JUDGMENT V.P. Gopalan Nambiyar, J. 1. The appellant was working from September 1965, as an Accountant of the Kozhikode Branch of the United Commercial Bank, represented by its General Manager, the 1st respondent. Certain irregularities in the working of the Bank were detected. Charge-sheet in respect of these were served on the Manager and the Cashier of the Branch and also on the appellant. The Manager was permitted to resign; and so was the Cashier, who accepted the allegations against him and made good the amount defalcated. Against the appellant, by Ext. P-l communication dated 14th November 1967, instances of "irregularities, negligence, frauds, misappropriation and failure of duty"� were listed in thirteen paragraphs and explanation called for. Ext. P-2 is a copy of the appellant explanation. At the outset it expressed the appellant sincere regret for the fraud which happened at the Kozhikode Branch while he was the Accountant. He explained that these could not be noticed by him owing to the practice followed at that Branch where the supervisory work was distributed among the Manager and the Accountant, the Chief Cashier and the Additional Officer. He offered explanation seriatim in regard to the specific instances mentioned in the letter. Ext. P-2 runs to more than three pages of closely typed matter. Among other things, he stated that if any further clarification was required or if any one is deputed to investigate the veracity of his statement, he hoped to be able to give convincing proof verifying the registers and vouchers. He wound up by stating that he was extremely sorry for the irregularities and misappropriations which occurred in the Branch and prayed to be excused for his deficiencies and lapses. This was followed by Ext, P-3 which we may extract in full: "We refer to your letter of the 25th November, 1967 in reply to the charge-sheet No. SM-898/67 of the 14th November 1967. We have gone through your letter under reference and find, after due consideration, that your reply is very unsatisfactory. The various acts of omission, commission, negligence, irregularities etc., committed as Accountant of Kozhikode Branch and enumerated in the charge-sheet dated the 14th November, 1967, resulting also in loss to the Bank, warrant dismissal from the Bank service. However, taking a lenient and sympathetic view having regard to your future career, we hereby merely terminate you from the Bank service with immediate effect. However, taking a lenient and sympathetic view having regard to your future career, we hereby merely terminate you from the Bank service with immediate effect. This is without prejudice to the Bank right to recover from you in respect of loss and/or damage resulting from your acts of omission, commission and irregularities as Accountant of Kozhikode Branch. We are instructing our Kozhikode Branch to pay you a month emoluments in lieu of notice. The appellant preferred an appeal against Ext. P-3 order under the Kerala Shops and Commercial Establishments Act, 1960. Ext. P-4 is a copy of the written statement of the Bank before the Appellate Authority, and Ext. P-5, a copy of the re-joinder filed by the appellant. In paragraph 3 of his re-joinder, the appellant stated that the termination was virtually a punishment, and that his services were terminated illegally, arbitrarily and in violation of the principles of natural justice. Paragraph 10 stated that the termination was not for reasonable cause; that the charge and explanation called for were on the basis of misconduct, and the ostensible termination for reasonable cause was because the Bank was unable to sustain the charge. He further alleged that the termination was a pure and simple case of victimisation. By Ext, P-6 order, the Appellate Authority found that the termination was for reasonable cause, under the first limb of section 18 (1) of the Kerala Shops and Commercial Establishments Act, and not a termination for misconduct, under the second limb thereof. The appeal was therefore dismissed. There was a contention that the appellant was occupying a managerial post and therefore the appeal was not competent at his instance. But the Appellate Authority expressed no opinion on the question. The appellant writ petition was to quash Ext. P-6 order and to direct the 2nd respondent to take up the appeal afresh and dispose of the same in accordance with law. The learned Single Judge found that the termination was for reasonable cause and that the appellant had therefore no ground for grievance. In that view, he dismissed the writ petition. 2. Section 18(1) and (2) of the Shops and Commercial Establishments Act, may be read: "18. Notice of Dismissal. The learned Single Judge found that the termination was for reasonable cause and that the appellant had therefore no ground for grievance. In that view, he dismissed the writ petition. 