REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1217 OF 2011
Brij Bihari Singh Appellant(s)
versus
Bihar State Financial Corporation
and others
Respondent(s)
J U D G M E N T
| |
|M.Y. Eqbal, J.: |
The appellant was working on the post of Assistant General Manager in
the Bihar State Financial Corporation (in short, “the Corporation”). At the
direction of State Government, vide letter dated 20th March, 1993, the
Managing Director of the Corporation, who is the Disciplinary Authority,
put the appellant under suspension and initiated disciplinary proceedings
on the following charges:-
“1. He recommended release of Rs. 4.33 lakhs to M/s. Koshi Jute Mills Pvt.
Ltd., Supaul against purchased machines without deducting the stipulated
promoter's margin money, which is evident from the fact that the promoter's
margin money was deducted in totality at the time of subsequent release of
Rs.7.80 lakhs to the concern on 19.12.90.
2. He intentionally and in utter violence of delegated powers released Rs.
7.80 lakhs to the concern (M/s. Koshi Jute Mills Pvt. Ltd., Supaul) on
19.12.90 at his own for which he was not the competent authority for
disbursing such amount at his own. This irregular act of his is a grave
misconduct for his wrongful gain.
3. While making release of Rs. 7.80 lakhs to the concern (M/s. Koshi Jute
Mills Pvt. Ltd., Supaul) in utter violation of delegated powers, he did not
retain the 15% retention money according to stipulated conditions in the
Sanction Order and mutual agreement between the promoter and the machine
supplier.
4. While making release to the aforesaid concern he deliberately suppressed
the facts regarding observations of the Vigilance and Grievance Cell dated
22.12.89 and mentioned that the dealing of machine supplier is genuine
whereas observations of Vigilance and Grievance Cell duly approved by the
M.D. available in the loan file shows that the machine supplier is not
refunded and that of his connivance with the promoter.
5. He deliberately ignored the further observations of the Vigilance &
Grievance Cell duly approved by M.D. to inspect the site of the machine
supplier immediately and made release to the aforesaid concern.
6. He deliberately received the payment of Car Allowance for the period
from 9.3.88 to 1.10.88 without having a car in his name during aforesaid
period.
7. He purchased land at Patliputra Colony, Patna from Dr. Bindeshwari
Prasad Singh through three different absolute sale deeds (Registered at
Calcutta) showing himself as false profession without disclosing the source
of fund arranged.”
2. After serving the aforesaid memorandum of charges upon the appellant
some additional charges were served, which are also set out below :-
“He himself examined the proposal of Delhi based fake promoter of M/s.
Divine Cycle (P) Ltd., Industrial Area, Fatwah on promoter's personal
guarantee and placed the proposal with recommendation before the Board for
sanction of loan to the Company when the residential addresses of promoters
were incomplete and official address was subsequently found fake. He should
have examined the proposal before recommending the case to the Board which
he did not do so as a result the promoter managed to grab the fund from the
Corporation and left the unit abandoned. Thus due to his negligence of
duties in processing of the loan proposal the Corporation has been put to a
huge financial loss.
He, with an ulterior motive did not inform H.O. after getting the site
jointly inspected with BICICO representative in Feb. '83 that the unit was
running in a rented premises other than that of mortgaged to the
Corporation and deliberately did not take any action against the promoter
which proves his connivance with the promoter of the company to cause
wrongful loss to the Corporation.”
3. It appears that one officer of the State Government on deputation was
made Enquiry Officer, who conducted the enquiry in respect of the aforesaid
charges and submitted enquiry report holding that the majority of the
charges have been proved. Consequently, 2nd show cause notice was given to
the appellant which was duly responded. The appellant was then directed to
be personally present for hearing and then the Managing Director, instead
of passing final order, recommended the Board of Directors of the
Corporation for the punishment to be imposed upon the appellant. On receipt
of the said recommendation, the Board finally passed an order of dismissal
of the appellant from service.
4. The appellant assailed the order of dismissal by filing a writ
petition being CWJC No.3528 of 1994, which was eventually dismissed by the
learned Single Judge of the High Court. The said judgment and order was
finally upheld by the Division Bench of the High Court in Letters Patent
Appeal No.51 of 1998.
