Bombay HC Sets Aside Labour Court's Perversity Finding in Abhyudaya Bank Dismissal Case
Justice Sandeep Marne held that bringing policemen to interrogate a bank officer and filing complaints with outside authorities were not perverse findings by the Enquiry Officer, restoring the charges against the dismissed clerk.
The Bombay High Court has allowed a writ petition filed by Abhyudaya Co-operative Bank Ltd., setting aside concurrent orders of the First Labour Court, Thane, and the Industrial Court that had declared the Enquiry Officer's findings perverse in a domestic enquiry against a dismissed clerk. Justice Sandeep V. Marne, sitting singly, pronounced the judgment on 18 June 2026. The Labour Court had found the enquiry procedurally fair but struck down the Enquiry Officer's conclusions on both charges. The High Court found that the Labour Court had fundamentally misread the first charge and applied the wrong legal test to both, directing the Labour Court to now decide the proportionality of the punishment of dismissal within six months.
The Dispute Before the High Court
Smita Virendra Patil was originally appointed as a Clerk in Citizens Co-operative Bank, Pune. When that bank amalgamated with Abhyudaya Co-operative Bank Ltd. on 30 May 2006, her services were absorbed with effect from 3 July 2006. She was initially posted at the Pune branch and later transferred to the Accounts Department in Mumbai by order dated 8 June 2011.
By a further transfer order dated 16 May 2012, she was moved from the Accounts Department to the Vashi branch. She was relieved on 17 May 2012 and instructed to report to Vashi on 18 May 2012. On 17 May 2012, after being relieved, she allegedly came to the bank with two policemen and approached Mr. H.D. Bhat, Manager in the HRM Department, complaining that her transfer was intended to harass her. A show cause notice followed on 18 May 2012. She did not reply and was suspended on 22 May 2012.
A charge-sheet was issued on 16 April 2013. Two broad charges were framed: first, that she brought policemen to the bank's office, wrongly informed them that Mr. Bhat had transferred her to harass her, misbehaved with him, and attempted to intimidate him; second, that she made false, vexatious, and frivolous complaints to the Banking Ombudsman, the Reserve Bank of India, the Maharashtra State Human Rights Commission, the Chief Minister, the Deputy Chief Minister, the Ministry of Agriculture, and several other authorities, thereby tarnishing the bank's reputation. The enquiry ran from 22 July 2013 to 9 April 2014. The Enquiry Officer's report dated 6 December 2014 held all charges proved. The bank dismissed her by order dated 28 January 2015.
Patil had filed Complaint (ULP) No.58 of 2014 before the Labour Court at Thane, initially seeking to restrain the enquiry. After the dismissal order, she amended her complaint in 2017 to challenge it as well. The Labour Court framed two preliminary issues: fairness of the enquiry, and perversity of the Enquiry Officer's findings. By order dated 1 September 2023, it held the enquiry fair but the findings perverse. The bank's revision under Section 44 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (MRTU & PULP Act) was dismissed by the Industrial Court on 11 June 2024. The bank then filed Writ Petition No.10929 of 2024 before the Bombay High Court.
How the Labour Court Misread the First Charge
The bank's counsel, Ms. Rita Joshi, argued that the Labour Court had fundamentally confused the first charge. The charge was never about refusal to obey the transfer order. It was about the act of bringing policemen to the bank's office to question Mr. Bhat about the transfer. She pointed out that Patil's own cross-examination of Mr. Bhat effectively admitted the factum of bringing police to the office.
Mr. Bhat had deposed in examination-in-chief that after close of working hours on 17 May 2012, Patil came to the HRM Department with two policemen, who interrogated him about the reason for her transfer. In cross-examination, Patil asked Mr. Bhat: “Is it true that when the police accompanied me in the Bank, is there any dialogue between me and yourself?” Justice Marne observed that this question itself confirmed the factum of bringing police to the office was not in dispute.
The Labour Court had, in paragraph 33 of its order, focused on the fact that Patil had reported to the Vashi branch on 18 May 2012 at 7.45 a.m. and concluded that she had obeyed the transfer order, and therefore no misconduct was made out. Justice Marne held this reasoning to be perverse. The charge-sheet never alleged refusal to obey the transfer order. Reporting to Vashi the next morning did not undo the act of bringing policemen to interrogate Mr. Bhat the previous evening.
The Labour Court had further held in paragraph 34 that since there was no violence, hot discussion, or abusive language by the police towards Mr. Bhat, the conduct did not amount to misconduct. Justice Marne rejected this reasoning as well. The bank had never alleged violence or abusive language. The sole question was whether approaching police with a grievance about a transfer and then bringing them to the bank's office to subject an officer to interrogation amounted to misconduct. The Labour Court had “completely misdirected itself” by importing a requirement of violence that the charge never contained.
