CHAIRMAN, M/S. BROOKE BOND INDIA PVT. LTD. versus CHANDRA NATH CHOUDHARY

Citation: [1969] 1 S.C.R. 919 · Decided: 03-09-1968 · Supreme Court of India · Bench: J.M. SHELAT · Disposal: Dismissed
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Judgment (excerpt)

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CHAIRMAN, M/S. BROOKE BOND INDIA PVT. LTD •. 
v. 
CHANDRA NATH CHOUDHARY 
September 3, 1968 
(J. M: SHELAT, V. BHARGAVA AND C. A. VAIDIALINGAM, JJ.] 
Bihar Shops and Estcblishment Act, 1953, s. 26(1) and (2)-Scope 
of-Whether jurisdiction of La.bour Court or co1npetent 
authority only 
to deal with cases of misconduct falling under Rule 20 of the Bihar Shops 
and Establishment Rules, 1955, or 'any misconducf-Scope of proviso 
to s. 26(1)-Whether jurisdiction under s. 26 the sa1ne as under s. 33A, 
Industrial Disputes Act, 1947. 
The respondent was appointed a salesman in August, 1954 by the 
appellant company. 
He was sent to Kathmandu in 1956 to promote 
sales; the appellant company had also appointed a firm of wholesalers to 
stock and promote the sales of its products in Kathmandu. In December, 
1960, differences developed between the wholesalers and the respondent 
and the firm reported to the appellant a cash shortage of Rs. 11,000 which 
amount was alleged by it to have been advanced to the respondent against 
two receipts. On December 27, 1960 the respondent intimated to the 
appellant company that the receipts were extorted from him by the whole-
salers and that pending instructions from 
the company he was filing a 
criminal complaint against them. The company 
thereafter 
served the 
respondent with a charge-sheet alleging acts of misconduct by him in taking 
personal loans from the wholesalers, de"nial by him of these loans, and 
filing a criminal complaint against the wholesalers, abusing the position of 
trust and responsibility as the Company's employee and thereby bringing 
down its reputation. 
An enquiry into these charges was held by 
an Enquiry Officer who, in his report, found infer a/ia that a number df 
'charges against the respondent were satisfactory proved and that he had 
abused the trust reposed in him by the company. By an order dated Sep-
tember 20, 1961, the respondent was discharged 
from 
the 
Company's 
service "with immediate effect for the aforesaid items of misconduct com-
mitted by and proved against you." 
Aggrieved by the order of discharge, the, respondent filed a complaint 
in the Labour Court, Patna, under section 26 of the Bihar S80]1S and 
Establishment Act, 1953. 
The Labour C<>urt, with the consent of the 
parties admitted evidence recorded at the domestic enquiry as substantive 
evidence and also certain other evidence and ultimately found, inter alia, 
that the respondent's claim that the two receipts were extorted from him 
by the whoJcs.alCrs was correct; that his denial of having taken any Joans 
from the wholesalers was right; and that the Company's case that the 
wholesalers had advanced Rs. 11,000 as loan to the respondent was not 
correct. 
The Labour Court therefore allowed the respondent's complaint 
and set aside the order of discharge passed by the Company and dinx:ted 
his reinstatement. 
In appeal to this Court, it was contended on behalf of the Company 
(i) that the order passed by tha Col'.llpany was one of discharge simplicit'er 
and not one by way of punishment; that in the events that had transpired-
it was not possible 'for the company to continue to repose trust and confi-
~ence in the respondent and it \\'as justified in refusing to continue him in 
its SefVice; (ii) that Section 26 gave jurisdiction to the Labour Court to, 
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SUPREMF. COURT REPORTS 
[1969] I S.C R 
entertain a complaint only in cases of misconduct defined in rule 20 of the 
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lliha-r Shops and Establishmcn'.s Rules, 1955, and the misconduct alleged 
against the respondent 
in the 
charge-sheet did 
not fall under rule 20· 
accordingly section 26(2) and (5) had no application in the present case~ 
and (iii) the misconduct not being covered hy rule 20. the jurisdiction of 
the Labour Court to 
inl~rtcrc \.\-itil the Comp;iny·s order pac;scd after a 
domestic enquiry was a limited one, namely, only if the'rc was a breach of 
the principles ol naturJI ju;;ticc or if the order was perverse, or where there 
\\'a~ victimisation or unfair lahour practice: the juri'idiction of the Labour 
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C'...ourt in such cases would he the san1e as under sec. 33A of the Industrial 
Disputes Act. 1947. 
HELD : dismissing the appeal : 
(i) The contention th<it the Company v.·<is ju~lilicd in rerusing to con-
tinue the respondent in service was based on l\vo assu1np1ion5; th<1t the 
respondent had taken loan" from the wholesalers and that the order of 
the management was
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