5. Mr. Sunil Kumar, learned senior counsel appearing for the appellant
assailed the impugned judgment of the High Court and the order of dismissal
of the appellant mainly on the following grounds:-
“I. The departmental proceeding was conducted by the Enquiry Officer by
merely perusing the files without representing officer presenting the case
on behalf of the employer and without recording any evidence in support of
the charges.
II. The Enquiry Officer in the departmental proceedings submitted his
report merely by perusing the files without the charges being proved by the
employer.
III. There is a serious violation of principles of natural justice for the
reason inter alia that the presenting officer neither presented the case of
the employer nor led any oral or documentary evidence. The Disciplinary
Authority, instead of passing a final order on the basis of enquiry report
and the explanation submitted by the appellant, recommended the case to the
Board for taking a final decision. The Board, which is the appellate
authority usurp the power of the Disciplinary Authority and passed the
order of punishment.”
6. Before we decide the legality and propriety of the order of dismissal
passed by the respondent, we would like to refer relevant provisions of the
Regulations called the Bihar State Financial Corporation (Staff)
Regulations, 1965. Regulations 39 and 40 read as under:-
“39. Penalties:- (i) Without prejudice to the provisions of the
Regulations, an employee who commits a breach of the regulations of the
Corporation or who displays negligence, inefficiency or indolence or who
knowingly does anything detrimental to the interest of the Corporation or
in conflict with its instructions or who commits a breach of discipline or
is guilty of any other act of misconduct or who is convicted of a criminal
offence shall be liable to any or all of the following penalties:-
Reprimand;
Withholding or postponement of increment or promotion including stoppage at
an efficiency bar, if any,
Reduction to a lower post or grade or to a lower stage in his incremental
scale.
Recovery from pay of the whole or part of any pecuniary loss caused to the
Corporation by the employee,
Fine,
Suspension,
Dismissal,
Discharge, or
Compulsory retirement
(ii) No employee shall be subjected to the penalties in clauses (b), (c),
(d), (e), (f), (g), (h) or (i) of sub-regulation (i) except by an order in
writing signed by the Managing Director and no such order shall be passed
without the charge or charges being formulated in writing and given to the
said employ so that he shall have reasonable opportunity to answer them in
writing or in person, as he prefers, and in the latter case his defence
shall be taken down in writing and read to him, provided that the
requirements or this Regulation may be waived if the facts on the basis of
which action is to be taken have been established in a Court of Law or
where the employee has absconded or where it is for any other reason
impracticable to communicate with him or where there is difficulty in
observing them and the requirements can be waived without injustice to the
employee. In every case where all or any of the requirements of this
Regulation are waived, the reasons for so doing shall be recorded in
writing.
(iii) An employee may, before the initiation of any proceeding under sub-
regulation (ii) or pending the completion of such proceeding be placed
under suspension by the Managing Director. During such suspension he shall
receive subsistence allowance equal to two thirds of his substantive pay
plus the dearness allowance, provided that if no penalty under any of the
clauses (b), (c), (d), (e), (f), (g), (h) or (i) of sub-regulation (i) is
imposed, the employee shall be paid the difference between the subsistence
allowance and the emoluments which he would have received but for such
suspension for the period while he was under suspension and that, if a
penalty is imposed on him under the said clauses, no order shall be passed
which shall have the effect of compelling him to refund such subsistence
allowance. The period during which an employee is under suspension shall,
if he is not dismissed from the service, be treated as on duty for specific
purpose, i.e. as the Managing Director may direct.
40. Right to appeal:- (i) An employee shall have a right of appeal
against any order passed by the competent authority which injuriously
affects his interests.
(ii) No appeal shall lie after the expiration of sixty days from the
date of receipt of the order against which the appeal is preferred.”
7. Perusal of Regulations 39 and 40 would show the manner and procedure
for conducting departmental enquiry. Regulation 40 confers a statutory
right of appeal to the employee against an order passed by the competent
authority which injuriously affects his interest.
8. It is well settled that a person who is required to answer a charge
imposed should know not only the accusation but also the testimony by which
the accusation is supported. The delinquent must be given fair chance to
hear the evidence in support of the charge and to cross-examine the
witnesses who prove the charge. The delinquent must also be given a chance
to rebut the evidence led against him. A departure from this requirement
violates the principles of natural justice. Furthermore, the materials
brought on record pointing out the guilt are required to be proved. If the
enquiry report is based on merely ipse dixit and also conjecture and
surmises cannot be sustained in law.
