In a significant judgment that clarifies the boundaries of "employee misconduct" in the banking sector, the Calcutta High Court has ruled that the mere possession of official bank stationery by an employee does not automatically amount to "acts prejudicial to the interest of the bank."

The Division Bench, comprising Justice Lanusungkum Jamir and Justice Rai Chattopadhyay, upheld a previous order directing the Bank of Baroda to reinstate a dismissed employee with full back wages. The Court emphasized that for an act to be classified as "prejudicial," the employer must prove actual damage, loss, or a specific threat to the institution's reputation, rather than relying on mere suspicion or the "possibility" of misuse.

The case dates back over two decades. The employee, Sri Jyotirmoy Basu, was posted at the Bhawanipur branch of the Bank of Baroda before being transferred to the Ballygunge branch. In November 2000, during a police raid at his residence (related to a separate matter), police recovered certain official items belonging to the bank, including a rubber stamp, blank letterheads, and blank passbooks.

Following this discovery, the Bank initiated departmental proceedings against Mr. Basu. The chargesheet alleged "gross misconduct" under the Bipartite Settlement, claiming that keeping such sensitive stationery at home was an act prejudicial to the bank’s interest.

In February 2004, the Disciplinary Authority passed an order removing him from service. Although Mr. Basu was later acquitted in the criminal case related to the raid, his departmental penalty remained unchanged after internal appeals.

The matter first moved to the Central Government Industrial Tribunal-cum-Labour Court. While the Tribunal found the termination to be illegal, it did not order reinstatement. Instead, it awarded a lump-sum compensation of ₹2 lakh.

Dissatisfied with just a monetary settlement, the workman approached a Single Judge of the Calcutta High Court. The Single Judge took a sterner view of the bank’s actions, setting aside the Tribunal’s award and directing the bank to reinstate the employee with all consequential benefits and full back wages. The Bank of Baroda then filed an intra-court appeal (the present case) before the Division Bench to challenge this reinstatement.

The Bank’s legal counsel argued that banks operate on "utmost good faith." They contended that unauthorized possession of stamps and passbooks for nearly eleven months created a "likelihood of misuse." According to the bank, the potential for fraud was so high that it should be treated as inherent misconduct, regardless of whether a fraud actually occurred.

On the other hand, the employee maintained that the items were carried home inadvertently during his transfer between branches and that there was never any intention to misuse them.

The Division Bench focused on the specific language of the misconduct clause: "acts prejudicial to the interest of the bank."

The Court noted that while the employee admitted to having the items, the Bank failed to produce a single piece of evidence showing that:

The employee used the stamps or passbooks for any personal gain.
Any third party was defrauded.
The Bank suffered any financial or reputational loss.

The Bench observed:

"Mere recovery of articles from the employee's custody, without proof of adverse impact, cannot automatically establish misconduct... The bank failed to produce any fact, figure, or material demonstrating actual prejudice."

The Court further noted that the Bank’s argument was based entirely on "possibilities." In legal terms, "prejudice" requires a tangible negative effect. Since the employee had been acquitted in the criminal case and no misuse was proven in the departmental inquiry, the Court held that the punishment of dismissal was shockingly disproportionate and legally unsustainable.

The High Court dismissed the Bank of Baroda's appeal. It upheld the Single Judge’s order for reinstatement, ensuring the employee receives his full back wages (minus any compensation or benefits already paid).

This judgment serves as a vital precedent for bank employees across India. It reinforces the principle that:

Intent and Impact Matter: Routine errors or inadvertent possession of office property cannot be labeled as "gross misconduct" unless there is proof of bad faith or actual harm.
Burden of Proof: The employer carries the burden to prove how exactly an employee’s action harmed the institution.
Reinstatement is the Norm: If a dismissal is found to be illegal and based on flimsy grounds, compensation is not a substitute for the restoration of one's job and dignity.

The Calcutta High Court’s decision is a victory for labor rights within the corporate and banking sectors. It reminds employers that disciplinary actions must be rooted in facts and evidence, not just administrative strictness or hypothetical fears. For Sri Jyotirmoy Basu, the ruling marks the end of a 22-year-old struggle for justice, proving that the law protects employees from arbitrary termination when no real "misconduct" is proven.

Case Details:

Case Title: The Chairman and Managing Director, Bank of Baroda & Ors. v. Sri Jyotirmoy Basu & Anr.
Case No: MAT 737 of 2025
Court: Calcutta High Court
Bench: Justice Lanusungkum Jamir and Justice Rai Chattopadhyay