Plainly, the principal mandate of the rule is that seniority is determined on the basis of date of appointment (“shall be fixed from the date of their appointment”). Proviso (2) lists out two rules. The first is that those selected and appointed through a prior selection would rank senior to those selected and appointed through a later selection process. The High Court, in this case, was of the opinion that this rule (i.e. proviso) applied to selections from the same source, i.e. where two sets of direct recruits were appointed, those selected through a previous recruitment process, would rank senior to those recruited through a later recruitment process. This interpretation is, in this court’s opinion, salutary. There may be various reasons why the ultimate appointment of one batch of recruits may be delayed: challenges to some part of the recruitment process (such as shortlisting, calling of candidates for interviews etc.), during which period, a subsequent recruitment may be undertaken. To forestall any apprehensions as to which of the appointees would be senior, and 15 if those from the earlier process are appointed later, the proviso clarifies that candidates from the earlier process would rank senior, despite the main rule speaking of a date of appointment based seniority. The same logic would apply to departmental promotees, as well, if two batches of promotees are appointed, through selection. The second limb of the second proviso clarifies that when merit based, or seniority based promotions are resorted to, the applicable norm would be seniority in the feeder cadre, to forestall any debate about the rule of merit (in the selection) being the guiding principle

1

REPORTABLE

 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO (S). 3832-3833 OF 2020

(ARISING OUT OF SLP (C) NO(S). 26669-26670/2018)

MANOHAR LAL JAT & ORS. ETC. ...APPELLANT(S)

VERSUS

THE STATE OF RAJASTHAN & ORS. ETC. ...RESPONDENT(S)

WITH

CIVIL APPEAL NO. _3834 OF 2020

(ARISING OUT OF SLP (C) NO. 26671/2018)

J U D G M E N T

S. RAVINDRA BHAT, J.

1. Leave granted. With consent of all the counsel for parties, the appeals

were heard finally and judgement was reserved on 24th January 2020. These

appeals challenge the common judgement of the Rajasthan High Court1

. The

Division Bench of the High Court by the impugned judgement set aside an

order made by the learned single judge of that court and held that the present

Appellants (hereafter referred to as “direct recruits” or “DRs”) were not entitled

to claim seniority over and above the respondents, hereafter called

“departmental promotes” or “DPs”). The DRs had approached the High Court in

1

Sitting at its Jaipur Bench, in DB Special Appeal Writ Number 1053/2017 and DB Special Appeal Writ No.

1250/2017

2

the first instance, claiming that the seniority list, showing the DPs in earlier

positions, was untenable; the single judge allowed that petition. The Division

Bench has, however, allowed the appellants to question the eligibility of DPs to

be recruited.

2. The relevant facts are that on 01.09.2009, the Finance Department of the

Government of Rajasthan granted approval for creation of 531 posts of Tax

Assistants. This newly created post was augmented by further 23 posts, which

were added to the cadre; the final tally of such newly created posts of Tax

Assistants became 554. Amendments to the Rajasthan Commercial Taxes

Subordinate Services General Branch Rules, 1975, made with effect from

01.12.2010, prescribed the manner of filling of posts of Tax Assistants.

Schedule-I of the Amendment Rules defined the manner of filling of the posts

in the following terms:

“100% by direct recruitment:

(a) 80% by the appointing authority in accordance with Schedule

III

(b) 20% by selection from amongst ministerial staff of the

commercial taxes department that by way of departmental

examination in accordance Schedule II”

3. On 4th October 2010, a Departmental Selection Committee was

constituted for recruitment of both categories and proceedings were initiated

soon filling all the for 554 posts of Tax Assistants. In accordance with the rules,

it was proposed to fill the 80% quota of direct recruits to the extent of 443

vacancies and 111 from amongst DPs. Accordingly, on 25.01.2011 and

advertisement was issued for recruitment of DRs. The written examination,

stipulated under the rules was conducted for recruitment of DR’s; thereafter a

typing test was conducted on 15.05.2011. 356 candidates participated in this

typing test. On 16.05.2011, provisional results were declared for the test held

for DRs. Thereafter letters were apparently written by the Commissioner,

Department of Commercial Taxes enclosing a list of successful candidates, to 

3

the police authorities for due verification of their character and antecedents. On

24.05.2011, the department advertised for filling up of the 20% quota for DPs.

Earlier the proposal was to hold the written examination for the DPs on

24.06.2011; however, it was held earlier on 11.06.2011 and 12.06.2011. The

results of these tests for the DPs were announced on 14.06.2011 and the

department issued promotion letters on 23.06.2011. On 24.06.2011 the

appellants were issued with letters for police verification and medical test. By

this time however the DPs had already been promoted, and had taken charge of

their posts. The appointment orders of the DRs were issued subsequently; on

04-07-2011.

4. On 5th June, 2013, the Commercial Taxes Department of the State of

Rajasthan published a seniority list in which those appointed as DPs, in the 20%

quota were shown as senior to the DR/the appellants. Apparently, some of the

DRs – including the appellants objected to this placement and sought for

correction of the seniority list2

. Another provisional/tentative seniority list was

issued on 15-05-2014, in which the position was no different inasmuch as the

DPs were shown above the DRs. The appellants again objected; nevertheless on

18-09-2015 the Department substantially confirmed their previous positions in

the final list published by it.

5. The Direct Recruits (DRs) filed one set of Writ Petitions3

contending that

the seniority lists were contrary to law. Yet another seniority list was issued by

the Department on 30.05.2016 in which the previous position of the DPs was

left undisturbed. This became the subject matter of challenge before another

proceeding4

. Though the two writ proceedings had challenged the seniority

position allotted to the DRs except the few DPs and official respondents, no

2The third appellant, Ankur Kumar Bansal objected through a representation dated 27.06.2013, in effect stating

that the placement of DPs above the DRs was unjustified and contrary to the rules.

3 Manohar Lal Jat & Ors. vs. State of Rajasthan &Ors.

4 Gajendra Singh & Ors. vs. State of Rajasthan &Ors. CWP Np. 4630 of 2017

4

others were impleaded. The prominent grounds of attack in the writ petition,

were that the recruitments of the DRs and DPs took place simultaneously and

that the departmental candidates were mala fide issued with appointment letters

earlier, for no reason except to ensure that their dates of entry into the cadre of

tax inspectors were earlier, in order to favour their further career progression.

6. A learned Single Judge of the High Court by Judgment dated 25.05.2017

considered Rule 27 of the concerned Rules (hereafter called the “Seniority

Rules”)5

.

7. The Single Judge took particular notice of Rule 27(2) which stated that

those who undergo recruitment process in an earlier selection will be placed at

senior positions to those who undergo recruitment in a selection by a later

process. The Single Judge concluded as follows:

“16. A glance of Rule 2 (1) would reveal that the

advertisement dated 25th January, 2011, was issued with

reference to the vacancies of the year 2010-2011. Obviously, the

advertisement dated 24th May, 2011, would be a recruitment

process with reference to the vacancies of the subsequent year

2011-2012. The respondents are curiously silent on this aspect

in their counter affidavits as well as during the arguments.