9. In the case of State of U.P. vs. Saroj Kumar Sinha, (2010) 2 SCC 772,
this Court held:-
“28. An inquiry officer acting in a quasi-judicial authority is in the
position of an independent adjudicator. He is not supposed to be a
representative of the department/disciplinary authority/Government. His
function is to examine the evidence presented by the Department, even in
the absence of the delinquent official to see as to whether the unrebutted
evidence is sufficient to hold that the charges are proved. In the present
case the aforesaid procedure has not been observed. Since no oral evidence
has been examined the documents have not been proved, and could not have
been taken into consideration to conclude that the charges have been proved
against the respondents.
29. Apart from the above, by virtue of Article 311(2) of the Constitution
of India the departmental enquiry had to be conducted in accordance with
the rules of natural justice. It is a basic requirement of the rules of
natural justice that an employee be given a reasonable opportunity of being
heard in any proceedings which may culminate in punishment being imposed on
the employee.
30. When a departmental enquiry is conducted against the government servant
it cannot be treated as a casual exercise. The enquiry proceedings also
cannot be conducted with a closed mind. The inquiry officer has to be
wholly unbiased. The rules of natural justice are required to be observed
to ensure not only that justice is done but is manifestly seen to be done.
The object of rules of natural justice is to ensure that a government
servant is treated fairly in proceedings which may culminate in imposition
of punishment including dismissal/removal from service.”
10. In the instant case, the disciplinary proceeding was conducted in
gross violation of Regulation 39 of the said Regulations inasmuch as no
reasonable opportunity was given to the delinquent to place his case in
defence. The Regulation imposed a duty on the Authority to give a personal
hearing to the delinquent.
11. A right of appeal has been provided by Regulation 40 of the said
Regulations against any order passed by the competent Authority. In the
instant case as noticed above, the Disciplinary Authority, instead of
exercising the power as Disciplinary Authority imposing punishment,
referred his recommendations to the appellate authority, namely, Board of
Directors for taking a decision and the Board of Directors exercised the
power of Disciplinary Authority and imposed punishment of dismissal thereby
deprived the appellant from moving the appellate authority against the said
order. Such exercise of power is wholly arbitrary and discriminatory.
12. Curiously enough, the Managing Director being the disciplinary
authority prepared his report and referred the matter to the Board of
Directors to consider the draft charges, enquiry report, representation
filed by the officer concerned and his finding, for taking an appropriate
decision in the case. Not only that, when the case was placed before the
Board for taking a final decision, he participated in the said meeting and
a decision was taken by the Board of Directors to dismiss the appellant
from service. In our considered opinion, such a procedure adopted by the
disciplinary authority and the appellate authority is absolutely erroneous
in law.
13. In the case of Surjit Ghosh vs. United Commercial Bank, AIR 1995 SC
1053, this Court in similar circumstances, observed:-
“5. ……..It is true that when an authority higher than the disciplinary
authority itself imposes the punishment, the order of punishment suffers
from no illegality when no appeal is provided to such authority. However,
when an appeal is provided to the higher authority concerned against the
order of the disciplinary authority or of a lower authority and the higher
authority passes an order of punishment, the employee concerned is deprived
of the remedy of appeal which is a substantive right given to him by the
Rules/Regulations. An employee cannot be deprived of his substantive right.
What is further, when there is a provision of appeal against the order of
the disciplinary authority and when the appellate or the higher authority
against whose order there is no appeal, exercises the powers of the
disciplinary authority in a given case, it results in discrimination
against the employee concerned. This is particularly so when there are no
guidelines in the Rules/Regulations as to when the higher authority or the
appellate authority should exercise the powers of the disciplinary
authority. The higher or appellate authority may choose to exercise the
power of the disciplinary authority in some cases while not doing so in
other cases. In such cases, the right of the employee depends upon the
choice of the higher/appellate authority which patently results in
discrimination between an employee and employee. Surely, such a situation
cannot savour of legality. Hence we are of the view that the contention
advanced on behalf of the respondent-Bank that when an appellate authority
chooses to exercise the power of disciplinary authority, it should be held
that there is no right of appeal provided under the Regulations cannot be
accepted.
The result, therefore, is that the present order of dismissal suffers from
an inherent defect and has to be set aside.”
14. In Amar Nath Chowdhury vs. Braithwaite and Company Ltd. and Ors.,
(2002) 2 SCC 290, a similar case came for consideration before this Court.
