Employer Cannot Play Hide and Seek with Law: Madras High Court Upholds Reinstatement of Cognizant Employee Terminated Without Inquiry

“A Termination Order Dressed as ‘Simpliciter’ Cannot Hide its Punitive Core” —  In a landmark judgment Madras High Court dismissed a writ petition filed by Cognizant Technology Solutions Pvt. Ltd., challenging an appellate order that directed the reinstatement of its former Associate Director, Sivakumar Krishnamurthy, with continuity of service and full back wages.

Justice Dr. A.D. Maria Clete held that the termination was not for reasonable cause but was in fact “punitive in nature, stigmatic in content, and substantively unjustified”, thus invalid under Section 41 of the Tamil Nadu Shops and Establishments Act, 1947.

Describing the employer's strategy as a “camouflage to avoid lawful inquiry”, the Court upheld the detailed findings of the Appellate Authority, which had found the termination unlawful for lacking procedural fairness and substantive justification.

The dispute traces back to December 2015, when Cognizant terminated the services of Sivakumar Krishnamurthy, a senior professional, via a letter that purported to be a "termination simpliciter", while alleging “non-performance” and offering resignation as an alternative.

Significantly, this came after an earlier dismissal order dated 07 May 2015—based on a domestic inquiry—was unilaterally rescinded by the employer without legal explanation.

Sivakumar challenged the fresh termination before the Appellate Authority under Section 41(2) of the Tamil Nadu Shops and Establishments Act. After detailed hearings, including examination of 191 documents and oral testimonies, the Authority set aside the termination and ordered reinstatement with all benefits.

Cognizant then approached the High Court under Article 226, accusing the Authority of bias and alleging that the final order was not even authored by the officer herself. The High Court termed these allegations as "baseless, unsubstantiated and mischievous."

Whether the Termination was "Simpliciter" or Punitive?

The Court categorically held that the termination was not a mere severance of service, but a punitive action disguised as a routine order.

“The employer cannot escape judicial scrutiny by substituting the word ‘dismissal’ with ‘termination’. It is the content, not the caption, that matters.”

The Court drew upon binding precedents from the Supreme Court, including L. Michael v. Johnston Pumps India Ltd. and Gujarat Steel Tubes v. Gujarat Steel Tubes Mazdoor Sabha, reiterating:

“Masters and servants cannot be permitted to play hide and seek with the law of dismissals… The Court will find out… what the true ground for the termination is.”

In this case, the second termination order was held to be a continuation of the earlier misconduct-based dismissal, camouflaged to avoid the consequences of procedural lapses.

Was Reasonable Cause Established as Required Under Section 41(1)?

The Court found that no reasonable cause was made out. The termination letter cited "costs to the company" and "non-performance", but the employer failed to substantiate these allegations.

“Termination cannot be justified merely by invoking vague notions of ‘loss of confidence’ or ‘poor adaptability’. Such grounds require rigorous proof, not passing claims.”

Even when allowed to lead evidence afresh before the Appellate Authority, Cognizant failed to prove any one of the eight charges listed in the order. The Court observed:

“If at all the employer had confidence in its own charges, it ought to have followed the path of a disciplinary enquiry, not tactical retreat.”

Whether Allegations of Bias and Impropriety Against the Appellate Authority Had Merit?

The Court noted that Cognizant did not implead the Appellate Authority in her personal capacity, but still made serious allegations against her, including that she did not author the judgment herself.

“The request for forensic audit of a quasi-judicial order is a dangerous proposition. Judicial craftsmanship evolves over time. Discrepancies in writing style do not imply misconduct.”

The Court rejected the allegations as unsubstantiated and mischievous, observing: “What began with considerable noise has ultimately culminated in a mere whimper.”

Consequently, Cognizant was directed to pay ₹1,00,000 as costs to the Tamil Nadu Labour Welfare Fund, with the Court noting: “Institutional resources cannot justify judicial harassment.”

On the Legality of Reinstatement and Back Wages

Though Section 41(2) of the Shops and Establishments Act does not explicitly empower the Authority to grant reinstatement, the Court held that once a termination is set aside, the natural consequence is as if the termination “never existed in law.”

Quoting from The Tata Iron and Steel Co. Ltd. v. G. Ramakrishna Ayyar, the Court reiterated:

“Though it may not be quite accurate to say that the employee is entitled to reinstatement, yet the result is virtually the same.”

Further, since Section 41-A of the Act mandates payment of wages during pendency of proceedings, and Cognizant had already been paying salary under Court directions, the award of back wages was found justified.

Loss of Confidence Argument Also Rejected

Cognizant argued that it could no longer trust the employee and cited “loss of confidence” as an additional justification.

The Court rejected this as “a legal fiction”, observing:

“To hit below the belt by trading legal phrases is not industrial law.” (L. Michael)

“Loss of confidence in the law will be the consequence of the ‘loss of confidence’ doctrine.”

This judgment stands out not only for protecting the substantive rights of employees, but also for defending the dignity and independence of quasi-judicial officers, who often face unwarranted allegations in the course of duty.

In upholding the reinstatement of Sivakumar Krishnamurthy and penalizing Cognizant for abuse of process, the Court sent a clear message that procedural fairness is non-negotiable, and corporate strategies cannot override statutory safeguards.

“The rule of law demands that even global corporations are subject to local accountability. The Appellate Authority acted within jurisdiction, and her findings stand unshaken by anything on record.” – Justice Dr. A.D. Maria Clete

Date of Decision: 29 May 2025