JUDGMENT : K.M. Thaker, J. 1. Heard Mr. S.D. Vasavada, learned Advocate for the petitioner and Mr. Mishra, learned Advocate for the respondent. In this petition, the petitioner Company has brought under challenge award dated 17.9.2009 passed by the learned Labour Court at Bharuch in Reference (LCB) No. 150 of 2002. By the award impugned in present petition, the learned Labour Court has directed the petitioner Company to reinstate the respondent workman on his original post with continuity of service. The learned Labour Court has also directed the petitioner Company to pay backwages @ 50% to the respondent workman. 2. The petitioner Company is aggrieved by the said award. 3. Before proceeding further, it is necessary to mention that it is not in dispute that during pendency of this petition, more particularly since 12.12.2012, the respondent workman is reinstated by the petitioner Company and at present, he is in employment with the petitioner Company. It is also not in dispute that the petitioner Company has not paid wages to the respondent workman under Section 17B. 4. So far as the factual background is concerned, it has emerged from the record and submissions by learned Advocates for the contesting parties and from the award that the service of the respondent workman was allegedly terminated with effect from 8.1.2002. 4.1 According to the details mentioned by the respondent workmen in the statement filed before the learned Labour Court, after submitting leave report on 28.4.2011 he had proceeded on leave from 30.4.2001 to 7.5.2001 and he was to resume his duty with effect from 8.5.2001. According to the respondent workman, on 8.5.2001, when he reported for duty, he was informed by Mr. Soni that he was not to be allowed to resume duty. According to the respondent workman, subsequently he was allowed to resume duty on 12.5.2001, but he was informed that a notice is issued against him. The respondent workman has also claimed that on 28.5.2001, he received a notice raising allegation about misconduct. It is claimed that in pursuance of the said notice, a departmental enquiry was commenced. It appears that though an enquiry was commenced and was conducted to some extent, but subsequently it was discontinued midway and was not concluded and was not taken to its logical end. It is claimed that in pursuance of the said notice, a departmental enquiry was commenced. It appears that though an enquiry was commenced and was conducted to some extent, but subsequently it was discontinued midway and was not concluded and was not taken to its logical end. The respondent workman alleged before the learned Labour Court that during the said departmental enquiry, reasonable opportunity of defence was not allowed and he could not put forward appropriate and sufficient defence. Differently put, the respondent workman alleged violation of principles of natural justice during the departmental enquiry. 4.2 The respondent workman has claimed that on 10.1.2002, he received order terminating his service. 4.3 The respondent workman has also claimed that along with the order, the petitioner Company had also forwarded Bank draft towards salary in lieu of notice but any compensation in accordance with Section 25F of the Industrial Disputes Act was not paid. 4.4 With such allegations, the respondent workman raised dispute which came to be referred for adjudication to the learned Labour Court, Bharuch vide order of reference dated 30.3.2002. The said order of reference culminated into Reference No. 150 of 2002. In the said reference proceeding, the respondent workman filed a statement of claim contending allegations to the aforesaid effect. 4.5 The reference was opposed by the petitioner Company who filed reply below Exh. 19. According to the case of the petitioner Company, the respondent workman was appointed on 2.5.1994 as In-charge of Quality Control Department and at relevant time he was drawing salary at Rs. 8,500/. For certain reported misconduct charge-sheet dated 28.5.2001 was issued in respect of charge mentioned in the charge-sheet. An intimation to remain present during inquiry was forwarded to the respondent workman vide communication dated 31.5.2001. Thereafter, the departmental enquiry was conducted and last proceedings were held on 23.6.2001. According to the allegations by the petitioner, initially the respondent had attended proceedings of departmental enquiry, however, subsequently, he stopped attending the inquiry proceedings and that, therefore, the inquiry was discontinued and it was not taken to its formal end and termination order was passed. According to the allegation by the petitioner, the respondent workman had allegedly indulged into serious misconduct of disturbing industrial peace in the establishment and he was also involved in instigating other workmen. According to the allegation by the petitioner, the respondent workman had allegedly indulged into serious misconduct of disturbing industrial peace in the establishment and he was also involved in instigating other workmen. The petitioner Company has claimed that because of his conduct and acts of omission and commission, the petitioner Company lost confidence in the respondent workman and that, therefore, vide order dated 8.1.2002, his service was terminated. 4.6 In this background, the learned Labour Court recorded evidence of the contesting parties and upon conclusion of the evidence, the learned Labour Court heard the submissions by learned Advocates for the contesting parties. 