. SUPREME COURT REPORTS
THE CHARTERED BANK, BOMBAY
v.
441
THE CHARTERED BANK EMPLOYEES' UNION.
(P. B. GAJENDRAGADKAR, K.N. W ANCHOO and
K. c. DAS GUPTA, JJ.)
Industrial
Dispute -Chief Cashier of Bank withdrawing
guarantee in respect of Assistant Cashier-Termination of service of
Assistant Cashier by Bank without holding enquiry-Validity of-All
India Industrial Tribunal (Bank Disputes) Award, I95J, paras. 52I,
522(I).
The system of working in the cash department of the
appellant Bank was that there was a Chief Cashier and there
were about thirty Assistant Cashiers under him.
The Chief
Cashier had to give security for the work of the cash department;
the Assistant Cashiers were employed upon being introduced by
the Chief Cashier who guaranteed each such employee. There
was long standing practice in the Bank that at the end of the
day when the cash was locked up under the supervision of the
Chief Cashier, all the assistant cashiers had to be present so that
the cash could be checked before being locked up. In spite of
reminders C, an Assistant Cashier, had been leaving the Bank
without the permission of the Chief Cashier for some time before
the cash was checked and locked up. The Chief Cashier reported
the matter to the management, withdrew his guarantee in
respect of C and stated that unless the services of C were
dispensed with his conduct would affect the security of the cash
department. The Bank terminated the services of C in accordance with the provisions of para. 522(1) of the All India
Industrial Tribunal (Bank Disputes) Award, 1953, without holding any enquiry against C.
The Industrial Tribunal to which
the dispute was referred held that this was in fact and in reality
a case of termination of services for misconduct and the Bank
ought to have followed the procedure laid down in para. 521 of
the Bank Award for taking disciplinary action, that the
termination of service was. illegal and improper and that C
was entitled to reinstatement with full back wages and other
benefits:
Held, that the services of the Assistant Cashier were properly
terminated by the Bank. There was no doubt that an employer
could not dispense with the services of a permanent employee
by mere notice and claim that the industrial tribunal had no
jurisdiction to inquire into the circumstances of SJ!ch termination. Even in a case of this kind the requirement of bonafides
was essential and if the termination of service was a colourable
exercise of the power or as a result of victimisation or unfair
h.bour practice the tribunal had jurisdiction to interfere. Where
the termination of service ·was capricious, arbitrary or unnecessarily harsh that may be cogent evidence of victimisation or
unfair labour practice. In the present case the security of the
April 4.
442
SUPREME COURT REPORTS
[1960]
r960
Bank was involved and if the Bank decided that it would not go
into the squabble between the Chief Cashier and C and would use
Chartered Bank, para. 522(1) of the Bank Award to terminate the, services of Cit
Boinbay
could not be said the Bank was exercising its power under para.
v.
522(1) in a colourable manner. It was not necessary that in
Chartered Bank every case where there was an allegation of misconduct the
Eniptoyees' Union procedure under para. 52r for taking disciplinary action should
be followed.
Buckingham and Carnatic Company Ltd. v. Workers' of the
O!mpany, 1952 L.A.C. 490, approved.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 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
No. 12of1957.
Sachin Ghaudhury, S. N. Andley, J. B. Dadachanji
and Rameshwar Nath, for the appellant.
A. S. R.Chariand Y. Kumar,fortherespondents.
1960. April 4. The Judgment of the Court was
delivered by
wanc/100 J.
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 Colsavala (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.
Consequently 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
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3 S.C.R. SUPREME COURT REPORTS
443.
being locked up. Assistant Cashiers therefore can only
r960
leave the Bank before the locking up of the cash after Chartered Bank,
obtaining permission of the Chief Cashier.
Bombay
·
On January 4, 1957, the Chief Cashier reported to
v •
the management that the respondent had been leaving
Chartered Bank
the Bank without his permission for some time past Employees' Union
before the cash was checked and locked up in spite of
the issue of a departmental circular in that behalf on
Wanchoo J.
December 24, 1956, by which all assistant cashiers
(including the respondent) were reminded of the long~
standing practice that no assistant cashier should
leave the Bank without the permission of the Chief
Cashier before the cash was checked and locked up.
