The Supreme Court has ruled that an employee cannot be removed from service merely because a criminal case was discovered after appointment and was allegedly not disclosed. Before taking the extreme step of termination, the employer must first establish that the employee actually knew about the criminal case and deliberately withheld the information.
A Bench of Justice Sanjay Karol and Justice Augustine George Masih held that disclosure or discovery of criminal antecedents does not, by itself, make termination inevitable. The employer must examine the individual circumstances and determine whether retaining the employee would genuinely be untenable.
The Court laid down a two-stage examination that authorities must undertake.
First, they must determine whether there was an actual suppression of information or a false declaration. This requires examining whether the employee knew about the criminal case when the declaration was made and the circumstances surrounding the declaration.
Second, even where suppression is established, the employer must assess whether termination is warranted. This requires consideration of the nature and seriousness of the allegations, the employee’s alleged role, the nature of the post, the duties attached to it and, where applicable, the eventual outcome of the criminal proceedings.
The Court made it clear that a termination order can withstand judicial scrutiny only when both stages of this assessment have been properly undertaken.
Criminal case surfaced during verification
The case concerned an employee appointed as a Technician (Process) by Fertilizers and Chemicals Travancore Ltd. on May 5, 2021, initially for a two-year tenure on consolidated pay.
During verification of his criminal antecedents, the employer was informed that a Non-Cognizable Report had been registered against him on April 3, 2019, under Sections 323 and 504 of the IPC.
A show-cause notice was subsequently issued, alleging that the employee had furnished false information by failing to disclose the criminal case.
The employee disputed the allegation. He maintained that he had no knowledge of the NCR when he joined service. He later relied upon police records indicating that no evidence had been found against him and that his name had been removed from the list of accused persons.
The records also showed that he had not been arrested or even called to the police station in connection with the matter. Police certificates described his character favourably and indicated that no criminal case was pending against him.
Despite his explanation, the employer terminated his services without conducting an enquiry into whether he had actually known about the criminal case or determining whether the alleged suppression justified dismissal.
High Court decisions overturned
The employee approached the Kerala High Court. A Single Judge declined to interfere, holding that his claim of ignorance regarding the NCR involved a disputed factual issue. The Division Bench subsequently upheld that decision.
The matter then reached the Supreme Court.
The Supreme Court found that the approach adopted by the High Court failed to account for the employer’s obligation to examine the circumstances before imposing the penalty of termination.
Justice Augustine George Masih, writing the judgment, noted that knowledge is fundamental to any allegation of suppression. A person cannot deliberately conceal information that was never known to them.
In the present case, the Court found the employee’s consistent claim of ignorance credible, particularly in light of the police documents showing that he had not been arrested or summoned and that the case did not ultimately remain against him.
The Court also found that the employer had treated the mere existence of the criminal antecedent as sufficient reason for termination.
That approach, it held, was legally unsustainable.
The authorities had not examined the nature of the alleged offence, its relevance to the employee’s duties, or the effect of the subsequent outcome of the criminal proceedings. Nor had they recorded a finding explaining why his continued employment was considered unworkable.
Since neither of the two required stages had been satisfied, the termination was held to be illegal and reflective of a lack of proper application of mind.
Reinstatement ordered
The Supreme Court accordingly set aside the Kerala High Court’s decisions and directed that the employee be reinstated with consequential benefits.
Back wages, however, were limited to 50%, to be paid within eight weeks. If the amount was not paid within that period, it would carry interest at 6% per annum from the date it became payable until disbursement.
The judgment arose from Shatrughn Yadav v. The Fertilizers and Chemicals Travancore Ltd. (F.A.C.T.) & Others.