Justice Marne held that the very act of approaching police to complain about a transfer, and then bringing them to the branch to interrogate the officer, constituted misconduct. If Patil was aggrieved by the transfer, she ought to have used internal channels or made representations to bank officials. When a bank official is interrogated by police, the officer is bound to feel intimidated. The charge of attempt to intimidate Mr. Bhat was therefore proved. However, the specific allegation of misbehaviour with Mr. Bhat was not proved, since Mr. Bhat himself did not depose to any direct dialogue or altercation between them.
The Second Charge: Complaints to Outside Authorities
On the second charge, the Labour Court had held that mere making of complaints to various authorities does not amount to misconduct, and that there was no evidence that the bank's reputation was actually damaged.
Justice Marne disagreed. He examined one of the complaints dated 22 May 2012 addressed to the Reserve Bank of India, which raised grievances about Patil's transfer, post-merger functioning of the bank, reimbursements, non-grant of housing loan, deductions towards union fees, and other matters. The complaints had prompted responses from the Banking Ombudsman and the Ministry of Agriculture, Government of India, requiring the bank to explain itself.
The court drew a distinction between airing service-related grievances within the organisation, which is an employee's right, and levelling allegations about the functioning of the bank before outside authorities, some of which were unrelated to banking operations. The court relied on the Supreme Court's decision in M.H. Devendrappa v. Karnataka State Small Industries Development Corpn., (1998) 3 SCC 732, where the Apex Court held that any action of an employee detrimental to the interests or prestige of the employer undermines discipline within the organisation. Justice Marne also referred to this court's own decision in Hitachi v. Niraj Kadu (Writ Petition No.13192 of 2023, decided 12 December 2023), where posting defamatory content on Facebook was held to constitute grave misconduct, and where the Labour Court's finding that the act had no connection with the company's working was set aside.
Justice Marne held that it was not necessary in every case to prove actual damage to reputation or defamation. When an employee levels allegations about the employer's functioning before regulatory and other authorities, and the employer is required to give explanations and defend itself, the act cannot be said to never amount to misconduct. The nature of the allegations and the authorities before whom they are made may determine the gravity of the misconduct. The court was careful to note that the degree of misconduct and the appropriate punishment were matters for the Labour Court to decide at the final stage.
The Legal Test for Perversity in Domestic Enquiries
Justice Marne set out the applicable standard. In domestic enquiries, the strict rules of the Indian Evidence Act do not apply. The test is preponderance of probability, not proof beyond reasonable doubt. Labour and Industrial Courts cannot comment on the quality or quantity of evidence. So long as there is some evidence on record to support the Enquiry Officer's findings, those findings cannot be treated as perverse.
The court relied on the Supreme Court's formulation in Kuldeep Singh v. Commissioner of Police and Ors., (1999) 2 SCC 10: “If there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse.” It also cited State of Haryana v. Rattan Singh, (1977) 2 SCC 491, for the proposition that any material logically probative for a prudent mind is permissible in a domestic enquiry, and that absence of any evidence in support of a finding is an error of law apparent on the record, but sufficiency of evidence is beyond scrutiny.
Applying this standard, Justice Marne held that it was impossible to say there was absolutely no evidence to prove either charge. The Enquiry Officer had considered the documentary evidence on the second charge, noted that it was unchallenged and that no cross-examination was directed at the management witness on this point, and had recorded reasoned findings. The Labour and Industrial Courts had failed to apply the settled principle of preponderance of probability and had instead demanded a higher standard of proof.
The Industrial Court's order was separately criticised. Justice Marne found that the Industrial Court had exercised its revisional jurisdiction under Section 44 of the MRTU & PULP Act with material irregularity. It had made no discussion of whether bringing policemen to the bank's office and subjecting the officer to interrogation amounted to misconduct. It had recorded only general findings and cited its limited revisional jurisdiction as a reason not to interfere, without engaging with the perversity in the Labour Court's own reasoning.
Scope of the High Court's Intervention
Justice Marne was careful to delineate what the judgment did and did not decide. Setting aside the perversity finding did not mean the punishment of dismissal would be upheld. It meant only that the bank would not be required to lead fresh evidence before the Labour Court to prove the charges. The charges were correctly held proved in the enquiry, with the exception of the specific allegation of misbehaviour with Mr. Bhat, which the court held was not established.
The Labour Court was directed to proceed to determine whether the punishment of dismissal was proportionate to the gravity of the misconduct proved. The court expressly directed that this exercise be conducted uninfluenced by any of the findings recorded in the present judgment.
Order
Justice Sandeep V. Marne allowed Writ Petition No.10929 of 2024 and made the Rule absolute. The specific directions were:
The Labour Court's order dated 1 September 2023, as upheld by the Industrial Court's order dated 11 June 2024, were set aside. It was held that the Enquiry Officer's findings, except on the charge of misbehaviour with Mr. Bhat, were not perverse and were supported by evidence on record. The Labour Court was directed to decide the remaining issues, including proportionality of the punishment of dismissal, uninfluenced by the High Court's findings. Given that the complaint had been pending since 2014 and the respondent had been dismissed since 28 January 2015, the Labour Court was directed to decide the remaining issues preferably within six months. No order as to costs was made.