'Error Of Judgment Not Misconduct': Gujarat HC On Termination Of Employee For Making 'Unacceptable' Lok Adalat Settlements On Employer's Behalf

The Gujarat High Court has ruled that signing settlement claims in Lok Adalat does not amount to misconduct, emphasizing that even if an employee's actions appear to be an error in judgment or negligence in performing their duties, such actions do not qualify as misconduct unless the company can demonstrate that they have caused irreparable harm, thus highlighting the need to establish the severity of negligence in such cases.The division bench of Chief Justice Sunita Agarwal and Justice NV Anjaria observed, “For the above discussion, we reach at a irresistible conclusion that it may be a case of error of judgment or act of negligence on the part of the petitioner in discharging his duty, but that itself would not constitute misconduct, as it has not been shown or established by the appellant – Company that the said act of the appellant had resulted in irreparable damage to the Company, to indicate the grossness of negligence.”“No interfere, as such, is called for in the decision of the learned Single Judge. The appeal filed by the appellant Company being Letters Patent Appeal No. 1114 of 2022 is hereby dismissed, being devoid of merits,” the bench added.The court was handling two related appeals: one filed by an Insurance Company against a judgment and order that overturned the petitioner's dismissal from service and entitled them to all associated benefits, treating the dismissal as if it never occurred. The second appeal, filed by the petitioner, focused solely on contesting the rejection of their claim for interest on pension and other benefits following the annulment of the dismissal order and its subsequent appeal confirmation.The case revolved around allegations that the petitioner, employed as a Senior Divisional Manager, had settled 10 claims in the Lok Adalat during the 2014-15 period, purportedly with ulterior motives. The charges included accusations of lack of integrity, acting against the company's interests, and irregular settlement practices. It was claimed that the company incurred a loss of Rs. 66,81,105 due to these settlements.The inquiry report, however, noted that the petitioner's role involved signing compromise documents, but there were no allegations that the decisions were solely his. The report also highlighted the collaborative nature of the settlement process and found insufficient evidence to support the charges of wrongful intentions or ulterior motives.The Single Judge, in his findings, emphasized that penalizing the petitioner alone for actions taken within a team amounted to victimization. The Single Judge concluded that the settlements were not made with wrongful intentions or ulterior motives, and there were no allegations suggesting personal gain by the petitioner.After reviewing the Single Judge's findings, the Division Bench opined that the appellant Company's counsel failed to successfully challenge any of those findings. The Court noted that the charges did not include allegations of ill motive or improper financial gain, emphasizing the collaborative nature of the settlement process.The court emphasized that the petitioner was not the sole decision-maker in settling the claims and that a negotiation process involving various stakeholders was followed to assess the claims' merits. The court further acknowledged that in some instances, the company opted to settle claims to avoid lengthy and costly court disputes, suggesting that any potential wrongdoing on the petitioner's part could be attributed, at most, to an error in judgment or negligence.Regarding the petitioner's role, the court stressed that it was limited to endorsing settlement proposals presented by the Legal department. The compromise agreements were drafted through consultation between the Company's Law Officer, Ms. Shipra Tanwar, Penal Advocates, and the Claimant's Advocates, with no indication of ill intent on the petitioner's part.Furthermore, the Court noted that the Company did not file any reviews with the Court for claims settled by the Lok Adalat, which the Company considered legally inadmissible, and no allegations of malice were raised in the disciplinary proceedings.In relation to the cross-appeal filed by the petitioner, the court acknowledged that the petitioner had retired on March 31, 2016, upon reaching the superannuation age, and though his pension had been determined, his gratuity had been withheld due to an ongoing disciplinary inquiry after retirement. Subsequently, the pension was halted from February 2019 after a dismissal order was issued. “We, therefore, provide that all consequential benefits, the retiral benefits withheld or deducted, shall be paid to the writ petitioner, as if there was no dismissal of his service, within a period of two months from the date of service of the copy of this order before the competent authority. All the pending dues would carry the simple interest at the current bank rate, from the date of withholding of the same till the date of actual payment,”...

'Error Of Judgment Not Misconduct': Gujarat HC On Termination Of Employee For Making 'Unacceptable' Lok Adalat Settlements On Employer's Behalf

Bhavya Singh

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