17. A conjoint reading of Rule 2(1) and 27 of the Rules of

1975, would leave no room of any doubt that the persons selected

and appointed as a result of a selection process, which is not

subject matter to review and revision, shall rank senior to the

persons who are selected and appointed as a result of subsequent

selection. Thus, the phrase „subsequent selection‟ under Rule 27

read with Section 2(1) leads to logical conclusion that the

petitioners are employees who were appointed in a previous

selection and the private respondents (departmental employees),

are the persons who were accorded appointment in a „subsequent

selection‟. Hence, those departmental candidates cannot be

allowed to march over and above in the seniority to the

petitioners, who are the successful selected candidates of a

previous selection process.”

5 Rajasthan Commercial Taxes Subordinate Services (General Branch) Rules, 1975

5

8. The DRs aggrieved by the Judgment of the learned Single Judge

preferred appeals to the Division Bench Special Appeal Writ No. 1053 of 2017

and Special Appeal Writ No. 1250 of 2017.

9. Since all the Departmental Promotees (DPs) were not represented before

the Single Judge, many of them preferred third party appeals. The Division

Bench by its impugned Judgment allowed these appeals by DPs after noticing

that Rule 27 which had been relied upon by the Single Judge had been

amended. The Division Bench took note of the fact that after amendment with

the amendment provisos have been added.

10. The Court held that the main provision of the Rule 27 was amended on

10.10.2002 which added a second proviso and that the proviso would operate

when two selections are for one and the same category. The relevant

observations of the Division Bench are as follows:

“In our opinion, there is conflict between the main provision of

rule 27 and second proviso. If proviso is applied taking into

consideration the earlier and subsequent selection followed by

appointment then, in a given case, where a selection was started

earlier to subsequent but the appointment is given first to those

selected pursuant to subsequent selection, the relevance of the

date of appointment gets nullified. It is because of appointment

of the candidates pursuant to the subsequent selection prior to

the appointment of the candidates out of earlier selection. They

would not get seniority despite earlier appointment and,

thereby, significance to the date of appointment given in Rule

27 would be violated. The proviso cannot nullify the main

provision and, in those circumstances, consideration of two

provisions has to be made. The proviso would operate when

two selections are for one and the same category.”

11. According to the Division Bench thus the two categories DPs and DRs

were different and it was not open to the DRs especially after a long lapse of

time, to question the placement in the seniority list of the DPs. However, since

the DRs/Original Writ Petitioners had argued before the Division Bench about 

6

the ineligibility of DPs (or some of them) to participate in the selection –(which

was held in 2011) that issue was kept open.

Arguments of parties

12. Mrs. Aishwarya Bhati, learned Senior Counsel and Mr. Prashant Bhushan

appearing on behalf of the appellants argued that the Division Bench ignored

the fact that recruitments in this case were conducted with two different

advertisements for the same post, the appellants who were from open category

against 80% quota were selected earlier and the other set of departmental

employees were recruited later. In terms, the DR, answered the description of

having been selected earlier, and having participated in an earlier recruitment

process. On the other hand, the DPS responded to a different advertisement

issued later, and underwent a separate selection process. Plainly, having regard

to the express terms of the rule, i.e. Rule 27, the seniority of the direct recruits

(i.e. the appellants and others like them) had to be determined at posts earlier

than or senior to the DPs who were selected later.

13. It was argued that the mere incidence of issuance of earlier appointment

letters could not have resulted in an undue and unfair advantage to the DPs as to

deprive the DRs of earlier slots of the common seniority lists. Elaborating on

this aspect, learned counsel relied upon the observations of the Single Judge and

stated that selection or recruitment for the DR quota were advertised on

25.01.2011; the test was conducted on 17.04.2011 and on 16.05.2011 the select

list for the DR category was published. However, the Commercial Taxes

Department deliberately withheld issuing appointment letters and released

another advertisement to fill up the DP 20% quota of the ministerial employees

who were working in the same department. The departmental examination for

the DP quota was conducted on two successive dates i.e. 11.06.2011 and

12.06.2011. The learned counsel highlighted that this was despite the fact that 

7

the departmental test was originally scheduled later. Having proceeded to

schedule the test earlier the state proceeded with unusual speed and published

the results of the DP category candidates for the 20% quota on 14.06.2011 and

hastily issued appointment letters on 23.06.2011. It was only thereafter that the

appointment letters of DR category candidates (for the 80% open quota) were

issued. It was submitted that these circumstances ipso facto established malice

against DRs and advertisement on the part of the State and its officers, to grant

undue and unfair advantage to the DP category of candidates.

14. Learned counsel highlighted that the representation/letter by the General

Secretary of the Departmental Employees Association had pressurised the

Commercial Tax Department to recruit DPs earlier and relied upon a letter dated

19.05.2011. The conduct and action of the State in speeding up the process of

selection of the DP quota to the utter disadvantage of the DR recruits, was thus

established from the record. The department in fact given unprecedented

priority, to select candidates for the 20% departmental quota.

15. Learned counsel also argued that the explanation given by the State for

the delay that occurred in issuing appointment letters to the DR quota

candidates (which was that sometime was taken in police verification and

medical check up) has to be considered in the light of these established facts.

The learned counsel emphasised that it was only after the appointment letters

were issued to the DP candidates in the 20% category on 24.06.2011 that a mere

10 days later, i.e. 14.07.2011, appointment letters were issued to the DR

candidates.

16. It was lastly argued that the Division Bench while ignoring the facts of

the case, interpreted the rules (Rules 27 of the Rajasthan Commercial Taxes

Subordinate Service (General Branch) Rules, 1975 (in short, the Rules of 1975)

incorrectly. The original Rule 27 which was amended by notification dated

10.10.2002, which reckoned the seniority from the date of appointment.

However, the proviso (2) of the Rules 27 was retained, which clearly stipulates 

8

“that the persons selected and appointed as a result of selection, which is not

subjected to review and revision, shall rank senior to the persons who are

selected and appointed as a result of subsequent selection. Seniority inter-se of

persons selected on the basis of seniority-cum-merit and on the basis of merit in

the same selection shall be same as in the next below grade”.

17. It is argued that pertinently the intent of the rule, in retaining the proviso

(2) of the said rule, was to avoid ambiguity in reckoning seniority, in the cases

wherein the selection for the same post i.e. “Tax Assistants’ is done through two

different sources, wherein the date of advertisements and selection processes are

different. The proviso carves out an exception to the main provision, and the

function of the proviso is to limit the main part of the provision and carve out

something which but for the proviso would have been within the operative part.

This Court in various judgments such as S. Sundaram Pillai and others Vs. V.