In that case, the appellant who was an employee of Braithwaite and Company
Ltd., a Government of India undertaking, was subjected to disciplinary
proceedings. The enquiry committee submitted its report to the
disciplinary authority who was the Chairman-cum-Managing Director of the
Company. The disciplinary authority passed an order of removal of the
appellant from service. The appellant moved the Board of Directors who was
the appellate authority. When the appeal was taken up by the Board, the
said Chairman-cum-Managing Director participated in the deliberation of the
meeting of the Board which heard and dismissed the appeal. On these facts,
this Court held that the proceeding of the Board was vitiated on account of
participation of the disciplinary authority while deciding the appeal
preferred by the appellant. Similar view has been taken in the case of
Institute of Chartered Accountants of India vs. L.K. Ratna and Ors.,
(1986) 4 SCC 537.
15. In the case of K. Chelliah vs. Chairman Industrial Finance
Corporation of India and Anr., AIR 1973 Mad. 122, an employee of the IFCI
was dismissed from service. The decision to terminate the employee was
taken up by the Chairman who was also a Member of the Board which
considered the appeal. The High Court held that the entire proceeding was
vitiated by non-observance of principles of natural justice.
16. After giving our anxious consideration in the matter, we are of the
definite view that the procedure adopted by the respondents in removing the
appellant from service is erroneous and suffers from serious discrimination
and bias. Further, the Enquiry Officer conducted the enquiry without
following the procedure and without giving sufficient opportunity to the
delinquent to place his case. Enquiry is also vitiated in law.
17. For the reason aforesaid, we find that the appeal deserves to
succeed. The orders passed by the Board of Directors and the impugned
judgments passed by the High Court are liable to be set aside. The matter
is, therefore, sent back to the Disciplinary Authority to proceed from the
stage of the enquiry afresh and pass a reasoned order in accordance with
law after giving full opportunity of hearing to the appellant. Needless to
say if the appellant is aggrieved by the final order that may be passed by
the Disciplinary Authority, he shall have a right to appeal before the
appellate authority.
…………………………….J.
(M.Y. Eqbal)
…………………………….J.
(C. Nagappan)
New Delhi
November 20, 2015
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1217 OF 2011
Brij Bihari Singh Appellant(s)
versus
Bihar State Financial Corporation
and others
Respondent(s)
J U D G M E N T
| |
|M.Y. Eqbal, J.: |
The appellant was working on the post of Assistant General Manager in
the Bihar State Financial Corporation (in short, “the Corporation”). At the
direction of State Government, vide letter dated 20th March, 1993, the
Managing Director of the Corporation, who is the Disciplinary Authority,
put the appellant under suspension and initiated disciplinary proceedings
on the following charges:-
“1. He recommended release of Rs. 4.33 lakhs to M/s. Koshi Jute Mills Pvt.
Ltd., Supaul against purchased machines without deducting the stipulated
promoter's margin money, which is evident from the fact that the promoter's
margin money was deducted in totality at the time of subsequent release of
Rs.7.80 lakhs to the concern on 19.12.90.
2. He intentionally and in utter violence of delegated powers released Rs.
7.80 lakhs to the concern (M/s. Koshi Jute Mills Pvt. Ltd., Supaul) on
19.12.90 at his own for which he was not the competent authority for
disbursing such amount at his own. This irregular act of his is a grave
misconduct for his wrongful gain.
3. While making release of Rs. 7.80 lakhs to the concern (M/s. Koshi Jute
Mills Pvt. Ltd., Supaul) in utter violation of delegated powers, he did not
retain the 15% retention money according to stipulated conditions in the
Sanction Order and mutual agreement between the promoter and the machine
supplier.
4. While making release to the aforesaid concern he deliberately suppressed
the facts regarding observations of the Vigilance and Grievance Cell dated
22.12.89 and mentioned that the dealing of machine supplier is genuine
whereas observations of Vigilance and Grievance Cell duly approved by the
M.D. available in the loan file shows that the machine supplier is not
refunded and that of his connivance with the promoter.
5. He deliberately ignored the further observations of the Vigilance &
Grievance Cell duly approved by M.D. to inspect the site of the machine
supplier immediately and made release to the aforesaid concern.
6. He deliberately received the payment of Car Allowance for the period
from 9.3.88 to 1.10.88 without having a car in his name during aforesaid
period.
