Shelat, J. - (1.) This appeal, by special leave, is against the order by which the Labour Court, Patna, set aside the order of discharge from service passed by the Appellant-Company against the respondent and which also directed his reinstatement.
(2.) The respondent was appointed a salesman on August 19, 1954, by a letter of appointment, clause (9) whereof provided that either party could terminate the contract of employment by a notice of 28 days. The Appellant-Company had also appointed by an agreement M/s. Hari Bhagat Laxmi Bhagat at Kathmandu as its wholesalers. The said agreement provided that the wholesalers would have to deposit with the Company a sum of Rs. 20,000/-, that they would be paid commission at 3% on all sale proceeds in respect of sales effected by them, that out of the stock supplied to the wholesalers the Company's own salesman posted at Kathmandu would also be entitled to effect sales and that the sale proceeds in respect of sales effected by both of them should be remitted to the Company through its salesman. On August 26, 1956 the Company sent the respondent to Kathmandu for promoting sales and for assisting the said wholesalers in their sales. No difficulty appears to have been experienced by the Company by this arrangement until the middle of 1960. But it was said that thereafter the respondent became irregular in remitting the sale proceeds and that notwithstanding his assurances to regularise his work he did not do so. The result was that the Company sent one P. N. Saxena to Kathmandu and also a relief salesman, one K. B. Sinha, who on December 5, 1960, took over charge from the respondent. On December 6, 1960, the Company received a telegram from the wholesalers that there was cash shortage of Rs. 11,000/- by the respondent. On receipt of the telegram, one K. P. Sinha, the Branch Manager at Patna, went over to Kathmandu and made a preliminary enquiry in the course of which it was said that the respondent admitted that he had taken personal loans from the wholesalers and had executed two loan bonds for Rs. 6,400/- and Rs. 4,600/-. The respondent was also said to have written on 7th, 8th, 9th and 10th December 1960, letters to the said Branch Manager admitting that he had obtained the said loans from the wholesalers. On December 9, 1960, the wholesalers wrote to the Company that they had paid the said two amounts to the respondent for remittance to the Company and asked the Company to send them the requisite credit vouchers therefor. On December 28, 1960 the wholesalers also enclosed copies of two receipts purported to have been executed by the respondent in respect of the said two amounts. On December 27, 1960, the respondent intimated to the Company that the said receipts were extorted from him by the wholesalers, and that ending instructions from the Company he was filing a criminal complaint against them. It is clear that the wholesalers had changed their case, their case first being that the said two amounts were advanced by way of loans to the respondent and later on stating that the said two amounts were given to the respondent for remittance but the respondent had failed to remit them and that therefore there was cash shortage of Rs, 11,000/-. The respondent's case, (supra) on the other hand was that he had not taken any loans from the said wholesalers, that contrary to the said agreement with the wholesalers, the Company's officers at Patna Branch connived at credit sales effected by the wholesalers, that the wholesalers, on coming to know that on December 5, 1960 the respondent had handed over charge to a new salesman, got panicky and realising that they would not be able to recover the sale proceeds of the said credit sales, they and the said K. P. Sinha, the Branch Manager arranged between them to get the said loan bonds executed by the respondent, that the wholesalers thereafter also extorted under coercion the said two receipts, and that therefore the wholesalers' version that there was cash shortage of Rs. 11,000/was false. The Company thereafter served a charge-sheet on the respondent alleging therein that he had abused the position of trust and responsibility as a Company's employee and brought down thereby its reputation and had committed the following acts of misconduct, namely: "You have given room for allegations to be made against you by the wholesalers Hari Bhagat Laxmi Bhagat with respect to transactions admittedly entered into by you in your personal capacity. The wholesaler alleges that he handed over to you Rs. 11,000/- made up of Rs. 6,400/- on 2-l0-1960 and Rs. 4,600/- on 3-12-1960. You deny the receipt of this money from the wholesalers and in fact it appears that you have filed a criminal complaint against the wholesaler for alleged extortion of certain receipts from you. By such conduct and behaviour you have brought down the reputation of the Company at Kathmandu and therefore, you have committed a gross misconduct prejudicial to the interest of the Company. Further, by such irresponsible conduct on your part you have also forfeited the confidence of the Company reposed on you." The charge-sheet called upon the respondent to show cause why ''for the aforesaid gross misconduct committed by you, you should not be dismissed from service or otherwise suitably dealt with." It is clear that the facts of misconduct alleged against the respondent as his acts were: 1. taking personal loans from the wholesalers, 2. denial by him of these loans and filing a criminal complaint against the wholesalers, and 3. abusing the position of trust and responsibility as the company's employee and thereby bringing down its reputation. The last allegation is obviously an inference from the alleged acts (1) and (2), and not an independent act of misconduct. It may be mentioned that it was not the Company's case that the respondent had embezzled the Company's monies, its case all throughout being that the monies for which the respondent was said to have executed the said bonds and the said receipts were not the Company's monies but were for loans advanced by the wholesalers. In his reply to the said chargesheet, the respondent denied the said alleged transactions, his case, as aforesaid, being that the said bonds and the said receipts as also the said four letters written by him from the 7th to the 10th of December, 1960, were secured from him either under the influence of the Branch Manager or extorted from him under force and coercion by the wholesalers. It was admitted before us that the Appellant-Company has not framed any rules of conduct for its servants and further that there was no rule forbidding a Company's employee from entering into personal transactions such as loans. In the absence of any such rule, it is prima facie difficult to say how a loan or its denial could be said to be acts of misconduct.
(3.) An enquiry into the said charges was duly held thereafter wherein the respondent admittedly was given an opportunity of being heard and to lead such evidence as he desired. At the end of the enquiry the enquiry officer gave the following findings: (1) that between August to December 1960, the respondent was guilty of irregularities in his work, (2) that stocks were sold on credit and further that the respondent had failed to remit sale proceeds thereof, (3) that in spite of assurances given by him to be regular in future the respondent failed to live up to these assurances, (4) that during the time when the respondent was at Kathmandu the Company's business was low and that was due to his failure to inform the company of the market position there and his failure to obey instructions given to him by the officers at Patna Branch. (5) that the respondent had taken loans on his personal account from the wholesalers for which he had executed the said two bonds. (6) that by executing the said two receipts he had made it appear as if the said monies were part of the monies given to him for remittance, thus enabling the wholesalers to allege that they had handed them over for remittance and were no longer liable to the company for them.(7) (7) that the letters of the 7th, 8th, 9th and 10th December, 1960, were voluntarily written by the respondent to the Branch Manager, and (8) that it was possible that the said two receipts were extorted from the respondent. The enquiry officer concluded his report by holding that the charge that the respondent had entered into personal transactions with the wholesalers taking advantage of his position was satisfactorily proved and that he had made abuse of the trust reposed in him by the company and by systematic irregular work and disobedience of the instructions of the company he had managed to keep everybody in the dark with a view to covering his "illegal activities". The report ended by stating "that all the charges" had been satisfactorily established by cogent evidence beyond any reasonable doubt. By an order dated September 20, 1961, the respondent was discharged from the company's service "with immediate effect for the aforesaid items of misconduct committed by and proved against you".;