R. Pattabiraman and Others6

; J.K. Industries Ltd. and & Ors Chief inspector of

Factories and Boilers & Ors7

, held “proviso is an exception to the main part of

the section; but it is recognized that in exceptional cases a proviso may be

substantive provision itself.”

18. It is urged that the amended rule 27, only speaks about the seniority on

the basis of date of appointment; however, the proviso (2) clarifies the rule for

reckoning seniority when there are two advertisements for the same post, filled

through different categories (sources) of candidates. Therefore, the main rule

will only apply when the recruitment is through the same advertisement. It

cannot be applied in a case where another advertisement is issued for the same

post after the release of the results of the first advertisement and appointment

order is given in the later case. This process of arbitrary recruitment will always

deprive of the candidates in their order of seniority in their whole service tenure

which is against the principles of Article 14.

6

(1985) 1 SCC 591

7

1996) 6 SCC 665

9

19. Dr. Manish Singhvi, the learned Additional Advocate General, appearing

on behalf of the State of Rajasthan and Mr. R. Venkatramani, learned Senior

Counsel appearing on behalf of the contesting respondents, i.e. the

Departmental Promotee (DP) candidates, made their submissions. It was

argued on behalf of the State respondents that the permission for creation of 531

posts was given on 01.09.2009 and later 23 posts were added. The recruitments

in question resorted to in 2011, through the two advertisements issued (one for

the 80% quota of DRs and other to fill up 20% quota of DPs) was the first

recruitment drive to fill up these newly created posts which had hitherto not

existed. It was urged on behalf of the State that these circumstances of the case

are to be kept in mind from an important perspective i.e. the first attempt of the

State to fill up a large number of posts after they were encadred and were lying

unfilled for nearly two years. Learned counsel submitted that no doubt

advertisements to fill up the DR vacancies were issued prior in point of time i.e.

in January 201, however in response to this advertisement for the 80%

vacancies (i.e. 443 vacancies) no less than 15,352 applications were received;

these has to be screened to determine eligibility of the candidates; thereafter the

written examination was conducted on 17.04.2011. A typing test was also

conducted on 15.05.2011 for 356 candidates. A provisional result was declared

on 16.05.2011. The learned Additional Advocate General emphasized that the

police verification and medical examination processes took a little while for

such a large number of candidates and was eventually completed on 01.07.2011.

20. It was urged that two months period for completing this process cannot be

considered unreasonable for any stretch of imagination – since Rajasthan is the

largest State geographically and has about 35 districts. The advertisement for

departmental candidates was in the meanwhile issued on 24.05.2011. For filling

111 vacancies, 232 applications were received, written test was held on two

dates i.e. 11th and 12th June, 2011. The DPs were not required to undergo any

typing test nor require police verification and medical examination since they 

10

were working with the Government for a considerable period of time. The

process for final appointment thus was relatively easy. In these circumstances

their results were compiled and published on 14.06.2011 but having regard to

the simplified and shortened nature of the selection process they were appointed

on 24.06.2011.

21. The learned Additional Advocate General and Senior Counsel for the

contesting respondents submitted that the Division Bench correctly concluded

that the underlying idea behind Rule 27 and the principle of seniority indicated

by it which is that those selected earlier would rank earlier to those selected

later, would apply in the case of recruits in the same category. Thus, for

instance, if within the DR quota there are two sets of selections, the Rule

enunciated in Rule 27, squarely applied, however that principle would be

inapplicable where the recruits are appointed from different categories such as

promotees and direct recruits. In such cases the main part of the Rule i.e.

seniority based upon the entry into the cadre would squarely applied.

22. Learned senior counsel highlighted that the consistent view of this Court

in several decisions has been to confine the proviso within the field of its

operation and not allow it to supplant the main or enacted portion contained in

the provision of which the proviso relates to. It is thus urged that the proviso

cannot be interpreted as nullifying the enactment or taking away something

conferred by the main section or provision. Learned counsel relied upon certain

decisions in this regard8

. The learned AAG emphasized that the facts on record

show that the entire cadre was created for the first time by the single notification

dated 01.12.2010. The recruitment to the two categories occurred as a first time

measure. That advertisements were issued on different dates – one for direct

recruits (DRs) and the other for direct promotees (DPs) did not make them

separate recruitment processes. They were contemporaneous in that the State

8Casio India Pvt. Ltd. v. State of Haryana (2016) 6 SCC 209 & Rohitash Kumar v. Om Prakash Sharma and

Ors. (2013) 11 SCC 451. 

11

intended the selected candidates to man the same post. Thus, it could not be

argued that appointments made in the 80% quota for DR candidates was for a

previous year (having regard to the definition of “Year” under the recruitment

rules9

.

23. It was highlighted in this regard that the decision to conduct the

recruitment and selection process was a composite one – though advertisements

were issued on separate dates. If one kept this in mind, it was clear that the

entire recruitment process was a composite one. Given that the 80% quota

earmarked for DRs was available to candidates with different eligibility criteria,

of necessity, a separate advertisement was issued. Similarly, having regard to

the fact that the 20% departmental promotion quota could be filled only by

those working within the Commercial Tax Department (and which could not be

filled by DRs), a different kind of advertisement with relevant eligibility

conditions was issued. This did not mean that separate selection processes were

held; since the department had vacancies in a new post for the first time,

recruitment had to be considered common.

Relevant rules:

24. Rule 27 of the Rajasthan Commercial Taxes Subordinate Services

(General Branch) Rules, 1975 was taken note of by the learned Single Judge.

The relevant extract of that Rule is reproduced below:

“27. Seniority “Seniority of persons appointed to the

lowest post of the Service or lowest categories of posts in

each of the Group/Sections of the Service, as the case

may be, shall be determined from the date but in respect

of persons appointed by promotion to other higher posts

9 Rule 2 reads as follows:

“Definition – 2.In these rules, unless the context otherwise requires:

(a)…………..

(b)………………

xxxxxx xxxxxx xxxxxx

(l) Year “means financial year”.

12

in the Service or other higher categories of posts in each

of the Groups/Sections in the Service, as the case may be,

shall be determined from the date of their regular

selection to such posts.

Provided

(1)That the seniority inter-se of the persons appointed to

the Service before the commencement of the rules,

and/or in process of integration of the Services of the

pre-reorganisation of States of Rajasthan or the

Services of the new State of Rajasthan established by

the State Re-organisation Act, 1956, shall be

determined, modified or altered by the Appointing

Authority on an ad hoc basis;

(2)That the persons selected and appointed as a result of

a selection, which is not subject to review and

revision, shall rank senior to the persons who are

selected and appointed as a result of subsequent

selection. Seniority inter se of persons selected on the

basis of seniority-cum-merit and on the basis of merit

in the same selection shall be the same as in the next

below grade;”

25. With effect from 10.10.2002, the main provision of Rule 27 was amended

even while maintaining the two provisos below it. This was referred to by the

Division Bench in its impugned judgment. The amendment to the Rule is

extracted below:

“AMENDMENT: In the column of the Schedule attached

herewith, following words shall be substituted in place of every

Service Rule Col. No.4 with regard to substantial provisions

(except their provisions) which means:-

„Seniority in respect of persons appointed on the posts included

in the cadre of service shall be as per the provisions of these

rules and shall be fixed from the date of their appointment. Those

appointed on ad hoc or urgent temporary basis, they shall not be

considered after their regular selection.”

