Social Audit And Labour Law Violation In Kotak Mahindra Bank.

 HR Practice- Human Right Violation: HR Laws On  Dismissal.  

* Birendra K Jha                                                                                                                                                                                 Certified Social Auditor; Practitioner Social Impact Assessment Audit; Practitioner BRSR Audit. EMail: birendrajha03@yahoo.com

The Kotak Mahindra Bank, particularly the HR Department failed to apply mind that  in service jurisprudence any  stigmatic order passed  on ground of alleged misconduct cannot be sustained unless a proper enquiry in accordance with law has been conducted. Any stigma on the delinquent employees  rest of his life almost renders him unemployable in future with any employer. Deprivation of livelihood violates the very fundamental right of a citizen enshrined under Article 21 of the Constitution of India. So this power of dismissal should be used only after proper Domestic Enquiry.

In Kotak Mahindra Bank poor HR Practice is reported with  Labour Law violation. The Kotak Mahindra Bank is within top 1000 companies in the SEBI. This Bank is mandatorily required to file the BRSR Report to the SEBI. This is done  only after mandatory  Third Party Audit under Principle 5 of the BRSR. This is surprising that the BRSR report has been given  in the SEBI by the Bank on wrong footing, when there is glaring practices on the human right violation. There is no assurance or assessment. If any, this needs revision.    

Social Auditors engaged in Third Party Audit for BRSR Report may encounter "Dismissal". They  should must check carefully the "Terminated Employees" status, whether legal or illegal? 

As stated above, a case is reported here from the Kotak Mahindra Bank. Here the Bank has violated the   fundamental protection available to the Employees under the Human Right Law. This glides in better way understanding the "dismissal side". This also exhibits wide skill gap in HR Practice. 

Case Study of Aaraj Sharma : 

Mr Aaraj Sharma, in 2022 was a Senior Manager in the Kotak Mahindra Bank. He received appointment letter from the Bank where Rules on Termination Order was  mentioned in Clause 19. The clause was structured in following way: 

"19. Termination: Your services can be terminated by the Bank, without any notice or payment of any kind in lieu of notice, in the following cases:

19.2 Any act, which in the opinion of the management is an act of dishonesty, disobedience, insubordination, incivility, intemperance, irregularity in attendance or other misconduct or neglect of duty or incompetence in the discharge of duty on your part or the breach on your part of any of the terms, conditions or stipulations contained in this letter or a violation on your part of any of the Bank’s rules and policies; and/or

19.6 Any misconduct pertaining to moral turpitude, riotous/disorderly behavior, theft, misappropriation, conviction by any court of law". 

One day in 2022 Aaraj Sharma, was terminated from Bank on some misconduct ground. The Bank took the strength of the "Termination Clause 19" stated above and never conducted any  procedure of Natural Justice as available under the Statutory Act for conducting the Domestic Enquiry. The HR Department, failed to apply mind further that contract appointment letter clauses are only subordinate regulation. Any clauses in this contract,  which is against Ruling Act is "ultra-vires."  

The action was prima facie illegal, which was being in absolute derogation of the applicable law. This was expected from the HR Department to pass  just, legal,  and final order after proper application of mind and appreciation of the material available on record. But this was not done.  This was severe violation of the Labour Law and violation of the fundamental protection available to the Employee under the Human Right Law. The Kotak Mahindra Bank is on record where it says it meets Labour Law compliance. This is wrong statement. 

Now three things needed to be proved here: 

1) Under the Law of Rajasthan Shop & Establishment Act whether, Kotak Mahindra  Bank is covered or not ? 

2) Under that Law whether employee Aaraj Sharma is covered or not ? 

3) If yes what is the procedure of termination in that Law. 

The Kotak Mahindra Bank is covered at Rajasthan under Section 2 (3) of the Rajasthan Shop & Establishment Act. The Section 2 (3) of this Act is elaborated here:  

"2. (3) “commercial establishment” means a commercial or trading or banking or insurance establishment."  

Thus the Kotak Mahindra Bank is a Bank covered under the Rajasthan Shop & Establishment Act. Now next question is whether Aaraj Sharma is covered under this Act. Answer is Yes. Because the Section 2 (5) of this Act says: 

 “employee” means a person wholly or principally employed in, or in connection with any establishment and includes an apprentice but does not include a member of the employer's family; it also includes any clerical or other staff of a factory or industrial establishment who falls outside the purview of the Factories Act, 1948 (Central Act LXIII of 1948)”

Thus Aaraj Sharma, being Sr Manager,  is also covered under Section 2 (5) of this Act.  Now next proving is what Law  is provided under the Rajasthan Shop & Establishment Act  for Termination. The Answer is given in Section 28-A (1). This states: 

"No employer shall dismiss or discharge from his employment any employee who has been in such employment continuously for a period of not less than 6 months" and further states "supported by satisfactory evidence recorded at an enquiry held for the purpose in the prescribed manner".

Aaraj Sharma at the time of removal was in the Kotak Mahindra for more than 6 months. In his case before dismissal, mandatory Domestic Enquiry was needed as per Section 28-A of the Rajasthan Shop & Establishment Act. This is basic of HR Practice. The "Basic HR Practice" is seen missing from the Bank. 

As just demonstrated, the "Basic HR" is missing in the Kotak Mahindra Bank. If HR do not know the basic HR Practice, then the department shall create only havoc in the name of HR. In Cox and Kings Limited Vs. Narendra Singh Rathore & Ors., Hon'ble Rajasthan High Court has also given similar order where Domestic Enquiry is needed before termination, but Bank failed to apply mind.  

In service jurisprudence any  stigmatic order passed by the HR Department on ground of alleged misconduct cannot be sustained unless a proper enquiry in accordance with law has been conducted. Any stigma on the delinquent employees,   rest of his life almost renders him unemployable in future with any employer. Deprivation of livelihood violates the very fundamental right of a citizen enshrined under Article 21 of the Constitution of India. The HR Department  must, therefore, be circumspect before summarily taking away the livelihood of an employee on stigmatic grounds. 

Conclusion: 

The dismissal order of Aaraj Sharma was struck down by the Hon'ble Rajasthan High Court. The Hon'ble Court  held the termination order  illegal. The Bank was directed to take Aaraj Sharma  in service from the date of dismissal.