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Saturday, December 17, 2016

Even in cases where the punishment imposed by the disciplinary authority is found to be shocking to the conscience of the court, normally the disciplinary authority or the appellate authority should be directed to reconsider the question of imposition of penalty. The High Court in this case, has not only interfered with the punishment imposed by the disciplinary authority in a routine manner but overstepped its jurisdiction by directing the appellate authority to impose any other punishment short of removal.- punishment imposed was not shockingly disproportionate, no question of remitting the case to the disciplinary authority arises.


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 11975 OF 2016
                  (ARISING OUT OF SLP (C) NO.30710 OF 2014)

|CHIEF EXECUTIVE OFFICER,                     |                          |
|KRISHNA DISTRICT COOPERATIVE CENTRAL BANK    |                          |
|LTD. AND ANOTHER                             |.....APPELLANT(S)         |
|VERSUS                                       |                          |
|K. HANUMANTHA RAO AND ANOTHER                |.....RESPONDENT(S)        |

                               J U D G M E N T

                 Leave granted.

2.    A departmental inquiry was conducted against respondent  No.1  herein,
an employee of appellant, viz. Krishna  District  Cooperative  Central  Bank
Ltd., into certain charges of misconduct.   In  the  said  inquiry,  charges
were proved and  as  a  result  the  disciplinary  authority  inflicted  the
punishment of dismissal from service upon respondent No.1.  The  High  Court
vide impugned judgment has altered the said penalty of dismissal to that  of
stoppage of two increments for a period of three years.
                 Whether it was permissible for the High Court to do  so  in
the facts of the present case, is the question that needs to  be  determined
in the instant appeal.

The events leading to the filing of this appeal are recapitulated  in  brief
as under:
                  Respondent  No.  1  was  a  Supervisor  of  five   Primary
Agricultural Cooperative Societies (PACS).  He  failed  in  discharging  his
duties properly in supervising the  same,  which  led  to  cheating  by  the
members of the Nidamanuru Primary Agricultural  Cooperative  Society  (PACS)
resulting in misappropriation of the society funds, for  which  disciplinary
action was initiated against him.  The precise  charges  against  him,  vide
charge memo dated 08.03.2002, were that he  had  derelicted  his  duties  as
Supervisor  leading  to  misappropriation  of  the  funds  of  the  society.
Details of fifteen such accounts/instances were  given  wherein  frauds  had
taken place and the amount of fraud involved in  each  such  case  totalling
upto Rs.46,87,950.10.  Names of the persons who  had  misappropriated  these
amounts were also given.  It was mentioned that respondent No.1 worked as  a
Supervisor of the society and it was his  duty  to  have  close  supervision
over the affairs of the society and bring to the  notice  of  the  Bank  the
fraud which took place and safeguard the funds of the society and the  Bank.
 However, he failed  to  discharge  his  legitimate  duties  of  supervision
leading to huge misappropriation that had taken place, which  he  could  not
detect and thwart.  Thus, by derelicting his legitimate duties he paved  way
for huge misappropriation and thereby committed grave  misconduct.   Inquiry
was held and charge of dereliction of duty was  proved  as  per  the  report
given by the Inquiry Officer.

There is no dispute that this inquiry was conducted in accordance  with  the
principle of natural justice  giving  fair  chance  to  respondent  No.1  to
defend himself.  In fact, as per the report of Inquiry  Officer,  respondent
No.1 had even admitted dereliction of duties on his part.

The General Manager, Krishna District Cooperative Central Bank  Ltd.,  after
examining the report of the Inquiry Officer in  detail,  observed  that  the
charged employee committed grave misconduct and acted in  a  way  unbecoming
of an employee of the Bank and passed an order of dismissal from service  of
the Bank.  Feeling aggrieved by the order dated 05.10.2002,  respondent  No.
1 herein filed an appeal/mercy petition  before  the  Chairman,  Person  In-
charge Committee of the Krishna Cooperative Central Bank  Ltd.,  and  prayed
to consider the case  sympathetically  on  humanitarian  grounds  and  issue
reinstatement orders, which was also dismissed  on  22.01.2003.   Respondent
No. 1 thereafter filed writ petition bearing W.P.  No.4238/2003  before  the
High Court of Andhra Pradesh at Hyderabad.