13

26. The following provisos to the above main provision (i.e. Rule 27 [1])

were left intact:

“Provided that

(1) That the seniority inter-se of the persons appointed to the

Service before the commencement of the rules, and/or in process

of integration of the Services of the pre-reorganisation of States

of Rajasthan or the Services of the new State of Rajasthan

established by the State Re-organisation Act, 1956, shall be

determined, modified or altered by the Appointing Authority on

an ad hoc basis;

(2) That the persons selected and appointed as a result of a

selection, which is not subject to review and revision, shall rank

senior to the persons who are selected and appointed as a result

of subsequent selection. Seniority inter se of persons selected on

the basis of seniority-cum-merit and on the basis of merit in the

same selection shall be the same as in the next below grade;”

27. Thus, the main provision was amended as to clearly provide that seniority

in the cadre would be fixed from the dates of appointment of the employees, or

officers, to the cadre.

28. The question to be decided here is having regard to the fact that the DPs

were concededly appointed prior to the DRs, where the latter, as is argued by

them appointed on the basis of merit “in the same selection”10 The DRs

argument is that their appointment, later than the DPs is the result of

manipulation by the department (or, rather some officers in the department) who

wished to favor the DPs; and that since their selections began before that of the

DPs, the second proviso is attracted, for determination of inter se seniority.

They also argue that the selection- in terms of the rules, “subsequent selection”

necessarily refers to a chronologically later event; in the present case, the

recruitment of the DRs began with the advertisement in January, 2011 (and

10Second proviso to Rule 27 (1)

14

thus, in the earlier financial year, having regard to Rule 2 (l)) whereas the

selection process for DPs began in May, 2011.

29. On a plain reading of the entire rule (Rule 27 [1] and the two provisos)

what is evident is that (a) before the amendment of 2002, seniority of personnel

appointed to the “lowest categories of posts” in any department was to be

determined as from the date of appointment; however, for promotees, it was to

be from the date of selection; (b) after the amendment of 2002, seniority has to

be fixed (by reason of Rule 27 (1)) as on the date of appointment to the post or

service; (c) however, in the case of pre-state integration of state (of Rajasthan)

or pre-integration of services, seniority could be “modified or altered by the

Appointing Authority on an ad hoc basis”- this clearly was meant to be a

“sunset” clause, i.e. operative for a limited period; (d) the second proviso,-

which is the one pressed into service by the DRs, states that seniority of those

selected earlier will be determined over those selected latter.

30. Plainly, the principal mandate of the rule is that seniority is determined

on the basis of date of appointment (“shall be fixed from the date of their

appointment”). Proviso (2) lists out two rules. The first is that those selected

and appointed through a prior selection would rank senior to those selected and

appointed through a later selection process. The High Court, in this case, was of

the opinion that this rule (i.e. proviso) applied to selections from the same

source, i.e. where two sets of direct recruits were appointed, those selected

through a previous recruitment process, would rank senior to those recruited

through a later recruitment process. This interpretation is, in this court’s

opinion, salutary. There may be various reasons why the ultimate appointment

of one batch of recruits may be delayed: challenges to some part of the

recruitment process (such as shortlisting, calling of candidates for interviews

etc.), during which period, a subsequent recruitment may be undertaken. To

forestall any apprehensions as to which of the appointees would be senior, and 

15

if those from the earlier process are appointed later, the proviso clarifies that

candidates from the earlier process would rank senior, despite the main rule

speaking of a date of appointment based seniority. The same logic would apply

to departmental promotees, as well, if two batches of promotees are appointed,

through selection. The second limb of the second proviso clarifies that when

merit based, or seniority based promotions are resorted to, the applicable norm

would be seniority in the feeder cadre, to forestall any debate about the rule of

merit (in the selection) being the guiding principle.

31. In Prem Kumar Verma v. Union of India11this court had to consider Rule

303 of the Railway Establishment Manual, which was phrased like Rule 27 in

the present case. The extract of the relevant discussion is as follows:

“4. In view of the rival submissions at the Bar the first question that

would arise for consideration is which Rule would govern the inter

se seniority. It is undisputed that vacancies arose prior to July 1989

and advertisement for the said post had been issued earlier to July

1989 and finally the Railway Recruitment Board concluded its

selection process and selected 29 candidates on 11-7-1989.

Therefore, the relevant Rules, as existed then, would govern the

inter se seniority. The next question that arises for consideration is

which is the relevant Rule that was in force in July 1989. From the

materials produced before us it appears that para 303 of the

Manual, as it stood in July 1989 is to the following effect:

“303. The seniority of candidates recruited through the

Railway Service Commission or by any other recruiting

authority should be determined as under:

(a) Candidates who are sent for initial training to training

schools will rank in seniority in the relevant grade in the order

of merit obtained at the examination held at the end of the

training period before being posted against working posts.

(b) Candidates who do not have to undergo any training, the

seniority should be determined on the basis of the merit order

assigned by the Railway Service Commission or other

recruiting authority.”

11(1998) 5 SCC 457

16

Later on sometime in the year 1990 Rule 303(a) was amended by

inserting the following expression:

“Those who joined the subsequent course for any reasons

whatsoever and those who passed the examination in the

subsequent chance will rank junior to those who had

passed the examination in earlier courses.”

The aforesaid Rule stood further amended in 1993 which reads thus:

“In case however persons belonging to the same RRB

panel are sent for initial training in batches due to

administrative reasons and not because of reasons

attributable to the candidates, the inter se seniority will

be regulated batchwise provided persons higher up in the

panel of RRB not sent for training in the appropriate

batch (as per seniority) due to administrative reasons

shall be clubbed along with the candidates who took the

training in the appropriate batch for the purpose of

regularising the inter se seniority provided such persons

pass the examination at the end of the training in the first

attempt.”

5. In view of our conclusion that the posts fell vacant prior

to July 1989 and the process of selection was completed and the

Recruitment Board selected the candidates on 11-7-1989 the

amendment that was introduced on 5-5-1990 and the further

amendment of 1993 will have no application and it is the

unamended Rule 303(a), as it stood on 11-7-1989, that would

govern the case of inter se seniority. The analysis of the

provisions of para 303 indicates that where candidates are

required to undergo some training after being selected through

Railway Service Commission or any other recruiting authority,

their seniority is determined on the basis of their respective merit

in the examination held at the end of the training period and

where candidates do not have to undergo any training, the

seniority is determined on the basis of the merit assigned by the

Railway Service Commission or other recruiting authority. In the

present case the candidates had to undergo training and in fact

they had undergone training in batches, as already stated. In that

view of the matter their seniority had rightly been determined by

the Railway authority on the basis of their respective merit

obtained in the examination held at the end of the training 

17

period. The Tribunal committed error by altering the said

seniority on the basis of a rule which was not in existence on the

date the vacancy arose and, on the date, when the selection was

completed.”

