JUDGMENT : Satish Kumar Mittal, J. The State Bank of Patiala has filed this Letters Patent Appeal challenging the judgment dated 4.11.2009 passed by the learned Single Judge, whereby the writ petition (C.W.P. No. 21600 of 2008) filed by the appellant-Bank challenging the award of the Labour Court modifying the punishment of dismissal of the workman from service to stoppage of five increments with cumulative effect, has been dismissed. In this case, the respondent-workman was appointed in the appellant-Bank as a Peon in the year 1973. In the year 1984 he was promoted as Record Keeper/Godown Keeper and posted at Miller Ganj Branch, Ludhiana where in the year 1987 he was charge-sheeted on the allegations that he had unauthorizedly delivered the stocks to the borrowers, which were pledged with the appellant-Bank as a security in cash credit limit, in violation of the instructions of the Bank, and in order to conceal the unauthorized delivery of the stocks to the firms, certain stocks of paper/board of inferior quality were kept in the godowns, which were actually not pledged with the bank. 2. The respondent-workman replied to the charge-sheet showing his ignorance about the illegalities being committed by the borrowing firm. However, the Enquiry Officer found him guilty of the charges. On the basis of the enquiry report, after issuing show cause notice, the workman was dismissed from service vide order dated 24.8.1988 (Annexure P3). The appeal preferred by him was dismissed vide order dated 10.4.1989 (Annexure P4). Thereafter, the workman raised an industrial dispute by issuing the demand notice and the matter was referred to the Labour Court for its adjudication. 3. The Labour Court after considering the evidence led by the parties came to the conclusion that a fair and proper enquiry was conducted by the management. However, after going through the entire evidence led before it and the finding recorded by the Enquiry Officer, it was found that there is no evidence on the record to establish that the workman had removed the stocks in collusion with the borrowing firm or with intent to gain something in removing the stocks. It has also been found that the workman had not embezzled or misappropriated any amount of the Bank or caused any financial loss to it. It has also been found that the workman had not embezzled or misappropriated any amount of the Bank or caused any financial loss to it. Rather it was observed that all the witnesses of the bank had stated very good about the integrity, behaviour, attitude and sincerity of the workman. While taking into consideration all these factors, the Labour Court came to the conclusion that the punishment of dismissal of the respondent workman from service was not justified in the facts and circumstances of the case and was disproportionate to the alleged misconduct of the workman. After coming to the said conclusion, the Labour Court vide order dated 14.8.2008 (Annexure P5) converted the punishment of dismissal of the workman from service into stoppage of five increments with cumulative effect and ordered his reinstatement with full back-wages in exercise of its powers vested u/s 11A of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act'). 4. The learned Single Judge affirmed the award of the Labour Court and held that in the facts and circumstances of the case, the Labour Court was fully justified to award lesser punishment in exercise of the discretion u/s 11A of the Act. 5. In this appeal, learned counsel for the appellant argued that when the Labour Court itself found that a fair and proper enquiry was conducted by the management in which the workman was given full opportunity to defend his case, it was not justified to modify the punishment of dismissal into stoppage of five increments with cumulative effect and ordering reinstatement of the workman in service with full back-wages. According to the learned counsel, the respondent-workman was working in the financial institution and if the financial institution has lost the confidence in the workman, then the Labour Court was not required to interfere in the order of punishment awarded by the management. Learned counsel further contended that it is not the amount of money misappropriated that becomes a primary factor for awarding punishment. On the contrary, it is the loss of confidence which is the primary factor to be taken into consideration. When a person is found guilty of misappropriating the funds, there is nothing wrong in the management losing confidence and faith in such a person and awarding the punishment of dismissal from service. On the contrary, it is the loss of confidence which is the primary factor to be taken into consideration. When a person is found guilty of misappropriating the funds, there is nothing wrong in the management losing confidence and faith in such a person and awarding the punishment of dismissal from service. In support of his contention, learned counsel referred to the decisions of the Hon'ble Supreme Court in U.P. State Road Transport Corporation Vs. Vinod Kumar, (2007) 13 JT 404 and Divisional Controller, N.E.K.R.T.C. Vs. H. Amaresh, AIR 2006 SC 2730 . 6. On the other hand, learned counsel for the workman argued that dismissal is the ultimate and most drastic disciplinary action. Before upholding such punishment, the Labour Court has to consider whether in the background of the circumstances that transpired the misconduct committed by the concerned workman is so grave as to justify the extreme penalty of dismissal from service. The learned counsel further argued that in the present case the Labour Court after taking into consideration the facts and circumstances of the case has rightly come to the conclusion that the management was not justified to impose the extreme penalty which was found to be gross disproportionate to the alleged misconduct. The learned counsel argued that it is now well settled that the right of the employer to inflict punishment of discharge or dismissal is not unfettered and the Labour Court has been invested with discretion u/s 11A of the Act to award lesser punishment if the same is found to be disproportionate to the alleged misconduct. According to the learned counsel, in the present case the said discretion has rightly been exercised by the Labour Court which has been upheld by the learned Single Judge. Therefore, no interference is required in the impugned orders. 