The learned single Judge of the High Court of Andhra Pradesh  at  Hyderabad,
after considering the material available on record  and  after  hearing  the
arguments of the counsel for the parties,  held  that  respondent  No.1  was
negligent in performing his duties and committed an act prejudicial  to  the
interest of the Bank which resulted  in  serious  loss  to  the  Bank.   The
Single Judge of  the  High  Court  further  observed  that  because  of  the
negligence of  respondent  No.1,  an  amount  of  Rs.46,87,950.10  had  been
misappropriated by the staff and members of Nidamanuru PACS.   It  was  held
that there were no grounds to interfere with the punishment imposed  by  the
disciplinary authority and confirmed by the appellate authority.
Feeling aggrieved by the order dated 18.07.2005, respondent  No.1  preferred
Writ Appeal No. 1640/2005, which has been partly  allowed  by  the  Division
Bench of the High Court vide  its  impugned  order  dated  17.08.2014.   The
Division Bench of the High Court has, in fact, interfered with  the  penalty
imposed.  Reason for such a course of  action  adopted  by  the  High  Court
given  in  the  impugned  judgment  is  that  there  was  no  allegation  of
misappropriation against  respondent  No.1.   The  accusation  was  lack  of
proper supervision which holds good against the top administration as well.

After hearing the counsel for the parties, we  are  of  the  view  that  the
impugned judgment of the Division Bench of the High Court is  unsustainable.
 There are more than one reason for coming to  this  conclusion,  which  are
stated hereunder:

(i)   The observation of the High Court that accusation of  lack  of  proper
supervision holds good against the top administration  as  well  is  without
any basis.  The High Court did not appreciate that respondent No.1  was  the
Supervisor and it was his specific duty, in  that  capacity,  to  check  the
accounts etc. and supervise the work of subordinates.  Respondent  No.1,  in
fact, admitted this fact.  Also, there is an admission to  the  effect  that
his  proper  supervision  would  have  prevented  the  persons  named   from
defrauding the Bank.  The High Court failed to appreciate  that  the  duties
of the Supervisor  are  not  identical  and  similar  to  that  of  the  top
management of the Bank.  No such duty by  top  management  of  the  Bank  is
spelled out to show that it was similar to the duty of respondent No.1.

            (ii) Even otherwise, the aforesaid reason could not be  a  valid
reason for interfering with  the  punishment  imposed.   It  is  trite  that
Courts, while exercising their power of judicial review over  such  matters,
do not sit as the appellate authority.  Decision qua the nature and  quantum
is the prerogative of the disciplinary authority.  It is  not  the  function
of  the  High  Court  to  decide  the  same.   It  is  only  in  exceptional
circumstances, where it is found that the punishment/penalty awarded by  the
disciplinary authority/ employer is wholly disproportionate, that too to  an
extent that it shakes the conscience of the Court, that the Court  steps  in
and interferes.
            No doubt, the award of punishment, which is  grossly  in  excess
to the allegations, cannot claim immunity and remains open for  interference
under limited scope for judicial review.  This  limited  power  of  judicial
review  to  interfere  with  the  penalty  is  based  on  the  doctrine   of
proportionality which is a well recognised concept  of  judicial  review  in
our jurisprudence.  The punishment should appear to be  so  disproportionate
that it shocks the judicial conscience.  (See State of Jharkhand &  Ors.  v.
Kamal Prasad & Ors.[1]).  It would also be  apt  to  extract  the  following
observations in this behalf from  the  judgment  of  this  Court  in  Deputy
Commissioner, Kendriya Vidyalaya Sangthan & Ors.  v. J. Hussain[2]:
“8.  The order of the appellate authority while having a relook at the  case
would, obviously, examine as  to  whether  the  punishment  imposed  by  the
disciplinary authority is reasonable or not. If the appellate  authority  is
of the opinion that the case warrants lesser  penalty,  it  can  reduce  the
penalty so imposed by the disciplinary authority. Such a power  which  vests
with the appellate authority departmentally is ordinarily not  available  to
the court or a tribunal. The court while undertaking judicial review of  the
matter is not supposed to substitute  its  own  opinion  on  reappraisal  of
facts. (See UT of Dadra & Nagar Haveli v. Gulabhia M. Lad [(2010) 5 SCC  775
: (2010) 2 SCC (L&S) 101]  .  In  exercise  of  power  of  judicial  review,
however, the court can interfere with the  punishment  imposed  when  it  is
found to be totally irrational or is outrageous in defiance of  logic.  This
limited  scope  of  judicial  review  is  permissible  and  interference  is
available  only  when  the  punishment   is   shockingly   disproportionate,
suggesting lack of good faith. Otherwise, merely because in the  opinion  of
the court lesser punishment would have been more appropriate,  cannot  be  a
ground to interfere with the discretion of the departmental authorities.

