How Should Management Handle Employees Involved in a Fake Currency Incident? Seeking Advice on Next Steps

Two of our employees were involved in an incident regarding a fake Rs. 500 note transaction, and the police interrogated them while in custody for a few hours before releasing them. A First Information Report (FIR) was filed. It was reported that one employee (A) received the fake note from a coworker (B) and used it at a petrol station to pay for fuel. The petrol station staff identified the note as counterfeit, reported it to the police, and employee (A) was taken into custody. Employee (A) then contacted coworker (B), who stated that they received the note from a lady who is a vegetable vendor in the market. The police also questioned the lady. Both employees were released with a warning to cooperate with further investigations if needed, and were informed they might face fines for their actions. The incident was reported in the local newspaper, and the employees submitted a copy of the FIR to management.

My queries are:

1. Should disciplinary action be taken against the employees if it is proven during a domestic inquiry that they were involved in a fake Rs. 500 transaction, considering that the company's standing orders do not cover misconduct outside the factory premises?

2. Is the Management's stern response justified even though the employees' actions fall outside the company's scope of regulations?

3. Have the employees been barred from work duties so far?

I seek expert guidance on how to proceed.

Regards, V. Sridharan

Before that, you can suspend these workers pending inquiry and pay half wages as per the act.

What the decision taken by the management in conducting a domestic inquiry on the charges of moral turpitude is correct, and you can impose dismissal of service as a punishment for these workmen.

Sorry to differ with the view of Mr. Kumar.

Legal Context of Using Forged Currency

The offense relating to using as genuine, forged, or counterfeit currency notes or banknotes comes under Section 489-B of the Indian Penal Code, 1860. There are several judgments of the various High Courts and the Supreme Court of India deciding in favor of the accused on the ground of absence of mens rea or guilty intention. One such important judgment by the Supreme Court is Umashankar v. State of Chhattisgarh. In its judgment, the Supreme Court categorically held that the provisions of sections 489-A to 489-E, which deal with various economic offenses in respect of forged or counterfeit currency notes or banknotes, are not meant to punish unwary possessors or users in day-to-day commercial transactions.

Judicial Precedents

In a case decided on 01-10-2018, viz., Sanskriti Jayantilal Salia v. the State of Maharashtra, following the rule laid down by the Apex Court in Umashankar's and other cases, the High Court of Bombay held that when mens rea is conspicuously absent in an offense under Section 489-B, the burden of proof is on the prosecution only.

Advice to Management

So, dear Sridharan, impress upon your management not to act in unnecessary haste. Since the employees had honestly informed you of the entire episode with the FIR copy, just call for a formal explanation from the employees for the sake of record and await the outcome of the criminal case, if any, to be instituted by the Police in this regard. The case may take years. So ask them to report the stage of the case then and there. On the contrary, if you initiate parallel departmental disciplinary action by placing them under suspension now, you will have to pay them subsistence allowance until the disposal of the departmental proceedings. If they are acquitted in the criminal case, the likelihood of which is certain, you will have to revoke any punishment you are likely to award in your disciplinary proceedings, and you will have to pay them full back wages with all attendant benefits.

My inference from the post of Mr. Sridharan is that the two employees have not deliberately been involved in the fake note transaction, but unexpectedly the fake note reached the hands of the employees. Police interrogations have also been conducted, and the entire matter with supporting evidence has been reported to management. Thus, their integrity need not be doubted. Keeping this in view, you can proceed in the matter.

I also endorse the views expressed by Mr. Umakanthan.

Dear Sridharan, Police interrogation or filing an FIR does not make anyone guilty. Indian jurisprudence works as per the principle of "home prasumitur bonus donec probetur malus." It means "one is innocent until proven guilty."

The incident has happened outside your company premises. It has nothing to do with the job for which you have employed the employees. Therefore, let the court decide whether the employee is guilty or not. What if the court acquits the employee?

Indian Legislators and Legal Precedents

Just look at the Indian legislators. About a third of the legislators carry serious charges of murder, arson, rape, etc. Nevertheless, the Indian constitution allows them to contest the elections. They get elected, and these very tainted legislators make laws for us! In that case, in what way are those two employees bothering your company? Click the following link to refer to the news of the sitting MPs: [India Today Article](https://www.indiatoday.in/elections/lok-sabha-2019/story/50-per-cent-mps-new-lok-sabha-criminal-records-1534465-2019-05-25)

Focus on Business Priorities

What has happened is their personal matter. Let it remain. Let your company not get into the personal affairs of the employees. Concentrate on business, concentrate on the customers, concentrate on the competitors, that is all.

Thanks,
Dinesh Divekar

I express my sincere thanks to Sri Umakanthan Sir, Sri RKN61, and Mr. Dinesh Divekar for sharing their different views. These insights have been very helpful to me in informing the management. It has been suggested to the management that they can keep the disciplinary proceedings pending until the outcome of the criminal case against the aforementioned workmen is determined.

Regards,
V. Sridharan