7. After hearing the arguments of the learned counsel for the parties and going through the impugned orders, we do not find any merit in this appeal. In the present case from the evidence on the record, the Labour Court has come to the conclusion that the respondent-workman did not make any embezzlement, misappropriation of any amount or tampering with the record of the Bank. It has also been found that due to the alleged misconduct no financial loss was caused to the appellant-Bank. Only it was found that he was negligent in discharge of his duties. It has also been found that due to the alleged misconduct no financial loss was caused to the appellant-Bank. Only it was found that he was negligent in discharge of his duties. Regarding loss of faith, it was observed that all the witnesses of the bank had stated very good about the honesty, integrity and behaviour of the workman. While taking into consideration all these factors, the Labour Court came to the conclusion that the punishment awarded by the management to the workman dismissing him from service was grossly disproportionate to the committed misconduct. Hence, in the facts and circumstances of the case, the appellant-Bank was not justified to impose such punishment. In these facts, while exercising power u/s 11A of the Act, the Labour Court converted the said punishment into lesser punishment of stoppage of five increments with cumulative effect. The aforesaid two judgments relied upon by the learned counsel for the appellant are not applicable in the facts and circumstances of the case. In both the judgments the workman was found guilty of misappropriation of funds of the employer, and in view of the said fact it was held that there was nothing wrong in the employer losing confidence or faith in such a person and awarding a punishment of dismissal. But in the present case no such finding has been recorded by the Labour Court. The argument of the learned counsel for the appellant that in case the domestic enquiry was found to be fair and proper in which the alleged misconduct was proved against the workman, the Labour Court was not justified to interfere in the order of punishment, cannot be accepted. In our view, the decision on the preliminary issue that the domestic enquiry was properly and fairly held and was valid, does not mean that the order of dismissal or discharge is justified. Such finding does not exclude the Labour Court from going into the merits of the case. It is always open to the Labour Court, in exercise of its discretion u/s 11A of the Act, to go into the question of quantum of punishment in the background of the case. Such finding does not exclude the Labour Court from going into the merits of the case. It is always open to the Labour Court, in exercise of its discretion u/s 11A of the Act, to go into the question of quantum of punishment in the background of the case. If in the facts and circumstances of the case, the Labour Court comes to the conclusion that the punishment awarded is grossly disproportionate to the committed misconduct, it has the power to alter the punishment and award lesser punishment u/s 11A of the Act. It is a fundamental principle of justice that the punishment should commensurate with the guilt In The Workmen of Firestone Tyre and Rubber Co. of India (Pvt.) Ltd. Vs. The Management and Others, AIR 1973 SC 1227 , it was held by the Hon'ble Supreme Court that before promulgation of Section 11A, it was considered the prerogative of the employer to inflict the punishment on the delinquent workman which was beyond the jurisdiction of the industrial adjudication to interfere. However, after promulgation of this Section, an industrial adjudicator has the power to substitute its own measure of punishment for the managerial prerogative not only where the punishment is shockingly disproportionate to the act of misconduct but even where it is satisfied that the punishment of discharge or dismissal is not commensurate with the act of misconduct committed by the workman. Even where the Labour Court/Industrial Tribunal is satisfied that the act of misconduct alleged against the workman is proved and a penalty has to be imposed, it has to examine, in the facts and circumstances of the case, as to whether the extreme penalty of dismissal or discharge is justified or not. If the Labour Court comes to the conclusion that the punishment is disproportionate or excessive to the act of misconduct committed by the workman, it has the power to vary the punishment and impose a lesser punishment which it may deem just and fair in the facts and circumstances of the case. While awarding lesser punishment, the Labour Court has also been empowered u/s 11A of the Act to direct reinstatement of the workman. 8. While awarding lesser punishment, the Labour Court has also been empowered u/s 11A of the Act to direct reinstatement of the workman. 8. In this case, the Labour Court keeping in view the facts and circumstances of the case had recorded a finding that the punishment given by the disciplinary authority was shockingly disproportionate to the committed misconduct which is merely a procedural mistake on account of negligent act committed by the respondent-workman. On the basis of this misconduct, it could not be said that the appellant-bank has lost faith and confidence in the workman, particularly when all the witnesses of the appellant-bank had categorically stated very good about the integrity, behaviour and attitude of the respondent-workman. Section 11A of the Act confers power on the Labour Court to evaluate the severity of misconduct and to assess whether the punishment imposed by the employer is commensurate with the gravity of misconduct. Thus, the Labour Court, while exercising the said power, found the punishment of dismissal too severe for the act of misconduct committed by the respondent-workman and substituted the punishment of dismissal to stoppage of five increments with cumulative effect. The learned Single Judge has rightly held that while commuting the punishment of dismissal into stoppage of five increments with cumulative effect, five years of the service of the workman are practically effaced for as his increments and the ultimate terminal benefits that could have accrued to him during the said period had been stopped. Thus, in our opinion, keeping in view the facts and circumstances of the case, the Labour Court has committed no illegality white modifying the order of punishment and ordering re-instatement of the workman and the said order has rightly been upheld by the learned Single Judge. In view of the above, this appeal is dismissed.