2. Section 18(1) and (2) of the Shops and Commercial Establishments Act, may be read: "18. Notice of Dismissal. (1) No employer shall dispense with the services of an employee employed continuously for a period of not less than six months, except for a reasonable cause and without giving such employee at least one month notice or wages in lieu of such notice, provided however that such notice shall not be necessary where the services of such employee are dispensed with on a charge of misconduct supported by satisfactory evidence recorded at an inquiry held for the purpose. (2) Any employee whose services are dispensed with may appeal to such authority and within such time as may be prescribed either on the ground that there was no reasonable cause for dispensing with his services or on the ground that he had not been guilty of misconduct as held by the employer." The scope and ambit of section 18 (1) was hotly debated before us. The section 18(1) provides for two modes of dispensing with the service of the employee viz. (1) for reasonable cause and with one month notice or wages in lieu of such notice; and (2) for misconduct of the employee proved by satisfactory evidence at an enquiry held for the purpose. Sub-clause (2) makes it clear that the appeal would lie both on the ground of the reasonableness, of the cause and on the ground that there was no misconduct. There was no controversy before us that the impugned order is open to judicial scrutiny and had to be judged on its terms and against the background of the facts and circumstances leading to it, to decide whether it was a termination for reasonable cause or one for misconduct. It was also admitted before us that the reasonable cause was not a subjective condition to be found by the employer but one liable to be subjected to objective scrutiny. These aspects have been made sufficiently clear in the latest pronouncement of the Supreme Court in L. Michael and another v. M/s Johnson Pumps Ltd. A.I.R. 1975 S.C. 661. It was also admitted before us that the reasonable cause was not a subjective condition to be found by the employer but one liable to be subjected to objective scrutiny. These aspects have been made sufficiently clear in the latest pronouncement of the Supreme Court in L. Michael and another v. M/s Johnson Pumps Ltd. A.I.R. 1975 S.C. 661. Krishna Iyer, J. who spoke for the court stated thus: "The law is simply this: The Tribunal has the power and, indeed, the duty to X-ray the order and discover its true nature, if the object and effect, if the attendant circumstances and the ulterior purpose be to dismiss the employee because he is an evil to be eliminated. But if the management, to cover up the inability to establish by an enquiry, illegitimately but ingeniously passes an innocent-looking order of termination simpliciter, such action is bad and is liable to be set aside. Loss of confidence is no new armour for the management; otherwise security of tenure, ensured by the new industrial jurisprudence and authenticated by a catena of cases of this court, can be subverted by this neo-formula. Loss of confidence in the Law will be the consequence of the Loss of Confidence doctrine. * * * * * * 22. Before we conclude we would like to add that an employer who believes or suspects that his employee, particularly one holding a position of confidence, has betrayed that confidence, can, if the conditions and terms of the employment permit, terminate his employment and discharge him without any stigma attaching to the discharge. But such belief or suspicion of the employer should not be a mere whim or fancy. It should be bona fide and reasonable. It must rest on some tangible basis and tlie power has to be exercised by the employer objectively, in good faith, which means honestly with due care and prudence. If the exercise of such power is challenged on the ground of being colourable or mala fide or an act of victimisation or unfair labour practice, the employer must disclose to the court the grounds of his impugned action so that the same may be tested judicially. In the instant case this has not been done. There is only the ipse dixit of the employer that he was suspecting since 1968 that the appellant was divulging secrets relating to his business. In the instant case this has not been done. There is only the ipse dixit of the employer that he was suspecting since 1968 that the appellant was divulging secrets relating to his business. The employer has not disclosed the grounds on which this suspicion arose in 1968. Further, after 1968, the appellant was given two extra increments, in addition to his normal increments, as stated already, in appreciation of his hard work. This circumstance; completely demolishes even the whimsical and tenuous stand taken by the employer. It was manifest therefore that the impugned action was not bona fide. � In the light of the above, let us X-ray the order Ext. P-6. It was, as noticed, preceded by an elaborate charge and an elaborate explanation. We cannot read Ext. P-2 explanation as an unqualified admission of guilt. There was explanation on the merits, coupled with expression of regret and request for excuse. But to read it as a confession of guilt would be "to construe things clean from the purpose of the things themselves". Nor can we read Ext. P-3 order as innocuous, or as a magnanimous course adopted by the management to give short shrift to the employee without casting any stigma on him and without being obliged to test the allegations against the employee on the touchstone of an enquiry with satisfactory evidence. It is significant that in Ext. P-3, the Bank referred to the charge-sheet and the reply, and expressed its opinion that the reply was unsatisfactory, and that the various acts of omission, commission, negligence, irregularities, etc., enumerated in the charge-sheet warrant dismissal from service; but taking a lenient and sympathetic view, having regard to the future career of the appellant, a termination with immediate effect was directed. We have little hesitation to hold that Ext. P-3 was nothing more than an oblique device of finding the employee guilty of misconduct