32. Keeping in mind that the advertisements (for filling the entire cadre, in

both the quotas or streams of recruitment) were issued one after the other, and

more importantly, that this was the first selection and recruitment to a newly

created cadre, the delay which occurred on account of administrative exigencies

(and also the completion of procedure, such as verification of antecedents) the

seniority of the promotees given on the basis of their dates of appointment, is

justified by Rule 27 in this case. The impugned judgment, in the opinion of this

court, is not erroneous; it does not call for interference.

33. In view of the above discussion, the appeals are dismissed, without order

on costs.

.......................................................J

 [INDIRA BANERJEE]

......................................................J

 [S. RAVINDRA BHAT]

New Delhi,

November 26, 2020.

refund of contract consideration of ₹3,61,20,000/- paid by them to the appellant

1

REPORTABLE

 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3807 OF 2020

(Arising out of SLP (C) NO(S). 28244 OF 2015)

CHIEF EXECUTIVE OFFICER AND

VICE CHAIRMAN GUJARAT MARITIME

BOARD ...APPELLANT(S)

VERSUS

ASIATIC STEEL INDUSTRIES LTD AND ORS. ...RESPONDENT(S)

J U D G M E N T

S. RAVINDRA BHAT, J.

1. Leave granted. With consent, the appeal was heard. This appeal is

directed against a judgment of the High Court of Gujarat dated 24.07.2015. The

respondent (hereafter “Asiatic Steel”) had filed a writ petition before the High

Court seeking refund of contract consideration of ₹3,61,20,000/- paid by them

to the appellant (hereafter “the Board”). The High Court allowed the writ

petition, in view of its earlier interim order, and directed the Board to pay

interest for the period from 08.11.1994 to 19.05.1998. The brief facts that arise

for consideration are as follows.

2

2. The Board issued a tender notice on 02.08.1994 for allotment of plots at

Sosiya (near Bhavnagar, Gujarat) for ship-breaking of „very large crude

carriers/ultra large crude carriers‟ (VLCC/ULCC). Asiatic Steel made the

highest bid, which was accepted and confirmed by the Board on 08.11.1994, for

₹ 3, 61, 20,000/- (hereafter the „Principal‟). Asiatic Steel was allotted Plot V-10.

The bid payment was made on 22.03.1995 in foreign currency, to the tune of

$1,153,000, while the earnest money deposit of ₹5,00,000/- was paid on

08.11.1994.

3. On 23.02.1995, Asiatic Steel and other allottees approached the Board

citing difficulties in commencing commercial operations, on account of the

connectivity to the plots and the existence of rocks inhibiting beaching of ships

on the plot for the purpose of ship-breaking. Through a letter dated 19.05.1998,

Asiatic steel intimated the Board that it wished to abandon the contract and

demanded that the payment be refunded (an amount of $1,153,000), with

interest at 10% per annum from the date of remittance. The Board, through a

notice dated 19.05.1998, stated that an amount of ₹3, 61, 20,000/- would be

refunded, but without interest. The Board also clarified that the refund would be

directed to the original allottee of the plot (i.e. the second respondent, i.e. M/s

Ganpatrai Jaigopal- hereafter referred to as “Ganpatrai”). Asiatic Steel then filed

a writ petition before the High Court, seeking (i) refund of USD $ 1,153,000

with interest of 12% per annum compounded quarterly, to the third respondent,

M/s Industeel Investment Holdings (hereafter “Industeel”, which had made the

payment originally on behalf of Asiatic Steel); and (ii) refund of earnest money

of ₹5,00,000/- with interest of 12% per annum, compounded quarterly to Asiatic

Steel.

4. Through an interim order dated 26.02.2002, the High Court held that

prima facie, Asiatic Steel was entitled to a refund with interest at 10% per

annum. Accordingly, the Board was directed to deposit the admitted amount, 

3

i.e., the Principal, with interest at 10% p.a. with the court‟s Registry on or

before 15.04.2002. The interest was to be calculated from 19.05.1998 up to

15.04.2002. The amount was permitted to be withdrawn by Respondent No. 3,

with the consent of the other respondents. The Board made this deposit, as

directed by the court.

5. On 17.09.2014, the High Court determined that the following issues

survived to be determined:

(a) Whether interest on payment should be calculated from 24.03.1995 to

15.04.2002, or from 19.05.1998;

(b) Whether the earnest money of ₹5,00,000 should be refunded;

(c) Whether interest should be calculated at 10% p.a. or 12% p.a.

6. The Board resolved, through a resolution dated 17.12.2014, to refund the

earnest money deposit with interest of 10% calculated from 19.05.1998. On

account of this development, the High Court examined the issue of

quantification of interest, and held that so far as the amount that had already

been refunded with interest at 10% was concerned, no grievance could be raised

by Asiatic Steel, as it had initially claimed an interest of 10%, in the letter to the

Board dated 19.05.1998. In the case of the refund already made of the Principal

and the earnest money deposit, it was held that Asiatic Steel was not justified in

claiming more than 10% interest. Neither party raised any grievance against the

High Court‟s interim order dated 26.02.2002 fixing the interest at 10%. The

only question then left to be decided was with respect to the date from which

interest on the Principal was to be calculated, and what the rate of interest was

to be.

7. The High Court held that the Board never claimed that it suffered any

damage or loss due to Asiatic Steel‟s termination of the contract. The reasoning

of the impugned judgment was that hence, the Board was under a liability to

compensate or pay reasonable interest for the period during which the money 

4

was retained by it. The High Court took into consideration that Indusind was a

Singaporean company, and that the rate of interest was lower in developed

countries. Accordingly, the rate of interest was altered to 6% p.a., for the period

during which the money was enjoyed by the Board. The Board was directed to

(i) refund the earnest money of ₹5,00,000/- with interest at 10% p.a., in

accordance with the resolution of 17.12.2014; and (ii) pay interest of 6% on the

Principal from 08.11.1994 to 19.05.1998. This interest amount works out to

₹76,47,544/-. The Board is, hence, aggrieved by the impugned judgment.

Arguments Advanced

8. It was contended on behalf of the Board that the subject matter of the

present dispute was a contract. To determine whether the Board had to pay

compensation for any benefit received under the contract, it was imperative that

breach of such contract should have been proved. Sections 64 and 65 of the

Indian Contract Act, 1872 (hereinafter the „Contract Act‟), contemplate return

of benefit for a void/voidable contract. It was submitted that these provisions do

not apply when there is no allegation as to the contract being void. In any case,

the Board had already refunded the entire amount to Asiatic Steel. The learned

counsel for the Board went on to submit that Section 73 and 75 of the Contract

Act were inapplicable, as breach was not proven or found, and neither did the

high court make a finding of rightful rescission of contract by Asiatic Steel.