4.7 After considering the submissions by learned Advocates for the contesting parties and upon considering the evidence available on record, the learned Labour Court reached to the conclusion that the petitioner Company failed to establish any circumstance leading to the conclusion about the loss of confidence in the workman. The learned Labour Court also reached to the conclusion that before terminating the service of the respondent workman, the petitioner failed to follow the procedure prescribed by law and consequently, the termination of the service of the respondent workman is contrary to law and unjust. The learned Labour Court also found that the petitioner Company failed to establish that the respondent workman was gainfully employed during the period after termination of his employment. Having reached to such conclusion, the learned Labour Court directed the petitioner Company to reinstate the respondent workman with 50% backwages and continuity of service and other consequential benefits. 5. Mr. Vasavada, learned Advocate for the petitioner Company submitted that the learned Labour Court has directed the petitioner Company to reinstate the respondent workman, however, the learned Labour Court failed to appreciate that because of the conduct of the respondent workman, the petitioner lost confidence in him and having found that it was not in the interest of the Company to continue the respondent workman, his service was terminated. Learned Advocate for the petitioner also submitted that the direction to pay 50% backwages is unjustified. Learned Advocate for the petitioner submitted that the respondent was gainfully employed during interregnum and therefore, the direction to pay backwages @ 50% is not justified. 6. The petition and submissions of the learned Advocate for the petitioner are opposed by Mr. Mishra, learned Advocate for the respondent workman. Learned Advocate for the petitioner submitted that the respondent was gainfully employed during interregnum and therefore, the direction to pay backwages @ 50% is not justified. 6. The petition and submissions of the learned Advocate for the petitioner are opposed by Mr. Mishra, learned Advocate for the respondent workman. He submitted that the award does not suffer from any error and the conclusions recorded by the learned Labour Court are based on the material available on record. Learned Advocate for the respondent workman submitted that there was no reason, much less any circumstance, to claim that the petitioner Company lost confidence and that it was not in the interest of the Company to employ him. Learned Advocate for the respondent workman submitted that as rightly held by the learned Labour Court, the petitioner Company failed to establish alleged reasons for terminating his service and that, therefore, the award is just and proper and the petition deserves to be rejected. 7. I have considered the submissions by learned Advocates for the contesting parties. I have also considered the award and the material available on record. 8. It has emerged from the material available on record of this petition and from the discussion by the learned Labour Court in the award that the petitioner Company had initiated disciplinary proceeding against the respondent workman by issuing a charge-sheet, however, subsequently the petitioner abandoned the inquiry proceedings midway and decided to terminate the service of the respondent workman on the ground of loss of confidence and accordingly, the service of the respondent workman came to be terminated with effect from 8.1.2002. 9. On examination of the evidence on record before the learned Labour Court, it has emerged that from the evidence on record the learned Labour Court deduced that the petitioner Company failed to establish any reason or circumstance in light of which it can be said that the petitioner Company was justified in terminating the respondent workman on the ground of loss confidence. 10. It is not in dispute that before terminating the service of the respondent workman, retrenchment compensation was not paid to the respondent workman. 10.1 It is also not in dispute that the disciplinary proceeding was not taken to its logical end and the departmental enquiry was abandoned midway by the petitioner Company. 10. It is not in dispute that before terminating the service of the respondent workman, retrenchment compensation was not paid to the respondent workman. 10.1 It is also not in dispute that the disciplinary proceeding was not taken to its logical end and the departmental enquiry was abandoned midway by the petitioner Company. 10.2 It is also not in dispute that the respondent workman had proceeded on leave from 30.4.2001 and for that purpose, he had submitted leave report on 20.8.2001. The petitioner Company thereafter initiated proceeding against the respondent workman by serving charge-sheet dated 28.5.2001. 10.3 However, as mentioned earlier, the inquiry was not concluded and was not taken to its logical end and was terminated/abandoned midway by the petitioner before finally concluding it in accordance with the law. 11. Thus, it is now not open for the petitioner to rely on the said disciplinary proceeding and it cannot claim that it had terminated the service of the respondent workman after conducting domestic inquiry for misconduct alleged vide charge-sheet dated 28.5.2001 inasmuch as the allegations levelled against the respondent workman vide charge-sheet dated 28.5.2001 have not been established by the petitioner Company by leading evidence during the departmental enquiry. 11.1 Besides this, the petitioner Company did not establish the allegations in the charge-sheet even before the learned Labour Court by leading appropriate evidence. 