Alfred Henry Lionel Leach, J.
1. The appellant company appeals against a decree passed for the payment of Rs. 2,987-3-7 in a suit instituted on the Original Side of this Court. The respondent was in the employ JJof the company as a station master and claimed damages for wrongful dismissal. About the middle of 1931, while the respondent was holding the position of station master at Narasaraopet, it was discovered that the assistant goods clerk had misappropriated monies collected by him in respect of freight charges. It is said that the misappropriations amounted to Rs. 15,000. 'The discovery was made as the result of an audit. On the defalcations being discovered the company made a written complaint to the police. The result was that the respondent, the assistant goods clerk and another employee of the company were arrested. They were all charged with criminal breach of trust and conspiracy under the provisions of Sections 408 and 120-B of the Indian Penal Code. On his arrest on the 24th August, 1931, the respondent was placed under suspension. On the 3rd October, 1932, the trial Magistrate convicted all the accused and sentenced the respondent and the third accused to one year's rigorous imprisonment. The goods clerk was sentenced to two years' rigorous imprisonment. As the result of the conviction the company dismissed the respondent from its service by a letter dated the 11th November, J.932. The respondent appealed against his conviction to the Sessions Judge of Guntur, who by a judgment dated the 21st November, 1932, dismissed the appeal. The respondent then applied to this Court to set aside the conviction and sentence under its revisional powers. By an order dated the 22nd November, 1933, the petition was allowed and the conviction and sentence were set aside. On the 17th July, 1935, the respondent filed the suit out of which this appeal arises. In his plaint he claimed Rs. 6,049-15-0, made up of the following amounts : (1) Rs. 1,200 as damages for wrongful dismissal; (2) Rs. 100 as damages in lieu of one month's notice; (3) Rs. 300, being the amount of a security deposit made by the respondent which he said had been wrongfully withheld; (4) Rs. 2,449-15-0, being the amount which it was said the company was bound to pay into the company's provident fund for the respondent's benefit; and (5) Rs. 2,000 claimed as arrears of salary from the 24th October, 1932 to the 23rd November, 1935. Item No. 1 was abandoned by the respondent in the course of the trial. Items Nos. 3 and 5 were disallowed by the trial Judge (Mr. Justice Gentle) and his decision has been accepted. Items 2 and 4 were decreed. The company contends that the respondent was not entitled in law to any sum and that the suit should have been dismissed. The appeal turns on the decision of the question whether the respondent was wrongfully dismissed. It is common ground that if the dismissal was not wrongful the company had the right of withholding its contribution from the provident fund and that the respondent had no right to notice.
2. The respondent was employed by the company under an agreement in writing. The agreement was embodied in a letter which the respondent addressed to the agent of the company. Under it the respondent agreed to accept service with the company upon the terms and conditions set out in the letter. It is only necessary to refer to the third and the seventh conditions. The third condition reads as follows:
That I hereby bind myself to obey and abide by all the instructions and regulations contained in the General Rules for Indian Railways, the subsidiary working rules and all regulations in force that affect my duties and work and by any further instructions that may, from time to time, be issued by any person duly placed in authority over me.
3. The seventh condition is this:
That I clearly understand that the authority which appoints me has the power, for any reason that may to him appear sufficient, to dismiss me.
4. The appellant company has framed rules regulating the discharge and dismissal of its subordinate servants and the submission of appeals. The rules deal not only with dismissal but also with the discharge of the employees. It is not necessary to refer to the rules relating to discharge as this case is merely concerned with the appellant company's powers of dismissal. The relevant rules so far as this case is concerned are Rules 5 and 7. Rule 5 reads thus:
Dismissal - An employee will beliable to be dismissed from the service in the following circumstances, namely:
(i) in consequence of his conviction by a Criminal Court, or
(ii) for serious misconduct, or
(iii) for neglect of duty resulting in, or likely to result in, loss to Government or to the Railway Administration, or danger to the lives of persons using the Railway.
5. Rule 7 on which the respondent places great reliance is in these terms:
Dismissal - Procedure - In all cases where an employee is charged with an offence of a nature, which if proved against him, is likely to lead to his dismissal, his District Officer shall order a Departmental Enquiry, and if a prima facie case is established, shall forward the proceedings with a copy of the employee's service register to the Head of his Department for decision.