9. The sole basis of the High Court‟s direction to pay interest for the period

from 08.11.1994 to 19.05.1998 was the Court‟s view that the Board had an

obligation to compensate Asiatic Steel for its enjoyment of the principal during

this period, and because the Board had not shown that it suffered any loss on

account of termination of the contract. Counsel urged that Asiatic Steel accepted

and provided an undertaking of their satisfaction of the site, in the contract 

5

entered into between the parties. They then went on to abandon the contract on

grounds of the site being rocky/ unsuitable for their commercial activities.

10. Counsel for Asiatic Steel, on the other hand, submitted that the Board

took about 4 years to take action on its promise to create surrounding

infrastructure and clear the rocks as well as the rocky island near plot V-10,

which made it unviable for Asiatic Steel to commence business. The Board had

agreed, through its board meeting on 23.03.1995, to develop infrastructure and

remove the rocks; Asiatic Steel once again appraised the Board of the

importance of removing the rocks, through a letter dated 26.04.1996. Asiatic

Steel even stated that it could take up the task of removing the rocks, if the

Board so desired. The request for removal of the rocks and the rocky formation

near plot V-10 was repeated through another letter dated 22.05.1996. The other

successful bidders for plots V-6 to V-9 also raised similar issues, and

approached the courts for relief. Asiatic Steel did not join those bidders, and

sought to deal with the matter amicably. Counsel submitted that since the Board

did not actually carry out the promised work, Asiatic Steel could not commence

commercial production; they were left with no option but to abandon the project

and seek a refund. It was submitted that Asiatic Steel incurred heavy losses on

account of interest costs from the date of remittance, as well as losses on

account of depreciation of the rupee over a period of three years.

11. When the Board failed to make the refund or discharge its duties, Asiatic

Steel filed a petition before the High Court. A civil suit claiming damages was

also preferred at the City Civil Court, Ahmedabad, which was unconditionally

withdrawn, after seeking permission from the High Court, which was granted

through the order dated 26.02.2002.

12. The learned counsel submitted that on account of the Board‟s failure to

remove the rocks, Asiatic Steel could not take possession of the plot, and

therefore, that interest is due from the date of deposit till the date of payment. It 

6

was argued that the very fact that the Board agreed to refund the premium and

the earnest money shows their acceptance that they have been unable to provide

the promised plots. It was further submitted that all the other allottees had been

paid interest on the amounts deposited by them. It was urged that the Board

enjoyed the Principal amount from 08.11.1994 to 19.05.1998, and it was not a

case where the possession of the plot was handed over and the contract was

concluded. Asiatic Steel was deprived of a substantial amount that could not be

utilized elsewhere during that period. It was submitted that interest was

essentially compensation for denial of the right to utilize the money due.

13. Reliance was placed on Union of India, Tr. Dir. of IT v. M/s Tata

Chemicals Ltd.1

, where this court held that interest „…is a kind of compensation

of use and retention of money collected unauthorizedly by the Department.

When the collection is illegal, there is corresponding obligation on the revenue

to refund such amount with interest in as much as they have retained and

enjoyed the money deposited.‟

14. With regard to the question of whether Asiatic Steel raised objections

regarding the unsuitability of the land for the purpose for which it had been

tendered, it was contended on its behalf that objections were raised, prior to

remitting a major part of the upset premium. The first objection on record was

immediately after payment of the earnest money deposit after the allotment of

the plot on 08.11.1994, through letter dated 23.02.1995. The payment of the

premium was made on 22.03.1995. It was argued that no time period under the

lease, was consumed for any activity whatsoever on the plot, and Asiatic Steel

did not derive any benefit at all. It was categorically acknowledged and

admitted in board meetings and letters that the plot was unusable and the

contract was to be mutually abandoned. Considering that the Board agreed to

refund the amount with interest, it was argued, that the consequence was that

1

(2014) 6 SCC 335. 

7

the money should be returned with interest from the date when it was enjoyed

by the Board.

15. Asiatic Steel urged that the limited issue to be determined by this court is

that of interest payment from when the remittance was made, i.e., 22.03.1995 to

19.05.1998, when the contract was abandoned. Finally, they submitted that this

amount works out to ₹1,32,44,729/- (at 10% interest p.a.), ₹1,06,95,783/- (at 8%

interest p.a.), and ₹81,46,837 (at 6% interest p.a.).

16. It was further submitted that the successful bidders of plots V-8

(Svaminarayan Ship Breaking Pvt. Ltd.) and V-9 (M/s Mazz Marine Pvt. Ltd.)

who were similarly situated to Asiatic Steel, had approached courts for a decree,

and been refunded their deposits with interest, pursuant to orders dated

14.08.1996 and 08.07.2002 respectively.

17. With this court‟s permission, Asiatic Steel filed copies of RTI queries

which had sought specific information with regard to (i) amount paid to

similarly placed bidders/plot holders during settlement with the Board; (ii)

whether interest was paid to the bidders/plot holders along with the principal,

and from what date this was paid; and (iii) the percentage of interest paid along

with principal.

18. A response to the RTI query was received on 20.02.2020, in respect of

the bidders for plots V-7, V-8 and V-9. The bidder for V-7 was paid an interest

at 12%, amounting to ₹22,80,743/-, for the period from 23.03.1995 –

30.11.1995. The bidder for V-8 was paid interest at 12%, amounting to

₹3,55,068/-, for the period from 27.03.1995 – 30.11.1995. The bidder for V-9

was paid interest at 9% amounting to ₹2,12,500/-, for the period from

23.03.1995 – 30.11.1995.

19. It was urged that in accordance with tender conditions, the primary

obligation to provide a suitable plot for ship breaking was that of the Board. 

8

Counsel for Asiatic Steel submitted that the „as is where is‟ clause cannot be

interpreted to mean that the Board can allot any piece of land that is of no utility

to the bidder, and be absolved of liability.

20. In response to Asiatic Steel‟s contentions that identically situated bidders

were paid interest at 10-12% were unsustainable, it was contended on behalf of

the Board, in a response, that interest was not payable under the terms of the

contract with the present respondents. Further, Asiatic Steel had allowed the

plot to remain unused for almost half of the license/concession period before

rescinding the contract. It had verified the site before casting a bid; it took a

conscious decision to make the bid and pay the upset premium.

21. It was further submitted that the Board had written to Asiatic Steel on

28.11.1995, informing them that the plot was ready in all respects and

possession was required to be taken before 30.11.1995. The bidders for V-7 and

V-8 were given interest only up till the date the plot holders were to take

possession – 30.11.1995. Asiatic Steel did not take possession.