11.2 Instead, the petitioner Company took up a defence that it lost confidence in the respondent workman and that it was not in the interest of the petitioner Company to continue him in the employment and therefore, his service came to be terminated. 12. In present case, the respondent's service is terminated on the ground of loss of confidence. 13. However, it is not in dispute that before terminating his service on such ground, any conclusion, after inviting and considering the respondent's explanation, with reasons and justification, was not recorded. 13.1 Loss of confidence by employer is a stigma and an order terminating service of a workman on ground of loss of confidence renders the order stigmatic. Such action would cast a stigma and blur not only on the service record of an employee but also on his character and the employee would be left to leave his life with such stigma. Such action would cast a stigma and blur not only on the service record of an employee but also on his character and the employee would be left to leave his life with such stigma. Therefore, an employer should not reach to such conclusion lightly and casually and without calling for concerned employee's explanation or by violating principles of natural justice and the principles of natural justice should be complied. 13.2 It is true that once an employee has lost the confidence of the employer, it may not be safe and in interest of the establishment to continue such employee in the service. It is also true that loss of confidence is primary and important factor in the decision of retaining an employee in service or to terminate the service. The Court would not, if principles of natural justice are complied and reasons and circumstances justifying 'loss of confidence' are satisfactorily made out and established by employer, interfere in the decision of the employer to terminate the service of such employee and the Court would also not substitute its own view or decision for that of the employer and the Court would not show sympathy in such cases as it would amount to extending undue sympathy in an undeserving case. 13.3 However, ground for loss of confidence and action of terminating service on ground of loss of confidence must be justified and should be based on sound conclusion supported by cogent reasons and after considering delinquent's explanation. 13.4 To hold otherwise, i.e. to hold that the employer can pass termination order on ground of loss of confidence without conducting departmental proceeding and without granting opportunity of hearing and defence and without recording reasons justifying the decision that workman has lost confidence of the employer and without establishing the facts or circumstances on account of which such conclusion is arrived at, would result into and invite chaotic situation and it would place in the hands of the employer a weapon which can be used by the employer in all cases where it is not possible to prove and establish charge of misconduct and it will empower and allow the employer to terminate service of any employee by merely citing ground of 'loss of confidence'. 13.5 Though, the Tribunal or the Court cannot substitute its opinion instead of employer's opinion, so as to provide proper safeguard against such arbitrary action of the employer and to ensure that service of any employee is not arbitrarily or abruptly terminated without establishing and justifying the facts and circumstances leading the employer to hold that the employee has lost confidence, compliance with principles of natural justice cannot be discounted and it is necessary to hold that drastic and capital action of terminating service of an employee on ground of loss of confidence cannot be taken without informing the grounds or reasons or facts on account of which the employer feels that the employee has lost confidence of employer and without calling for employee's explanation and without granting opportunity to the employee to offer explanation and without requiring the employer to record the reasons and justification for such conclusion leading to termination of an employee. The principles of natural justice and its compliance has to be read as necessary concomitant of employer's action against employee on ground of loss of confidence. 13.6 An employer cannot act on whims and fancy by simply claiming that he has lost confidence. The employer who wants to take action against an employee on ground of loss of confidence, must establish the circumstances and reasons for his opinion, i.e. to justify his opinion. 13.7 When the employer claims and asserts that he has lost confidence in the employee, then he points accusing finger at the character of the employee and alleges that employee's conduct and character are wanting in the matter of trust and confidence, i.e. his conduct is wanting and falls short of inspiring trust and confidence or to earn the confidence of his employer. Such claim by the employer also indicates that the employee's conduct and/or his qualities are not satisfactory or they are not upto the standard of the establishment/employer. Thus, such view or opinion of the employer would cast stigma on the employee and his character. Therefore, the departmental proceeding in accordance with the principles of natural justice are required to be treated as condition or requirement for taking action against an employer on ground of loss of confidence. The employee cannot be allowed to do away with the said procedure. Any action of terminating service of an employee without complying such procedure has to be treated as vitiated. 