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Judgment
Alfred Henry Lionel Leach, J.—The appellant company appeals against a decree passed for the payment of Rs. 2,987-3-7 in a suit
instituted on the Original Side of this Court. The respondent was in the employ JJof the company as a station master and claimed damages for
wrongful dismissal. About the middle of 1931, while the respondent was holding the position of station master at Narasaraopet, it was discovered
that the assistant goods clerk had misappropriated monies collected by him in respect of freight charges. It is said that the misappropriations
amounted to Rs. 15,000. ''The discovery was made as the result of an audit. On the defalcations being discovered the company made a written
complaint to the police. The result was that the respondent, the assistant goods clerk and another employee of the company were arrested. They
were all charged with criminal breach of trust and conspiracy under the provisions of Sections 408 and 120-B of the Indian Penal Code. On his
arrest on the 24th August, 1931, the respondent was placed under suspension. On the 3rd October, 1932, the trial Magistrate convicted all the
accused and sentenced the respondent and the third accused to one year''s rigorous imprisonment. The goods clerk was sentenced to two years''
rigorous imprisonment. As the result of the conviction the company dismissed the respondent from its service by a letter dated the 11th November,
J.932. The respondent appealed against his conviction to the Sessions Judge of Guntur, who by a judgment dated the 21st November, 1932,
dismissed the appeal. The respondent then applied to this Court to set aside the conviction and sentence under its revisional powers. By an order
dated the 22nd November, 1933, the petition was allowed and the conviction and sentence were set aside. On the 17th July, 1935, the
respondent filed the suit out of which this appeal arises. In his plaint he claimed Rs. 6,049-15-0, made up of the following amounts : (1) Rs. 1,200
as damages for wrongful dismissal; (2) Rs. 100 as damages in lieu of one month''s notice; (3) Rs. 300, being the amount of a security deposit made
by the respondent which he said had been wrongfully withheld; (4) Rs. 2,449-15-0, being the amount which it was said the company was bound
to pay into the company''s provident fund for the respondent''s benefit; and (5) Rs. 2,000 claimed as arrears of salary from the 24th October,
1932 to the 23rd November, 1935. Item No. 1 was abandoned by the respondent in the course of the trial. Items Nos. 3 and 5 were disallowed
by the trial Judge (Mr. Justice Gentle) and his decision has been accepted. Items 2 and 4 were decreed. The company contends that the
respondent was not entitled in law to any sum and that the suit should have been dismissed. The appeal turns on the decision of the question
whether the respondent was wrongfully dismissed. It is common ground that if the dismissal was not wrongful the company had the right of
withholding its contribution from the provident fund and that the respondent had no right to notice.
The respondent was employed by the company under an agreement in writing. The agreement was embodied in a letter which the respondent
addressed to the agent of the company. Under it the respondent agreed to accept service with the company upon the terms and conditions set out
in the letter. It is only necessary to refer to the third and the seventh conditions. The third condition reads as follows:
That I hereby bind myself to obey and abide by all the instructions and regulations contained in the General Rules for Indian Railways, the
subsidiary working rules and all regulations in force that affect my duties and work and by any further instructions that may, from time to time, be
issued by any person duly placed in authority over me.
The seventh condition is this:
That I clearly understand that the authority which appoints me has the power, for any reason that may to him appear sufficient, to dismiss me.
The appellant company has framed rules regulating the discharge and dismissal of its subordinate servants and the submission of appeals. The
rules deal not only with dismissal but also with the discharge of the employees. It is not necessary to refer to the rules relating to discharge as this
case is merely concerned with the appellant company''s powers of dismissal. The relevant rules so far as this case is concerned are Rules 5 and 7.
Rule 5 reads thus:
Dismissal - An employee will beliable to be dismissed from the service in the following circumstances, namely:
(i) in consequence of his conviction by a Criminal Court, or
(ii) for serious misconduct, or
(iii) for neglect of duty resulting in, or likely to result in, loss to Government or to the Railway Administration, or danger to the lives of persons using
the Railway.
Rule 7 on which the respondent places great reliance is in these terms:
Dismissal - Procedure - In all cases where an employee is charged with an offence of a nature, which if proved against him, is likely to lead to his
dismissal, his District Officer shall order a Departmental Enquiry, and if a prima facie case is established, shall forward the proceedings with a copy
of the employee''s service register to the Head of his Department for decision.