22. It was urged that the present case is a contractual dispute where, without

breach being proved against the Board, interest was ordered as a „compensatory

measure‟, that too under writ jurisdiction.

Analysis

23. The Guidelines for Permission to Utilize Ship breaking Plots at Sosiya

provided that permission shall be granted for a period of ten years from the date

of issue of the permission letter, after which, the permission shall cease. The

conditions applicable for grant of permission are provided under Clause 13;

Clause 13(d) mandates that plot charges be paid in advance, before issuance of

the permission letter, and plot charges for the next year are to be paid before the

commencement of the relevant year. 

9

24. Asiatic Steel was the highest bidder in an auction for five shipbreaking

plots, held on 08.11.1994. The Board received payment of the earnest money

deposit of ₹5,00,000/- on this day. Plot V-10 was allotted to Respondent No. 1

(Asiatic Steel Industries Ltd.). M/s Ganpatrai were the Indian shareholders of

Asiatic Steel, while M/s Industeel was a foreign shareholder based in Singapore.

The upset premium was remitted by Industeel in US currency (dollars $), on

22.03.1995.

25. The minutes of the meeting dated 23.02.1995 record that the shipbreakers

(including Asiatic Steel herein), informed the Board that certain rocks were

required to be removed along plots V-6 to V-10, which hinder the beaching of

ships. The Board agreed to prepare an estimate and invite tenders for the

removal of these rocks.

26. The record shows that the notice inviting tenders issued by the Board

expressly stated in para 14 that:

“14. The tenderer may inspect the site at his own cost and shall be

deemed to have acquainted himself, fully with all the site conditions.

15. Tenderer shall be deemed to have read and understood the

guidelines at Annexure one and the terms and conditions at annexure

to.”

27. Such being the position, it was nobody‟s case that Asiatic Steel was

unaware about the site conditions. This is particularly important because it was

willing to commit a substantial amount in foreign exchange for the plot which it

bid for and was eventually granted. Likewise, the requisite undertaking too was

furnished on its behalf. It is in this background of circumstances, that the claim

for interest for the period in question requires examination.

28. The record relied upon by Asiatic Steel is in the form of three office

orders issued by the Board. The first office order is dated 06.05.1996. This 

10

order relates to Nyankaran Investment and Leasing Pvt. Ltd. This company had

successfully bid for Plot Number V-7 and paid ₹ 2.74 crores. This company had

deposited the entire amount on 23.03.1995. Upon being dissatisfied with the

plot, the company filed CA 8287/1995, in proceedings under Article 226 of the

Constitution of India, before the Gujarat High Court. Having regard to the

observations made by the High Court, the board sanctioned refund of the entire

amount along with 12% interest, by its order dated 06.05.1996. The amount

paid by the Board as interest was ₹ 22.80 lakhs. The second instance relates to

Svaminarayan Shipbreaking (P) Ltd, Surat, which had bid for a plot (V-8) and

paid ₹50 lakhs in two equal instalments. This company filed proceedings before

the Gujarat High Court, (i.e. CA 3122/1995). The Board, therefore decided to

refund the principal along with interest at 12% per annum for two different

periods, based on the deposit of the two payments of ₹ 25 lakhs. The total

interest sanctioned on 08.08.1996 (and later paid) was ₹ 3.55 lakhs. The last

instance is of Maaz Marine (P) Ltd, Surat, which had bid for a plot (V-9) and

paid the instalments. This company filed proceedings before the Gujarat High

Court, (i.e. CA 3211/1995). The Board, therefore decided to refund the principal

along with interest @ 9% per annum for the period, based on the deposit of the

payment of ₹ 25 lakhs. The total interest sanctioned on 08.08.1996 (and later

paid) was ₹2.12 lakhs. This amount was sanctioned by office order dated

27.03.2000, even though the Board had decided to refund earlier (on

21.03.1996, due to the court proceedings and orders); however, the amount was

sanctioned later, awaiting the decision of the civil court, in an inter se dispute

between the directors of Mazz Marine, (i.e. in Suit No. 1200/1997). Upon the

decision in that case, the amount was released, including the interest at 9% p.a.

for one year.

29. The correspondence on the record reveals that the last payment towards

the plot was tendered by Asiatic Steel under cover of a letter dated 22.03.1995 

11

for an amount of US$ 1,153,000/-. The other letters placed on record are the

one dated 23.04.1995, to the Board indicating that the full payment for the

consideration of ₹ 3,61,20,000/- had been made towards a plot. Other than this,

in the writ petition, Asiatic Steel argued that it made efforts several times to ask

the board to clear the beachfront rocks to make the plot functional. It was also

argued that three other entities which had bid for and secured different plots

were dissatisfied by the Board‟s inaction and had approached the High Court.

As a result, the High Court passed orders which led to refund of the amounts

deposited by those concerns, with some interest. On the record, the minutes of a

discussion presided over by the Chief Minister of the state regarding

outstanding amounts of premium payable by plot holders in the shipbreaking

yard, dated 29.04.1998, would show that the state authorities were pressing for

payment of overdue premium instalments. It is after these events, that Asiatic

Steel claimed refund of the amount through a letter dated 19.05.1998. In that

letter, Asiatic Steel stated as follows:

“..there were 4 other successful bidders for plots V- 6 to V-9. These

4 bidders similarly complained of non-availability of basic

infrastructure. They subsequently approached the High Court of

Gujarat for interim relief and for directions to GMB to develop

basic infrastructure and to remove rocks in front of lots V-6 to V-9.

They approach the High Court to direct GMB to fulfil all these

obligations before asking for payment of upset premium. We

understand that the Hon‟ble High Court granted them some relief.

We may point out that we did not join the actions of these 4 bidders

in the High Court. Instead prefer to deal with the matter amicably

via discussions directly with GMB.”

30. Asiatic Steel‟s letter dated 26.04.1996, a copy of which has been placed

on the record, shows that it expressed willingness to remove the beachfront

rocks, provided the Board bore the expenses. The Board, however, was silent.

31. The contemporaneous situation, and the correspondence between Asiatic

Steel and the Board after the entire amount was deposited, reveals that other 

12

concerns approached the court seeking refund of their principal amounts, with

interest, which forced the Board to take a decision and comply. The final

decision by Asiatic Steel demanding refund was later, in May, 1998. In the

meanwhile, the other concerns, which had bid successfully for three plots had

approached the court (in 1995) and the Board had decided to refund the

amounts with one years‟ interest. Asiatic Steel, therefore, for reasons best

known to it, approached the court for refund (which it was undoubtedly entitled)

to and interest, first by filing a suit in 2001.

32. In this court‟s opinion, the claim for interest by Asiatic Steel – and the

response of the Board, on that issue, is to be judged in the light of both parties‟

conduct and what was expected of the Board as a state instrumentality. The

claim in this case is essentially a monetary one, and would ordinarily be

premised upon breach of contract. Asiatic Steel, therefore, correctly approached

the civil court by filing a suit2

. Later, apparently it was advised to resort to

proceedings under Article 226 of the Constitution of India. When its writ

petition was considered, the suit was permitted to be withdrawn; the High Court

directed the Board to deposit the entire principal amount, with interest at 10%

per annum.