14. The employee cannot be allowed to do away with the said procedure. Any action of terminating service of an employee without complying such procedure has to be treated as vitiated. 14. It is pertinent that in present case any material justifying such conclusion is not available on record. The petitioner Company has failed to establish any reason or any circumstance or event or reason on account of which it lost confidence in the respondent workman as claimed by it. 14.1 Such conclusion, i.e. conclusion about loss of confidence cannot be reached on any ipse dixit. There must be tangible material to establish the circumstance or the event or the reason on account of which the employer can claim that it has no confidence in the workman and that the continuation of the workman is not in the interest of the Company. 14.2 When any material to justify such conclusion is not established by the petitioner Company then its action of terminating service of a workman on such ground cannot be sustained and the findings recorded by learned Labour Court cannot be faulted. 14.3 Under the circumstances, the conclusion by the learned Labour Court that the termination of the service of the respondent workman was unjustified, arbitrary and contrary to law, cannot be faulted and the said conclusion is not, and cannot be considered, perverse and the said does not suffer from any infirmity or error and is based on the material available on record. 15. In this view of the matter, this Court is not inclined to interfere with the conclusion and decision of the learned Labour Court that the action of the petitioner Company is illegal and arbitrary and therefore deserves to be set aside. The learned Labour Court has rightly set aside the petitioner Company's action of terminating the service of the respondent workman. Consequently, the direction to reinstate the respondent workman by the petitioner Company also does not warrant any interference. 16. At this stage, it may be mentioned that according to the details given by the petitioner Company and the respondent workman, the respondent workman is reinstated with effect from December 2012. For this reason also this Court finds no reason or justification to interfere with the direction to reinstate the respondent workman. 17. This leaves behind the issue with regard to the direction to pay backwages @ 50%. 17.1 Mr. For this reason also this Court finds no reason or justification to interfere with the direction to reinstate the respondent workman. 17. This leaves behind the issue with regard to the direction to pay backwages @ 50%. 17.1 Mr. Vasavada, learned Advocate for the petitioner Company submitted that the respondent workman has been engaged in gainful employment during entire interregnum and that, therefore, the direction to pay of backwages is not justified at all. 17.2 In response to the said submission by Mr. Vasavada, learned Advocate for the petitioner, Mr. Mishra, learned Advocate for the respondent workman referred to the affidavit dated 17.12.2009 made by the respondent workman. In the said affidavit, the respondent workman has stated, inter alia, that:- "(1) I say and submit that I was working with the petitioner Company as in-charge in Quality Control department and since my services were terminated without holding any departmental inquiry and without following due procedure of law I was constrained to raise industrial dispute which ultimately came to be referred to Honourale Labour Court vide Ref (LCV) No. 150/02 which came to be allowed vide Award dated 17.9.2009 directing the petitioner Company to reinstate me into services on my original post with continuity of service and also with 50% of backwages. (2) I say and submit that the award came to be challenged by the petitioner-Company by filing above referred petition wherein the Honourable Court (Coram: Mr. Jayant Patel, J) was pleased to issue Rule and grant stay against implementation and execution of impugned award subject to compliance of provisions of Section 17B of Industrial Disputes Act, 1947. I hereby declare that I am not gainfully employed any where since termination of service from the petitioner-Company and hereby undertake to intimate to the Honourable Court if I am gainfully employed in future." 17.3 Mr. Mishra, learned Advocate for the respondent workman also referred to another affidavit dated 16.2.2012 made by the respondent workman wherein he has stated, inter alia, that:-- "3. I say further that thereafter I have approached my Advocate appearing in the proceeding. An affidavit of unemployment was prepared and accordingly it was sworn on 17.11.2009. I say that the aforesaid affidavit dated 17.11.2009 though prepared, the Advocate appearing in the matter did not file in the present proceeding. I say further that thereafter I have approached my Advocate appearing in the proceeding. An affidavit of unemployment was prepared and accordingly it was sworn on 17.11.2009. I say that the aforesaid affidavit dated 17.11.2009 though prepared, the Advocate appearing in the matter did not file in the present proceeding. I say that right from termination of services till date of award, I was totally unemployed, not gainfully employed in any establishment. I say that after the award passed by the labour Court, I approached the petitioner employer with a representation dated 2.11.2009 to reinstate me on my original post. I say that the aforesaid letter was sent through R.P.A.D. and a copy of the same was submitted to the Government Labour Officer. I say that at the relevant point of time I was informed that the award is likely to be challenged by the employer before the Hon'ble High Court of Gujarat. 