without going through the process of an enquiry supported by satisfactory evidence. What else, we ask, would be the justification for the observation that the proved facts warrant dismissal, and reference to leniency lest the future career of the appellant should be blighted 1964 (2) L.L.J. 280 . What else, we ask, would be the justification for the observation that the proved facts warrant dismissal, and reference to leniency lest the future career of the appellant should be blighted 1964 (2) L.L.J. 280 . We are of the opinion that the Tribunal and the learned Judge were wrong in holding that the order was passed under the first limb of section 18 (1) of the Kerala Shops and Commercial Establishments Act. Even if it were passed under the said section, what was the reasonable cause for the termination of service? We see none. Counsel for the Bank maintained that it was the state of affairs disclosed by the charge-sheet and the appellant explanation, which, according to the Bank, was a confession of the charge that constituted reasonable excuse for taking action. Even then, the reasonableness of the excuse must bear judicial scrutiny. The Bank cannot throw out certain charges against the appellant, invite explanation, and on a wrong construction of the explanation, proceed to make out a reasonable excuse for termination under the first part of section 18 (1). In the circumstances, we have little hesitation to characterise the Bank action as nothing but a camouflage for a termination which should, and ought to have been legitimately done under the second limb of section 18(1). For these reasons, we are unable to sustain Ext. P-3 and the judgment of the learned Judge. 3. But we were strongly pressed with the argument that even if misconduct were disclosed it was still open to the employer to terminate with one month notice under the earlier part of section 18 (1). It was said that judicial decisions have recognised and sanctioned this position. To the decisions relied on for the purpose, we shall now turn. 4. The case on which counsel for the Bank placed the strongest reliance was the decision of the Mysore High Court in Bombay Indra Bhavan v. Ramachandra Sastri and others 1964 (2) L.L.J. 280 . The facts there were that for absence without leave, explanation was sought from an employee by the employer. After considering the explanation, without proceeding further, the employee service was terminated with one month notice under the Mysore Shops and Commercial Establishments Act. It was held that the termination was for reasonable cause. We need not express our assent to, or dissent from, the decision. After considering the explanation, without proceeding further, the employee service was terminated with one month notice under the Mysore Shops and Commercial Establishments Act. It was held that the termination was for reasonable cause. We need not express our assent to, or dissent from, the decision. The significant aspect is, that it was observed: "It is not the case of the respondent that the order passed by the management had been actuated by any sinister motive or that the petitioner had indulged in unfair labour practice in victimising him. The respondent has admitted in the labour court that the management had no animosity against him." � Again, it was observed: "As observed above, the labour court does not hold that the order of termination of the services of the respondent was either mala fide or was actuated by a spirit of victimisation for his being a member of the workers association."� It was in such circumstances that the Mysore High Court quashed the award of the labour court which held that the termination violated the principles of natural justice, and ordered reinstatement as there was no proper domestic enquiry into the charge of absence without permission. The Mysore decision might possibly require re-examination in the light of the principles stated in the latest decision of the Supreme Court in L. Michael and another v. M/s Johnson Pumps Ltd. A.I.R. 1975 S.C. 661 But it falls into proper place on its facts. 5. In Jabalpur Electric Supply Company v. Sambhu Prasad Srivastava and others 1962 (2) L.L.J. 216 the question arose with respect to the provisions of the Industrial Disputes Act. Under clause 18 of the standing orders, theft, fraud or dishonesty were to be treated as misconduct for which the penalties were provided by clause 19. Clause 20 provided that the company had the right to discharge an employee from service when the employer had lost confidence in the employee. For having substituted or removed certain cables, a charge, explanation and enquiry followed, at the end of which the employee was informed that "in accordance with the interview which you had with our Chief Engineer, Mr. Fawcett the company did not find it possible to retain him in service. It was found that the employer had acted fairly and generously. For having substituted or removed certain cables, a charge, explanation and enquiry followed, at the end of which the employee was informed that "in accordance with the interview which you had with our Chief Engineer, Mr. Fawcett the company did not find it possible to retain him in service. It was found that the employer had acted fairly and generously. The question was whether the impugned termination of service was on the ground of loss of confidence under clause 20, or one for misconduct under clauses 18 and 19. On an analysis of the facts and circumstances that led to the order, it was found that