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Standard Chartered Bank Vs RC Srivastava: Labour Courts Cannot Overturn Management's Decision On Mere Hypothesis

Ananya Gosain ,
  18 November 2021       Share Bookmark

Court :
Supreme Court of India
Brief :

Citation :
LL 2021 SC 525



  • Hon’ble Justice Ajay Rastogi
  • Hon’ble Justice Abhay S Oka


  • Appellant: Standard Chartered Bank
  • Respondent: R.C. Srivastava


The Supreme Court, in this judgment, has held that judicial discretion cannot be exercised either whimsically or capriciously. TheLabour Court may scrutinize or analyse the evidence but what is important is how it does so. The Supreme Court observed that the Labour Court cannot overturn the decision of the management on "ipse dixit" and its decision should not be based on mere hypothesis.


  • The Standard Chartered Bank dismissed a male employee, respondent, in the present case, for drunkenness and unruly behaviour inside the bank's premises. He was also accused of assaulting the bank's senior officers.
  • The alleged crime had been committed on January 12, 1988. After holding an enquiry, the enquiry officer concluded that the charges were proved against the accused and the disciplinary authority affirmed the findings by the enquiry officer and held respondent punishable with the penalty of dismissal from service through an order dated August 22nd, 1991.
  • The Industrial Tribunal, however, held that the Bank management failed to establish the charges against the employee after revisiting the enquiry and statement of witnesses. It directed the bank on 4/09/2006 to reinstate the employee with full back wages and all the benefits that were attached to the post. The High Court upheld the same.
  • The employee, who had reached the age of superannuation on January 31, 2012, was being paid his last wages in terms of section 17-B of the Industrial Disputes Act 1947 during the litigation proceedings. He had been paid a total of around 57 Lakhs. On 27/02/2015, the Supreme Court stayed the payment of back wages


  • Section 11-A: Where an industrial dispute relating to dismissal of a workman has been referred to a Labour Court, and the Labour Court is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, or give such other relief to the workman including the award of any lesser. Provided that in any proceeding under this section, the Labour Court shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter.
  • Section 17-B: It provides for payment of full wages to workman pending proceedings in higher courts. - the employer shall be liable to pay such workman, during the period of pendency of such proceedings in the High Court or the Supreme Court, full wages last drawn by him, inclusive of any maintenance allowance admissible to him.


When and how is the labour court justified to interfere by invoking its statutory power under Section 11-A of the Act, 1947?


  • It was argued that since the domestic enquiry was conducted in a manner that was fair and proper, the tribunal has a limited scope to examine the findings of the inquiry unless they are supported by any evidence. As per the scope of Section 11-A of Industrial Dispute Act, a tribunal is not allowed to interfere with the enquiry.
  • The Court noted that the Tribunal had a limited scope to interfere with the domestic enquiry as to whether it was conducted pursuant to the provisions of the Bipartite Settlement and as to ascertainment of the correctness of the findings made by the enquiry officer or whether the punishment levelled against the employee commensurate with the nature of allegation proved against him.
  • If the sentence is grossly disproportionate, the Tribunal will be justified in its intervention under Section 11-A of the 1947 Act.
  • The Court noted that the Tribunal has become an appellate authority and has overstepped its jurisdiction by converting itself into a Court of Appeal. It has also completely forgotten the principle of preponderance of probabilities which is to be applied for domestic enquiry rather than broad principles of charge to be proved beyond doubt, which is a test in criminal justice system.
  • The Court held that the Tribunal had totally overlooked and exceeded its powers when it interfered with the finding made during the course of inquiry in this case. Hence, the High court also committed an error in its judgment.
  • In this case, the workman was paid over Rs.57,16,515.72 despite attaining the age of superannuation on January 31, 2012. In 2015, stay was granted in reference to back wages.
  • The SC upheld the order of penalty of dismissal from service passed by the authority in the domestic enquiry and the Court directed that no recovery shall be made in reference to the payment which has been made over to the workman in the interregnum period.


The scope of the judicial review in the case of domestic enquiry pertains to examining that the procedure in holding an inquiry is not violated, and the principles of natural justice have been complied with. The decision of the Labour Court should not be based on mere hypothesis. It cannot overturn the decision of the management on ipse dixit. Its jurisdiction under Section 11 of the 1947 Act is wide. It is not allowed to be exercised carelessly or whimsically. Judicial discretion may scrutinize or analyse the evidence but what is important is how it does so.

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