4. I say that right from beginning I am pursuing my matter with the hope that the employer may reinstate me and pay the wages as per the award passed by the labour Court. 5. I say that after the award dated 17.9.2009 I remained unemployed and not gainfully employed in any establishment till 1.4.2011. I say that on 1.4.2011 temporarily I joined an establishment known as Among Organics P. Ltd. Situated at Baroda and at present I am working as ad hoc daily-rated employee from 1.4.2011 onwards." 17.4 On the strength of the assertion in the said affidavits Mr. Mishra, learned Advocate for the respondent workman submitted that the respondent is entitled for backwages since his service was terminated illegally and reiterated his claim for backwages at such rate which the Court finds appropriate. 17.5 At this stage, Mr. Vasavada, learned Advocate for the petitioner Company referred to the affidavits made by the petitioner Company, i.e. the affidavit dated 1.3.2012 and another affidavit dated 26.6.2012. Learned Advocate for the petitioner Company claimed, while relying on the said affidavits, that according to the information available with the petitioner Company, the respondent workman has been engaged gainfully during entire interregnum. He claimed that the respondent workman had joined service with an establishment named Sajjan (India) Ltd. Where he worked till 2007 and subsequently, he worked with another establishment at Baroda. 17.6 So as to support his submission, Mr. He claimed that the respondent workman had joined service with an establishment named Sajjan (India) Ltd. Where he worked till 2007 and subsequently, he worked with another establishment at Baroda. 17.6 So as to support his submission, Mr. Vasavada, learned Advocate for the petitioner Company relied upon the document at page 87 of this petition which is annexed to the affidavit dated 1.3.2012. 17.7 The said document contains details of the respondent's provident fund account as employee of Sajjan (India) Ltd. 17.8 According to the details mentioned in the said document, the total balance in the provident fund account of respondent workman is shown to be Rs. 68,820/- as on 31.3.2009. 17.9 On the strength of the said document, learned Advocate for the petitioner submitted that the respondent workman has been engaged in gainful employment in the interregnum. 17.10 The respondent workman has made an attempt to deal with the said factual aspects by filing an affidavit made on 21.7.2012 (pages 93 to 95 of the petition). 17.11 However, the respondent workman has failed to explain and justify his claim that he was employee with the said Company only for the period from April 2011 and that before he came to be reinstated by the petitioner Company he had worked with the said other Company only from April 2011 to December 2012. 17.12 It has emerged that the respondent's provident fund account reflected amount of Rs. 52,691/- as employee's share and Rs. 16,129/- as employer's share culminating into total of Rs. 68,820/-. Considering the total amount in the provident fund account of the respondent workman, it is difficult to accept the claim of the respondent workman (that he had worked with the said other organisation only from April 2011 to December 2012) since such large amount (Rs. 68,820/-) would not get accumulated in provident fund account within period of about 18 months. On this count it is pertinent to note that it is not the case of the respondent that the said amount of Rs. 68,820/- includes the amount/contribution accumulated during the period of service with the petitioner Company. Under the circumstances, the respondent has failed to explain said aspect (brought out by the petitioner) which touches the issue related to his gainful employment in the interregnum. 18. 68,820/- includes the amount/contribution accumulated during the period of service with the petitioner Company. Under the circumstances, the respondent has failed to explain said aspect (brought out by the petitioner) which touches the issue related to his gainful employment in the interregnum. 18. From the above mentioned facts, it comes out that the petitioner Company has established that the respondent workman was gainfully engaged during the interregnum. 18.1 In this view of the matter, the burden to prove otherwise and to establish that for entire interregnum, he was not gainfully engaged and/or that the amount in the provident fund account includes the amount accrued during employment with the petitioner Company, was on the respondent workman since after the petitioner placed on record the said document of provident fund account the burden to prove that he was not gainfully employed shifted to the respondent workman but the respondent workman failed to establish the relevant fact. 19. Under the circumstances, more particularly when me respondent failed to explain and clarify above discussed aspects, the submission by learned Advocate for the petitioner Company that the respondent workman is not entitled for the backwages, deserves to be accepted in view of the fact that the respondent workman is found to be gainfully employed by another establishment in the interregnum. 20. Therefore, the direction granting backwages @ 50% is set aside whereas the direction passed by learned Labour Court requiring the petitioner Company to reinstate the respondent workman is confirmed. Accordingly, the petition is partly allowed. Rule is made absolute to the aforesaid extent.