When the punishment is found to  be  outrageously  disproportionate  to  the
nature of charge, principle of  proportionality  comes  into  play.  It  is,
however, to be borne in mind that this principle would be  attracted,  which
is in tune with the doctrine of Wednesbury  [Associated  Provincial  Picture
Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 :  (1947)  2  All  ER  680
(CA)] rule of reasonableness, only when in the facts  and  circumstances  of
the case, penalty imposed is so disproportionate to  the  nature  of  charge
that it shocks the conscience of the  court  and  the  court  is  forced  to
believe that it is totally unreasonable and  arbitrary.  This  principle  of
proportionality was propounded by Lord Diplock in Council of  Civil  Service
Unions v. Minister for the Civil Service [1985 AC 374 : (1984) 3 WLR 1174  :
(1984) 3 All ER 935 (HL)] in the following words: (AC p. 410 D-E)

“...Judicial review has I think developed to  a  stage  today  when  without
reiterating any analysis of the steps by  which  the  development  has  come
about, one can conveniently classify under three heads of the  grounds  upon
which administrative action is subject to control by  judicial  review.  The
first ground I would call ‘illegality’, the second ‘irrationality’  and  the
third ‘procedural impropriety’. This is not to say that further  development
on a case by case basis may not in course of time  add  further  grounds.  I
have in mind particularly  the  possible  adoption  in  the  future  of  the
principle of ‘proportionality’.”

An imprimatur to the aforesaid principle was accorded by this Court as  well
in Ranjit Thakur v. Union of India [(1987) 4 SCC 611 : 1988 SCC  (L&S)  1  :
(1987) 5 ATC 113] . Speaking for the Court, Venkatachaliah, J. (as  he  then
was) emphasising that “all powers have legal limits” invoked  the  aforesaid
doctrine in the following words: (SCC p. 620, para 25)

“25...The question of the choice and quantum of  punishment  is  within  the
jurisdiction and discretion of the court martial. But the  sentence  has  to
suit the offence and the offender. It should not  be  vindictive  or  unduly
harsh. It should not be so disproportionate to the offence as to  shock  the
conscience and  amount  in  itself  to  conclusive  evidence  of  bias.  The
doctrine of proportionality, as part of  the  concept  of  judicial  review,
would ensure that  even  on  an  aspect  which  is,  otherwise,  within  the
exclusive province of the court martial, if the decision of the  court  even
as to sentence is an outrageous defiance of logic, then the  sentence  would
not be immune from correction. Irrationality and perversity  are  recognised
grounds of judicial review.”

                 No such finding is arrived at by  the  High  Court  to  the
effect that  the  punishment  awarded  to  respondent  No.1  was  shockingly
                 Even otherwise, we do not find it to be  so  having  regard
to the fact that respondent  No.1  did  not  perform  his  duties  with  due
diligence and his negligence in performing the duties as  a  Supervisor  has
led to serious frauds in number of accounts by the  subordinate  staff.   It
was, therefore, for the disciplinary authority to  consider  as  to  whether
respondent No.1 was fit to continue in the post of Supervisor.
(iii) The impugned order is also faulted for the reason that it is  not  the
function of the High Court to impose a particular punishment even  in  those
cases where it was found that penalty awarded by the employer is  shockingly
disproportionate.  In such a  case,  the  matter  could,  at  the  best,  be
remanded to the disciplinary authority for imposition of  lesser  punishment
leaving it to such authority to consider as to which  lesser  penalty  needs
to be inflicted upon the delinquent employee.  No doubt, the  administrative
authority has to exercise its  powers  reasonably.   However,  the  doctrine
that powers must be exercised reasonably  has  to  be  reconciled  with  the
doctrine that the  Court  must  not  usurp  the  discretion  of  the  public
authority.  The Court must strive  to  apply  an  objective  standard  which
leaves to the deciding authority the  full  range  of  choice.   In  Lucknow
Kshetriya Gramin Bank  &  Anr.  v.  Rajendra  Singh[3],  this  principle  is
formulated in the following manner:

“13.  Indubitably, the well-ingrained principle of law is  that  it  is  the
disciplinary authority, or the appellate authority in appeal,  which  is  to
decide the nature of  punishment  to  be  given  to  a  delinquent  employee
keeping in view the seriousness of  the  misconduct  committed  by  such  an
employee. Courts cannot assume and usurp the function  of  the  disciplinary
authority. In Apparel Export Promotion Council v. A.K. Chopra [(1999) 1  SCC
759 : 1999 SCC (L&S) 405] this principle  was  explained  in  the  following
manner: (SCC p. 773, para 22)

“22...The High Court in our opinion fell in error in  interfering  with  the
punishment, which could be lawfully imposed by the departmental  authorities
on the respondent for his proven misconduct. … The  High  Court  should  not
have substituted  its  own  discretion  for  that  of  the  authority.  What
punishment was required to be imposed, in the  facts  and  circumstances  of
the case, was a matter which fell exclusively  within  the  jurisdiction  of
the competent authority and did not warrant any  interference  by  the  High
Court. The entire approach of the High Court has been faulty.  The  impugned
order of the High Court cannot be sustained on this ground alone.”

14.  Yet again, in State of Meghalaya v. Mecken Singh  N.  Marak  [(2008)  7
SCC 580 : (2008) 2  SCC  (L&S)  431],  this  Court  reiterated  the  law  by
stating: (SCC pp. 584-85, paras 14 and 17)

“14.  In the matter of imposition of sentence, the scope of interference  is
very limited and restricted to exceptional cases. The  jurisdiction  of  the
High Court, to interfere with the  quantum  of  punishment  is  limited  and
cannot be exercised without sufficient reasons.  The  High  Court,  although
has jurisdiction in appropriate case, to consider the question in regard  to
the quantum of punishment, but it has a limited role  to  play.  It  is  now
well settled that the High Courts, in exercise of powers under Article  226,
do  not  interfere  with  the  quantum  of  punishment  unless  there  exist
sufficient reasons therefor. The  punishment  imposed  by  the  disciplinary
authority or the appellate authority unless shocking to  the  conscience  of
the court, cannot be subjected to judicial review. In the impugned order  of
the High Court no reasons whatsoever have  been  indicated  as  to  why  the
punishment was considered disproportionate. Failure to give reasons  amounts
to denial of justice. The mere statement that it is  disproportionate  would
not suffice.

                          xx          xx         xx

17.  Even  in  cases  where  the  punishment  imposed  by  the  disciplinary
authority is found to be shocking to the conscience of the  court,  normally
the disciplinary authority or the appellate authority should be directed  to
reconsider the question of imposition of penalty. The  High  Court  in  this
case,  has  not  only  interfered  with  the  punishment  imposed   by   the
disciplinary authority in a routine manner but overstepped its  jurisdiction
by directing the appellate authority to impose any  other  punishment  short
of removal. By fettering  the  discretion  of  the  appellate  authority  to
impose appropriate punishment  for  serious  misconducts  committed  by  the
respondent, the High  Court  totally  misdirected  itself  while  exercising
jurisdiction under Article 226. Judged in this  background,  the  conclusion
of the Division Bench of the High Court cannot  be  regarded  as  proper  at
all. The High Court has  interfered  with  the  punishment  imposed  by  the
competent authority in a casual manner and, therefore, the appeal will  have
to be accepted.”

In any case, insofar as the instant matter is concerned, since we find  that
the punishment imposed was not shockingly disproportionate, no  question  of
remitting the case to the disciplinary authority arises.  We,  thus,   allow
this appeal and set

aside the impugned judgment of the Division Bench of the High Court.

                                                                (A.K. SIKRI)

                                                       (ABHAY MANOHAR SAPRE)

DECEMBER 09, 2016.
[1]   (2014) 7 SCC 223
[2]   (2013) 10 SCC 106
[3]   (2013) 12 SCC 372

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