At the enquiry a definite charge in writing shall be framed in respect of each offence and explained to the employee, and the evidence which he may adduce in his defence shall be recorded in his presence, provided that, for special reasons to be recorded, the evidence of any witness may be taken and recorded otherwise than in the presence of the employee. A finding with its grounds, shall be recorded on each charge.
6. There are two notes appended to this rule. They read as follows:
1. An order of dismissal operates as a bar to re-employment in any capacity by this Railway and shall not be issued unless the employee's guilt is established by clear and conclusive evidence. In other cases when there is circumstantial evidence as to his guilt, it shall be open to the competent authority to consider the question of discharging him.
2. The provisions of this rule do not apply when it is proposed to issue an order on the strength of facts or conclusions established at a judicial trial, or when the Railway servant concerned has absconded with an accusation hanging over his head.
7. It is the respondent's case that he had been wrongfully dismissed because there was no inquiry held under this rule, and this contention was accepted by Gentle, J. The learned Judge found as a fact that the respondent had failed to carry out his duties as station master, that he did not faithfully and diligently employ himself in the company's service according to the terms of the contract of employment and that he-was guilty of neglect of duty resulting in a loss to the company and such neglect of duty amounted to serious misconduct. The learned Judge was here referring to the duty cast upon the respondent as a station master to control his subordinates at the station and inspect their accounts. The learned Judge, however, considered that notwithstanding these facts the company should have held an inquiry before exercising its right of dismissal. In his opinion the company was not justified in dismissing the respondent because it had not been proved before him that the dismissal was based on the facts or the conclusions established at the trial before the magistrate. The company says that the learned Judge here misinterpreted Rule 7 and that on a correct interpretation it was entitled to dismiss the respondent without an inquiry.
8. As I have indicated, the respondent's dismissal took place shortly after his conviction. The letter of dismissal is in these terms:
You are dismissed from the company's service from 24th August, 1931, the date you are placed under suspension. Please note and acknowledge receipt of this letter.
9. There can be no doubt that the dismissal was based on the respondent's conviction. This the respondent accepted as being, the case in the letter which his advocate wrote before suit and also accepted in his plaint. In the letter it was said:
My client states that as the order of dismisssl is based on conviction by the trial Court, it ought to have been cancelled on my client's acquittal and that if you did not want to entertain my client any longer in service, you ought to have given a month's notice under the rules.
10. Paragraph 8 of the plaint reads as follows:
The plaintiff further submits that, as he was dismissed from service owing to the said conviction by the Sub-Divisional Magistrate, Narasaraopet. he ought to have been re-instated on his acquittal.
11. Therefore it is clearly the respondent's case that he was dismissed because of the conviction, and that this was so is obvious from the course of events. The respondent was placed under suspension as soon as he was arrested and he remained under suspension until he was dismissed, which took place on his conviction.
12. The learned Advocate for the respondent contends that the dismissal by reason of the conviction' was not sufficient to deprive the respondent of the right of an inquiry under Rule 7 of the rules regulating dismissal. He says that under note 2 of that rule an inquiry can be dispensed with only if the dismissal is based expressly on the strength of facts or conclusions established at the trial. But for the conclusion of the learned trial Judge on this question I should not have regarded this argument as a substantial one. With great respect, if a dismissal is based on a criminal conviction it seems to me that it must be taken to be based on the findings of the Court. The conviction follows the conclusions arrived at by the Court and to base a dismissal on a conviction it follows, in my opinion, that the conclusions of the Court are accepted. The respondent having-recognised that his dismissal was based on his conviction I hold that he has no case.
13. The fact that as the result of revision proceedings the conviction was set aside does not affect the position. If the company had the right to dismiss the respondent when he was convicted it could not be compelled to take him back into its employment when the conviction was set aside at some later date. In fact there was no argument to the contrary.
14. In my judgment the respondent was rightly dismissed and he is not entitled to maintain this suit. I wish, however, to make it clear that I am not holding that the rules must be read into the respondent's agreement of service. It is not necessary, for the purposes of this appeal to decide this question. I have assumed that the rules were embodied in the agreement.
15. The result is that the appeal succeeds and the suit must be dismissed with costs both here and below.