The Chief Cashier therefore stated that he was unable
to continue to guarantee the respondent and that
unless the respondent's service was dispensed with his
conduct will affect the security of the cash department.
As the Bank was not 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 paragra·ph 522(1) of the All India Industrial ~ribunal (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 covering his
employment had been withdrawn by the Chief Cashier
the Bank was unable to con:tinue to employ him. The
notice required under paragraph 522(1) was given and
the amount due to the respondent including retrenchment compensation 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 Cel1tral Government to the Industrial Tribunal
with respect to the "alleged wrongful termination of
the services of Shri N. D. Colsavala 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 I, 1937,
honestly and efficiently as an assistant cashier in the
cash department. The previous Chief Cashier who
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444
SUPREME COURT REPORTS
[1960)
r960
·
was the father of the pre~ent Chief Cashier however
became hostile to him since 1943, because he claimed
Cha,tered Bank, his legitimate dues for over-time work and leave
Bo"':_ay
which the then Chief Cashier was not prepared to
Cha,tmd Bank allow. Further the respondent's letter of appointment
Employees' Union did not oblige him to give any security or to procure
any guarantee and if the Chief Cashier had given any
Wanchoo J.
guarantee to the Bank, the respondent was not concerned with it and had even no knowledge of it. He
W!).S given no opportunity to contest the reasons for
the withdrawal of the guarantee by the Chief Cashier;
nor 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 compensation 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 not
incumbent on it to state the reasons for such termination and the reasons could not 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 Bank's
case was that the respondent was not 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 not bound to transfer the respondent to another
department and in any case the respondent's training,
experience, ability or record did not 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 not involving
)
...
3 S.C.R. SUPREME COURT REPORTS
445
disciplinary action for misconduct, by three months'
x96o
notice or on payment of three months' pay and allowChartered Bank,
ances in lieu of notice", this did not preclude it from
Bombay
inquiring into the reasons for the termination of
v ..
service and into the legality and/or propriety of the
Chartere~ Ba~ll
action taken by the bank and that paragraph 522(1) Employees Union
did not give a free hand to the Bank to dispense with
wa:;hoo 1.
the service of a permanent employee at will. It also
held that it was always open to the tribunal to inquire
info 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 locked 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 imprope~ 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 contention on behalf the Bank is that theview 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( l) completely 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 not 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
57
446
SUPREME COURT REPOR.TS
[1960]
r960
particularly meant to meet situations like this which
may arise in a banking concern.
Chartered Bank,
h fi
h
f
'
h
T e rst question that arises t ere ore is t e scope
Bombay
v.
of the power of the Bank to act under paragraph
Chartered Bank 522(1) of the Bank Award, particularly in the peculiar
fanployees' Union situation prevailing in the cash department of the
Bank. The position in the cash department of the
Wanchoo J.
banks was considered by the Bank Award in Chapter
XXI with respect to giving of security.
In paragraphs 417 and 418, the existing practice in various
banks is summarised and it takes one of three forms,
na.mely-(i) every member of the sta.ff 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 contract with the bank and recommends
the employees for emplC?yment in the cash department
and guarantees their fidelity and they are thereupon
appointed by the bank. The tribunaL was not right
in saying that the system which was prevailing in the
Bank was peculiar to it and was not mentioned in the
Bank Award. It will be seen that the system in the
Bank is of the second kind noticed in the Bank A ward
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 not
appear to be the invariable rule, and in the Bank the
Chief Cashier does not 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 not
known to the respondent. The Bank has produced the
respondent's application for employment and it is significaht that it is addressed to the Chief Cashier and not
to the management of the Bank and this bears out
the contention of the Bank that the subordinates in
the cash department are employed on the recommendation of the Chief Cashier who gives guarantee for
them. Nor does the Bank's contention that no one
employed in the cash department leaves without permission till the cash is checked and locked up appears
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3 S.C.R.
SUPREME COURT REPORTS
447
improbable, for the practice seems necessary for the
r960
security of the cash department. Therefore when the Chartered Bank,
Bank was faced with the report of the Chief Cashier
Bombay
dated 4-1-1957, it had to decide in the special circumv.
stances of this case what action should be taken on that Chartered Bank
report. Two courses were open to it: it could have Employees' Union
taken disciplinary action under paragraph 521 of the
Wanchoo].