7. He purchased land at Patliputra Colony, Patna from Dr. Bindeshwari
Prasad Singh through three different absolute sale deeds (Registered at
Calcutta) showing himself as false profession without disclosing the source
of fund arranged.”
2. After serving the aforesaid memorandum of charges upon the appellant
some additional charges were served, which are also set out below :-
“He himself examined the proposal of Delhi based fake promoter of M/s.
Divine Cycle (P) Ltd., Industrial Area, Fatwah on promoter's personal
guarantee and placed the proposal with recommendation before the Board for
sanction of loan to the Company when the residential addresses of promoters
were incomplete and official address was subsequently found fake. He should
have examined the proposal before recommending the case to the Board which
he did not do so as a result the promoter managed to grab the fund from the
Corporation and left the unit abandoned. Thus due to his negligence of
duties in processing of the loan proposal the Corporation has been put to a
huge financial loss.
He, with an ulterior motive did not inform H.O. after getting the site
jointly inspected with BICICO representative in Feb. '83 that the unit was
running in a rented premises other than that of mortgaged to the
Corporation and deliberately did not take any action against the promoter
which proves his connivance with the promoter of the company to cause
wrongful loss to the Corporation.”
3. It appears that one officer of the State Government on deputation was
made Enquiry Officer, who conducted the enquiry in respect of the aforesaid
charges and submitted enquiry report holding that the majority of the
charges have been proved. Consequently, 2nd show cause notice was given to
the appellant which was duly responded. The appellant was then directed to
be personally present for hearing and then the Managing Director, instead
of passing final order, recommended the Board of Directors of the
Corporation for the punishment to be imposed upon the appellant. On receipt
of the said recommendation, the Board finally passed an order of dismissal
of the appellant from service.
4. The appellant assailed the order of dismissal by filing a writ
petition being CWJC No.3528 of 1994, which was eventually dismissed by the
learned Single Judge of the High Court. The said judgment and order was
finally upheld by the Division Bench of the High Court in Letters Patent
Appeal No.51 of 1998.
5. Mr. Sunil Kumar, learned senior counsel appearing for the appellant
assailed the impugned judgment of the High Court and the order of dismissal
of the appellant mainly on the following grounds:-
“I. The departmental proceeding was conducted by the Enquiry Officer by
merely perusing the files without representing officer presenting the case
on behalf of the employer and without recording any evidence in support of
the charges.
II. The Enquiry Officer in the departmental proceedings submitted his
report merely by perusing the files without the charges being proved by the
employer.
III. There is a serious violation of principles of natural justice for the
reason inter alia that the presenting officer neither presented the case of
the employer nor led any oral or documentary evidence. The Disciplinary
Authority, instead of passing a final order on the basis of enquiry report
and the explanation submitted by the appellant, recommended the case to the
Board for taking a final decision. The Board, which is the appellate
authority usurp the power of the Disciplinary Authority and passed the
order of punishment.”
6. Before we decide the legality and propriety of the order of dismissal
passed by the respondent, we would like to refer relevant provisions of the
Regulations called the Bihar State Financial Corporation (Staff)
Regulations, 1965. Regulations 39 and 40 read as under:-
“39. Penalties:- (i) Without prejudice to the provisions of the
Regulations, an employee who commits a breach of the regulations of the
Corporation or who displays negligence, inefficiency or indolence or who
knowingly does anything detrimental to the interest of the Corporation or
in conflict with its instructions or who commits a breach of discipline or
is guilty of any other act of misconduct or who is convicted of a criminal
offence shall be liable to any or all of the following penalties:-
Reprimand;
Withholding or postponement of increment or promotion including stoppage at
an efficiency bar, if any,
Reduction to a lower post or grade or to a lower stage in his incremental
scale.
Recovery from pay of the whole or part of any pecuniary loss caused to the
Corporation by the employee,
Fine,
Suspension,
Dismissal,
Discharge, or
Compulsory retirement
(ii) No employee shall be subjected to the penalties in clauses (b), (c),
(d), (e), (f), (g), (h) or (i) of sub-regulation (i) except by an order in
writing signed by the Managing Director and no such order shall be passed
without the charge or charges being formulated in writing and given to the
said employ so that he shall have reasonable opportunity to answer them in
writing or in person, as he prefers, and in the latter case his defence
shall be taken down in writing and read to him, provided that the
requirements or this Regulation may be waived if the facts on the basis of
which action is to be taken have been established in a Court of Law or
where the employee has absconded or where it is for any other reason
impracticable to communicate with him or where there is difficulty in
observing them and the requirements can be waived without injustice to the
employee. In every case where all or any of the requirements of this
Regulation are waived, the reasons for so doing shall be recorded in
writing.