it was one passed under clause 20 and not under clause 19. The contention advanced before court was, as here, that the order was really one of dismissal. It was held it was not. The conclusion and the reasoning are quite understandable on the facts. The question is whether on the same or similar reasoning the conclusion of the Tribunal and the learned Judge can be sustained. We find it impossible to do so. The Supreme Court decision does not in any way support the extreme argument of counsel for the respondent that termination for misconduct without an enquiry can, in all cases pass as an innocuous mode of discharge from service. The question must essentially depend on the facts and circumstances of each case. 6. Nor does the decision in Tata Engineering and Locomotive Co. v. Prasad 1969 (2) L.L.J. 799 assist the respondent. That case was strongly pressed with respect to the facts disclosed against one of the employees, viz. Dubey, whose services were terminated without any enquiry. We shall consider this in some detail. Under standing orders 24 to 26 the company could terminate for misconduct after enquiry. Under standing order 47, it could terminate without enquiry by giving one month notice or wages in lieu of notice. There was a criminal charge against Dubey before the Magistrate Court, of having grievously assaulted one of the officers of the company. The case had been committed by the Magistrate and was pending trial. It was then that Dubey services were terminated on ground of loss of confidence under standing order 47. There was a criminal charge against Dubey before the Magistrate Court, of having grievously assaulted one of the officers of the company. The case had been committed by the Magistrate and was pending trial. It was then that Dubey services were terminated on ground of loss of confidence under standing order 47. On analysis of the background and facts the Supreme Court observed: "The company had two alternatives, either to act under standing order 47, or to take disciplinary action and hold a domestic enquiry. But the latter course would have meant that the company would have to launch into an enquiry almost parallel to the one which was going on before the committing magistrate. If the company, in these, circumstances, preferred the former it would not be reasonable to say, as the Tribunal did, that the company should have charged the workman with misconduct and held an enquiry. The fact that it did not do so but exercised its power under standing order 47 cannot render the order mala fide or one passed in colourable exercise of its power to discharge a workman from service if such power was properly exercised. There have been instances as in Jabalpur Electric Supply Company v. Sambhu Prasad Srivastava and others ( 1962 (2)L.LJ. 216 ) where on a question arising whether the power exercised was one for simple discharge or was punitive for a misconduct it was held that it was the former even though an investigation had preceded the order. Considering all the circumstances we are satisfied that the company properly and justifiably exercised its power to terminate the services of Dubey. There was no warrant for the tribunal to come to the conclusion that it had acted mala fide or to victimise Dubey. Its order in regard to Dubey must, therefore be set aside."� Correctly understood, we think the case falls in its proper canvas, and cannot support the broad proposition of counsel for the respondent-bank that for misconduct there can be a termination without enquiry. 7. We may also refer to the Full Bench decision of this court in Claud Fernandez v. Giovanola Binny Co. Ltd. 1971 K.L.T. 471 where an order of termination, seemingly innocuous, was X-rayed by this court and found to be a case of mala, fide termination. 8. 7. We may also refer to the Full Bench decision of this court in Claud Fernandez v. Giovanola Binny Co. Ltd. 1971 K.L.T. 471 where an order of termination, seemingly innocuous, was X-rayed by this court and found to be a case of mala, fide termination. 8. We are of the opinion that the termination of service of the appellant was really one for misconduct under the provisions of the second limb of section 18(1) of the Kerala Shops and Commercial Establishments Act, and was bad as there was no enquiry supported by satisfactory evidence. We are also of the view that even if it were to be regarded as one under the earlier limb of the said section, there was no reasonable excuse other than the charges for which an explanation had been demanded and given by the appellant, and that the impugned order was only a device to short-circuit an enquiry into the charges. In this view we are unable to sustain the order of the Appellate Authority and of the learned Judge. However, the Appellate Authority had not considered or dealt with the relief to be granted to the appellant. It has also not considered the question whether the appellant was one of the managerial staff, and therefore disentitled to invoke the provisions of the Act and file an appeal before the Appellate Authority. For consideration of these aspects the case must go back to the Appellate Authority. 9. We allow this appeal, set aside the judgment of the learned Judge and quash Ext.P-6, and send the matter back to the Appellate Authority for fresh disposal, after considering the plea that the appellant is part of the managerial staff, and the relief to be granted to the appellant, and for passing suitable orders on the appeal. There will be no order as to costs.