Bank Award or it could have acted under paragraph
522(1). The submission on behalf of the Bank is that
it did not 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 no question arose of its
taking disciplinary action against the respondent.
There is no doubt that an employer cannot dispense
with the services of a permanent employee by mere
notice and claim that the industrial tribunal has no
jurisdiction 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 come up for consideration before labour
tribunals many a time. In Buckingham and CarnatiC
Company Ltd., Etc., v. Workers of the Company, etc. {1),
the Labour Appellate Tribunal had occasion to consider
this matter relating to discharge by notice 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 colourable 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 normal standards of a reasonable man that
may be cogent evidence of victimisation or unfait
la.bour practice. We are of opinion that this correctly
lays down the scope of the powei of the tribunal to
(I) [195a] LA.C. 490,
448
SUPREME COURT REPORTS
[1960]
r960
interfere where service is terminated simpliciter under
the provisions of a contract or of standing orders or
Chartered Bank,
Bombay
of some award like the Bank Award.
In order to
v.
judge this, the tribunal will have to go into all the
Chartered Bank circumstances which led to the termination simpliciter
Employees' Union and an employer cannot say that it is not bound to
-
disclose the circumstances before the tribunal.
The
Wanchoo ].
form of the order of termination is not conclusive 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 comes to the conclusion, 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 colourable 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
tho statement of claim put in by the workmen there
was no allegation 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 nothing 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 not 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 not 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 not be sustainable.
But there is no finding that the action taken in this
case was a colourable exercise of the power under
paragraph 522(1). It is, however, urged on behalf of
the respondent that even though there is no such find.
ing by the tribunal a perusal of the entire award seems
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3 S.C.R.
SUPREME COURT REPORTS
449
to show th11t this was what the tribunal thought inas~
r960
much as it has said that this was a case in which
•
d h
ld h
b
k
Chartered Bank,
disciplinary act10n must an s ou
ave een ta en.
Bombay
However, as we read the award of the tribunal, the
v.
impression that we get is that its view was that where Chartered Bank
there is an allegation which may amount to misconduct Employees' Unio"
against an employee of a bank, the procedure under
paragraph 521 must always be followed and that the
Wanchoo J.
procedure under paragraph 522(1) can never be followed; and that is why the tribunal did not give any
finding that the action of the Bank was a colourable
exercise of the power under 1paragraph 522(1).
But
as learned counsel for the respondents has urged before
us that the action in this case is in any case a colourable 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, no doubt there would have l:ieen no case 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 concerned. The security of the cash
department was thus involved and ifthe 'Bank decided
as it seems to have done in this case that it would not
go into the squabble between~he Chief Cashier and the
respondent and would use paragraph 522(1) of the
450
SUPREME COURT REPORTS
[1960]
r96o
Bank Award to terminate the servjce of the respondent it cannot be said that the Bank was exercising
Chartered Bank,
Bombay
its power under paragraph 522(1) in a colourable manv.
ner. It may have honestly come to the conclusion
Chartered Bank that in this situation, as it was not possible for it to
Employ"s' Union change its system in the cash department, there was no
option for it but to dispense with the service of the
Wanahoo ].
k A
d
respondent under paragraph 522(1) of the Ban
war
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 cannot in our
opinion be said that the use of the power under paragraph 522(1) by the Bank in the present case was a
colourable exercise of that power. Nor 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 considering th:at the respondent has been working in one
department for the last twenty years he was not fit to
·be absorbed in another department. In the circumstances of this case therefore we are not prepared to
hold that the termination of the service of the respondent was a colourable exercise of the power under
pamgraph 522(1) of the Bank Award. The mention
of the fact that the service was being terminated
because the Chief Cashier had withdrawn the guarantee
of the respondent in the notice of discharge will not
change the nature of the termination, for the reason
was given obviously to avoid the charge that the
termination was entirely capricious or arbitrary, and
therefore n..ot bona fide.
We therefore allow the appeal and set aside the
order of the tribunal by which the respondent was
ordered to be reinstated with full back wages and other
benefits. In the circumstances we pass no order as
to costs.
Appeal allowed.
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