(iii) An employee may, before the initiation of any proceeding under sub-
regulation (ii) or pending the completion of such proceeding be placed
under suspension by the Managing Director. During such suspension he shall
receive subsistence allowance equal to two thirds of his substantive pay
plus the dearness allowance, provided that if no penalty under any of the
clauses (b), (c), (d), (e), (f), (g), (h) or (i) of sub-regulation (i) is
imposed, the employee shall be paid the difference between the subsistence
allowance and the emoluments which he would have received but for such
suspension for the period while he was under suspension and that, if a
penalty is imposed on him under the said clauses, no order shall be passed
which shall have the effect of compelling him to refund such subsistence
allowance. The period during which an employee is under suspension shall,
if he is not dismissed from the service, be treated as on duty for specific
purpose, i.e. as the Managing Director may direct.
40. Right to appeal:- (i) An employee shall have a right of appeal
against any order passed by the competent authority which injuriously
affects his interests.
(ii) No appeal shall lie after the expiration of sixty days from the
date of receipt of the order against which the appeal is preferred.”
7. Perusal of Regulations 39 and 40 would show the manner and procedure
for conducting departmental enquiry. Regulation 40 confers a statutory
right of appeal to the employee against an order passed by the competent
authority which injuriously affects his interest.
8. It is well settled that a person who is required to answer a charge
imposed should know not only the accusation but also the testimony by which
the accusation is supported. The delinquent must be given fair chance to
hear the evidence in support of the charge and to cross-examine the
witnesses who prove the charge. The delinquent must also be given a chance
to rebut the evidence led against him. A departure from this requirement
violates the principles of natural justice. Furthermore, the materials
brought on record pointing out the guilt are required to be proved. If the
enquiry report is based on merely ipse dixit and also conjecture and
surmises cannot be sustained in law.
9. In the case of State of U.P. vs. Saroj Kumar Sinha, (2010) 2 SCC 772,
this Court held:-
“28. An inquiry officer acting in a quasi-judicial authority is in the
position of an independent adjudicator. He is not supposed to be a
representative of the department/disciplinary authority/Government. His
function is to examine the evidence presented by the Department, even in
the absence of the delinquent official to see as to whether the unrebutted
evidence is sufficient to hold that the charges are proved. In the present
case the aforesaid procedure has not been observed. Since no oral evidence
has been examined the documents have not been proved, and could not have
been taken into consideration to conclude that the charges have been proved
against the respondents.
29. Apart from the above, by virtue of Article 311(2) of the Constitution
of India the departmental enquiry had to be conducted in accordance with
the rules of natural justice. It is a basic requirement of the rules of
natural justice that an employee be given a reasonable opportunity of being
heard in any proceedings which may culminate in punishment being imposed on
the employee.
30. When a departmental enquiry is conducted against the government servant
it cannot be treated as a casual exercise. The enquiry proceedings also
cannot be conducted with a closed mind. The inquiry officer has to be
wholly unbiased. The rules of natural justice are required to be observed
to ensure not only that justice is done but is manifestly seen to be done.
The object of rules of natural justice is to ensure that a government
servant is treated fairly in proceedings which may culminate in imposition
of punishment including dismissal/removal from service.”
10. In the instant case, the disciplinary proceeding was conducted in
gross violation of Regulation 39 of the said Regulations inasmuch as no
reasonable opportunity was given to the delinquent to place his case in
defence. The Regulation imposed a duty on the Authority to give a personal
hearing to the delinquent.
11. A right of appeal has been provided by Regulation 40 of the said
Regulations against any order passed by the competent Authority. In the
instant case as noticed above, the Disciplinary Authority, instead of
exercising the power as Disciplinary Authority imposing punishment,
referred his recommendations to the appellate authority, namely, Board of
Directors for taking a decision and the Board of Directors exercised the
power of Disciplinary Authority and imposed punishment of dismissal thereby
deprived the appellant from moving the appellate authority against the said
order. Such exercise of power is wholly arbitrary and discriminatory.