At the enquiry a definite charge in writing shall be framed in respect of each offence and explained to the employee, and the evidence which he may
adduce in his defence shall be recorded in his presence, provided that, for special reasons to be recorded, the evidence of any witness may be
taken and recorded otherwise than in the presence of the employee. A finding with its grounds, shall be recorded on each charge.
There are two notes appended to this rule. They read as follows:
An order of dismissal operates as a bar to re-employment in any capacity by this Railway and shall not be issued unless the employee''s guilt is
established by clear and conclusive evidence. In other cases when there is circumstantial evidence as to his guilt, it shall be open to the competent
authority to consider the question of discharging him.
The provisions of this rule do not apply when it is proposed to issue an order on the strength of facts or conclusions established at a judicial trial,
or when the Railway servant concerned has absconded with an accusation hanging over his head.
It is the respondent''s case that he had been wrongfully dismissed because there was no inquiry held under this rule, and this contention was
accepted by Gentle, J. The learned Judge found as a fact that the respondent had failed to carry out his duties as station master, that he did not
faithfully and diligently employ himself in the company''s service according to the terms of the contract of employment and that he-was guilty of
neglect of duty resulting in a loss to the company and such neglect of duty amounted to serious misconduct. The learned Judge was here referring
to the duty cast upon the respondent as a station master to control his subordinates at the station and inspect their accounts. The learned Judge,
however, considered that notwithstanding these facts the company should have held an inquiry before exercising its right of dismissal. In his opinion
the company was not justified in dismissing the respondent because it had not been proved before him that the dismissal was based on the facts or
the conclusions established at the trial before the magistrate. The company says that the learned Judge here misinterpreted Rule 7 and that on a
correct interpretation it was entitled to dismiss the respondent without an inquiry.
As I have indicated, the respondent''s dismissal took place shortly after his conviction. The letter of dismissal is in these terms:
You are dismissed from the company''s service from 24th August, 1931, the date you are placed under suspension. Please note and acknowledge
receipt of this letter.
There can be no doubt that the dismissal was based on the respondent''s conviction. This the respondent accepted as being, the case in the letter
which his advocate wrote before suit and also accepted in his plaint. In the letter it was said:
My client states that as the order of dismisssl is based on conviction by the trial Court, it ought to have been cancelled on my client''s acquittal and
that if you did not want to entertain my client any longer in service, you ought to have given a month''s notice under the rules.
Paragraph 8 of the plaint reads as follows:
The plaintiff further submits that, as he was dismissed from service owing to the said conviction by the Sub-Divisional Magistrate, Narasaraopet. he
ought to have been re-instated on his acquittal.
Therefore it is clearly the respondent''s case that he was dismissed because of the conviction, and that this was so is obvious from the course of
events. The respondent was placed under suspension as soon as he was arrested and he remained under suspension until he was dismissed, which
took place on his conviction.
The learned Advocate for the respondent contends that the dismissal by reason of the conviction'' was not sufficient to deprive the respondent
of the right of an inquiry under Rule 7 of the rules regulating dismissal. He says that under note 2 of that rule an inquiry can be dispensed with only if
the dismissal is based expressly on the strength of facts or conclusions established at the trial. But for the conclusion of the learned trial Judge on
this question I should not have regarded this argument as a substantial one. With great respect, if a dismissal is based on a criminal conviction it
seems to me that it must be taken to be based on the findings of the Court. The conviction follows the conclusions arrived at by the Court and to
base a dismissal on a conviction it follows, in my opinion, that the conclusions of the Court are accepted. The respondent having-recognised that
his dismissal was based on his conviction I hold that he has no case.
The fact that as the result of revision proceedings the conviction was set aside does not affect the position. If the company had the right to
dismiss the respondent when he was convicted it could not be compelled to take him back into its employment when the conviction was set aside
at some later date. In fact there was no argument to the contrary.
In my judgment the respondent was rightly dismissed and he is not entitled to maintain this suit. I wish, however, to make it clear that I am not
holding that the rules must be read into the respondent''s agreement of service. It is not necessary, for the purposes of this appeal to decide this
question. I have assumed that the rules were embodied in the agreement.
The result is that the appeal succeeds and the suit must be dismissed with costs both here and below.