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Allahabad Bank v. Krishan Pal Singh

Special Leave Petition (Civil) · 2021 INSC 510Decided 20 Sept 2021
Special Leave Petition (Civil) No. 19648 of 2019
Justice R. Subhash Reddy · Justice Sanjiv Khanna

Background

Krishan Pal Singh, a bank clerk-cum-cashier, was suspected of involvement in a fire that destroyed bank records and was dismissed from service in 1991 after a departmental inquiry. An Industrial Tribunal later found the misconduct unproved but, citing the bank's "loss of confidence," awarded him Rs. 30,000 compensation instead of reinstatement. The Allahabad High Court went further and ordered his full reinstatement with back wages, which the bank then challenged before the Supreme Court.

Decision Breakdown

The Supreme Court agreed that mere suspicion could not justify dismissal and that the High Court was right that the misconduct was never actually proved. However, it held that full reinstatement with back wages is not an automatic remedy, especially since the employee had worked only about six years before dismissal and had since reached retirement age during the long litigation. Balancing these factors, the Court modified the High Court's order and instead directed the bank to pay a lump sum compensation of Rs. 15 lakhs within eight weeks, with 6% annual interest if delayed.

Lesson Learnt

Even where a dismissal is found unjustified, courts can replace reinstatement with monetary compensation when reinstatement is no longer practical (e.g., due to superannuation or a short period of actual service): the remedy is tailored to real-world circumstances, not applied mechanically.

Official source (sci.gov.in)View Judgment (PDF)

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