12. Curiously enough, the Managing Director being the disciplinary
authority prepared his report and referred the matter to the Board of
Directors to consider the draft charges, enquiry report, representation
filed by the officer concerned and his finding, for taking an appropriate
decision in the case. Not only that, when the case was placed before the
Board for taking a final decision, he participated in the said meeting and
a decision was taken by the Board of Directors to dismiss the appellant
from service. In our considered opinion, such a procedure adopted by the
disciplinary authority and the appellate authority is absolutely erroneous
in law.
13. In the case of Surjit Ghosh vs. United Commercial Bank, AIR 1995 SC
1053, this Court in similar circumstances, observed:-
“5. ……..It is true that when an authority higher than the disciplinary
authority itself imposes the punishment, the order of punishment suffers
from no illegality when no appeal is provided to such authority. However,
when an appeal is provided to the higher authority concerned against the
order of the disciplinary authority or of a lower authority and the higher
authority passes an order of punishment, the employee concerned is deprived
of the remedy of appeal which is a substantive right given to him by the
Rules/Regulations. An employee cannot be deprived of his substantive right.
What is further, when there is a provision of appeal against the order of
the disciplinary authority and when the appellate or the higher authority
against whose order there is no appeal, exercises the powers of the
disciplinary authority in a given case, it results in discrimination
against the employee concerned. This is particularly so when there are no
guidelines in the Rules/Regulations as to when the higher authority or the
appellate authority should exercise the powers of the disciplinary
authority. The higher or appellate authority may choose to exercise the
power of the disciplinary authority in some cases while not doing so in
other cases. In such cases, the right of the employee depends upon the
choice of the higher/appellate authority which patently results in
discrimination between an employee and employee. Surely, such a situation
cannot savour of legality. Hence we are of the view that the contention
advanced on behalf of the respondent-Bank that when an appellate authority
chooses to exercise the power of disciplinary authority, it should be held
that there is no right of appeal provided under the Regulations cannot be
accepted.
The result, therefore, is that the present order of dismissal suffers from
an inherent defect and has to be set aside.”
14. In Amar Nath Chowdhury vs. Braithwaite and Company Ltd. and Ors.,
(2002) 2 SCC 290, a similar case came for consideration before this Court.
In that case, the appellant who was an employee of Braithwaite and Company
Ltd., a Government of India undertaking, was subjected to disciplinary
proceedings. The enquiry committee submitted its report to the
disciplinary authority who was the Chairman-cum-Managing Director of the
Company. The disciplinary authority passed an order of removal of the
appellant from service. The appellant moved the Board of Directors who was
the appellate authority. When the appeal was taken up by the Board, the
said Chairman-cum-Managing Director participated in the deliberation of the
meeting of the Board which heard and dismissed the appeal. On these facts,
this Court held that the proceeding of the Board was vitiated on account of
participation of the disciplinary authority while deciding the appeal
preferred by the appellant. Similar view has been taken in the case of
Institute of Chartered Accountants of India vs. L.K. Ratna and Ors.,
(1986) 4 SCC 537.
15. In the case of K. Chelliah vs. Chairman Industrial Finance
Corporation of India and Anr., AIR 1973 Mad. 122, an employee of the IFCI
was dismissed from service. The decision to terminate the employee was
taken up by the Chairman who was also a Member of the Board which
considered the appeal. The High Court held that the entire proceeding was
vitiated by non-observance of principles of natural justice.
16. After giving our anxious consideration in the matter, we are of the
definite view that the procedure adopted by the respondents in removing the
appellant from service is erroneous and suffers from serious discrimination
and bias. Further, the Enquiry Officer conducted the enquiry without
following the procedure and without giving sufficient opportunity to the
delinquent to place his case. Enquiry is also vitiated in law.
17. For the reason aforesaid, we find that the appeal deserves to
succeed. The orders passed by the Board of Directors and the impugned
judgments passed by the High Court are liable to be set aside. The matter
is, therefore, sent back to the Disciplinary Authority to proceed from the
stage of the enquiry afresh and pass a reasoned order in accordance with
law after giving full opportunity of hearing to the appellant. Needless to
say if the appellant is aggrieved by the final order that may be passed by
the Disciplinary Authority, he shall have a right to appeal before the
appellate authority.
…………………………….J.
(M.Y. Eqbal)
…………………………….J.
(C. Nagappan)
New Delhi
November 20, 2015
