The petitioner, a star category hotel in Mumbai, filed a writ petition challenging the judgment of the Third Labour Court, Mumbai, which had directed the reinstatement of an employee (Respondent) with continuity of service and other consequential benefits, but without backwages. This followed the Labour Court's decision in Complaint (ULP) No. 168/2018, which had found that the hotel had committed unfair labour practices under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act (MRTU & PULP Act). The matter escalated after the Industrial Court rejected the petitioner's revision application (ULP) No. 88/2023, leading the petitioner to approach the High Court.

The case revolves around two primary allegations against the Respondent:

Theft of Hotel Property: The Respondent, employed in the hotel’s Security Department since 2006, was accused of stealing two cakes from the hotel’s bakery in April 2017. Surveillance footage revealed that the Respondent had conspired with a fellow employee, Vinit Ghai, to carry two cakes from the hotel's premises, without billing them, and to transport them using a hotel vehicle. One of the cakes was delivered to a third party, and the other was taken by the Respondent to his residence. The hotel initiated an inquiry, and the Respondent was charged with theft and other misconducts under the Model Standing Orders.

Indiscipline During Suspension: The second set of charges stemmed from the Respondent’s repeated protests, alongside union leaders, against his suspension. Despite being under suspension for the alleged theft, the Respondent entered the hotel’s lobby with union members on multiple occasions in November 2017, creating a disruption and demanding a meeting with hotel management. This led to further charges of insubordination and misconduct.

In its preliminary ruling on 24 February 2021, the Labour Court upheld the fairness of the departmental inquiry and the findings of the Enquiry Officer, dismissing the Respondent’s objections. However, in its final ruling dated 13 September 2023, the Labour Court concluded that while the theft charge was not conclusively proven (despite the Enquiry Officer’s report stating otherwise), the hotel’s actions amounted to unfair labour practices. The Court directed the hotel to reinstate the Respondent with continuity of service but without backwages, as the theft was deemed to be a less severe offense due to the "edible" nature of the stolen goods.

The Court also took a compassionate view, invoking reformation principles, likening the Respondent’s case to the Probation of Offenders Act, and reducing the punishment to reinstatement rather than dismissal. The Labour Court deemed the hotel’s termination of the Respondent as disproportionate to the offense.

The High Court, in reviewing the case, found significant issues with the Labour Court's findings. The key points of contention included:

Inconsistent Findings on Theft: While the Enquiry Officer’s report conclusively proved the theft, the Labour Court had contradicted this by stating that the theft was not proven. The Court also found the Labour Court’s statement on the legal definition of theft to be contradictory and legally unsound.

Disproportionate Punishment: The High Court disagreed with the Labour Court’s assertion that the termination was disproportionately harsh. The theft, though involving edible goods, was still a breach of trust, particularly given that the Respondent worked in the hotel’s security department, which held him to higher standards of integrity. Additionally, the Respondent’s actions in bringing union leaders into the hotel lobby while under suspension further exacerbated the misconduct.

Creation of Disturbance in the Hotel Lobby: The High Court also took a dim view of the Respondent’s actions during the union protests. Despite the misconduct being linked to his suspension, the Respondent’s behavior was seen as an attempt to pressure the management, which led to disturbances in a public area of the hotel. This act of indiscipline further justified the hotel’s decision to terminate him.

While the High Court recognized the possibility of leniency due to the nature of the stolen goods, it ultimately ruled that reinstating the Respondent would be inappropriate. The judgment noted that the Respondent’s acts were not isolated but part of a pattern of misconduct that undermined the employer’s trust and discipline. The Court found the reinstatement order issued by the Labour and Industrial Courts to be untenable and set it aside.

Instead of reinstatement, the High Court awarded the Respondent lumpsum compensation of Rs. 5,00,000 in lieu of reinstatement and backwages. This compensation, when combined with the Rs. 1,82,275 already paid at the time of dismissal, brought the total amount due to the Respondent to approximately Rs. 6,82,275. The Court directed that the Respondent withdraw the salary already deposited in the Industrial Court and submit any shortfall for further payment by the hotel.

This decision reflects the balancing act between the rights of employees and the need for employers to maintain discipline within the workplace. While acknowledging the Respondent's right to challenge dismissal, the High Court recognized the severity of his misconduct and found that reinstatement was not the appropriate remedy. Instead, the compensation award struck a reasonable middle ground, acknowledging the seriousness of the offense while mitigating the consequences of termination.

The case highlights the complexities involved in labor disputes, particularly when issues of employee misconduct, union involvement, and disciplinary actions intersect. The decision serves as a reminder that while labor laws aim to protect workers from unjust treatment, they also uphold the employer’s right to enforce discipline and maintain operational integrity.