3 By the final impugned judgment, that order was confirmed. In an

earlier order, the court had in fact crystallized the precise issue, to be whether

interest was payable from 24.03.1995 or from 19.05.1998, or whether it was

payable from the latter date, till the date of deposit in court, i.e., 15.04.2002.

33. Two important aspects need to be noticed at this stage: first, on the one

hand, that Asiatic Steel was aware of the condition of the plot, at an early stage,

when it bid for it. In this regard, its conduct is to be judged in the light of the

Board‟s inaction in regard to the unfitness of the allotted site, as in the case of

the other concerns. Two, Asiatic Steel was no better and no worse than the other

2

Suit No. 2961/2001

3By its order dated 26.02.2002

13

plot lessees, who demanded refund of their amounts. The difference between

them, and Asiatic Steel was that the latter chose to demand refund on

19.05.1998. Asiatic Steel‟s final letter discloses its awareness that the other

concerns approached the court earlier, but that it waited as it wished to have the

issue resolved amicably, rather than moving the court for relief.

34. In the opinion of this court, that fact that Asiatic Steel and other concerns

bid for the plots knowing the state they were in, cannot be disputed. However,

the conduct of all the successful bidders consistently suggests that they expected

that the plots would be given in usable condition, within reasonable time.

Clearly, the Board could not and most certainly did not rectify the conditions by

removing the beachfront rocks. The Board is not forthcoming about the reasons

for its inaction. It urged two defences in its reply to the writ petition: one, that

the dispute was in the realm of contract and two, that even though like in other

cases, the Board was prepared to consider a refund, Asiatic Steel was a joint

venture company. These, in the opinion of this court are wholly insubstantial

reasons.

35. It is clear from the Board‟s conduct that it never responded to the letters

written by Asiatic Steel; at least, no reply has been placed on record. Even

Asiatic Steel‟s request for permission to carry-out the necessary clearance work

at the cost of the board, was not responded to - either positively or negatively.

Further, whenever any bidder approached the court complaining that the plot

allotted was unusable, the Board decided, mostly contemporaneously, to refund

the amount, even with interest. In the case of Asiatic Steel, however, when the

demand was made for refund on 19.05.1998, the Board did not act, forcing the

company to approach the court, firstly through a civil suit which was later

withdrawn, and then in a writ petition.

36. In the opinion of this court, the Board‟s complete silence in responding to

Asiatic Steel‟s demand for refund, coupled with the absence of any material 

14

placed on record by it suggesting that the complaints had no substance leaves it

vulnerable to the charge of complete arbitrariness. The Board‟s conduct or

indifference in regard to the refund sought (in respect of which there was no

meaningful argument on its part before the High Court) can be only on the

premise that it wished the parties to approach the court, till a decision could be

taken to refund the amounts received by it.

37. In this court‟s considered view, the Board‟s action is entirely

unacceptable. As a public body charged to uphold the rule of law, its conduct

had to be fair and not arbitrary. If it had any meaningful justification for

withholding the amount received from Asiatic Steel, such justification has not

been highlighted ever. On the other hand, its conduct reveals that it wished that

the parties should approach the court, before it took a decision. This behavior of

deliberate inaction to force a citizen or a commercial concern to approach the

court, rather than take a decision, justified on the anvil of reason (in the present

case, a decision to refund) means that the Board acted in a discriminatory

manner.

38. Long ago, in Dilbagh Rai Jarry v. Union of India 4

this court had quoted

from a decision of the Kerala High Court, approvingly5

:

“25. … But it must be remembered that the State is no ordinary party

trying to win a case against one of its own citizens by hook or by

crook; for the State's interest is to meet honest claims, vindicate a

substantial defence and never to score a technical point or overreach

a weaker party to avoid a just liability or secure an unfair

advantage, simply because legal devices provide such an

opportunity. The State is a virtuous litigant and looks with unconcern

on immoral forensic successes so that if on the merits the case is

weak, Government shows a willingness to settle the dispute

regardless of prestige and other lesser motivations which move

private parties to fight in court. The layout on litigation costs and

executive time by the State and its agencies is so staggering these

4

(1974) 3 SCC 554

5 P.P. Abubacker v. Union of India, AIR 1972 Ker 103

15

days because of the large amount of litigation in which it is involved

that a positive and wholesome policy of cutting back on the volume

of law suits by the twin methods of not being tempted into forensic

showdowns where a reasonable adjustment is feasible and ever

offering to extinguish a pending proceeding on just terms, giving the

legal mentors of Government some initiative and authority in this

behalf.”

Again, in Gurgaon Gramin Bank v. Khazani6

this court stated that:

“2. The number of litigations in our country is on the rise, for small

and trivial matters, people and sometimes the Central and the State

Governments and their instrumentalities like banks, nationalised or

private, come to courts may be due to ego clash or to save the

officers' skin. The judicial system is overburdened which naturally

causes delay in adjudication of disputes. Mediation Centres opened

in various parts of our country have, to some extent, eased the

burden of the courts but we are still in the tunnel and the light is far

away. On more than one occasion, this Court has reminded the

Central Government, the State Governments and other

instrumentalities as well as to the various banking institutions to take

earnest efforts to resolve the disputes at their end. At times, some

give-and-take attitude should be adopted or both will sink. Unless

serious questions of law of general importance arise for

consideration or a question which affects a large number of persons

or the stakes are very high, the courts' jurisdiction cannot be invoked

for resolution of small and trivial matters. We are really disturbed by

the manner in which those types of matters are being brought to

courts even at the level of the Supreme Court of India and this case

falls in that category.”

39. In State of A.P. v. Pioneer Builders7

this Court referred to the 27th Report

of the Law Commission on the Code of Civil Procedure, and held as follows:

“14. From a bare reading of sub-section (1) of Section 80, it is

plain that subject to what is provided in sub-section (2) thereof, no

suit can be filed against the Government or a public officer unless

requisite notice under the said provision has been served on such

6

2012 (8) SCC 781

7

(2006) 12 SCC 119

16

Government or public officer, as the case may be. It is well settled

that before the amendment of Section 80 the provisions of

unamended Section 80 admitted of no implications and exceptions

whatsoever and are express, explicit and mandatory. The section

imposes a statutory and unqualified obligation upon the court and in

the absence of compliance with Section 80, the suit is not

maintainable. (See Bhagchand Dagadusa v. Secy. of State for India

in Council [Bhagchand Dagadusa v. Secy. of State for India in

Council, 1927 SCC OnLine PC 48 : (1926-27) 54 IA 338 : AIR 1927

PC 176] ; Sawai Singhai Nirmal Chand v. Union of India [Sawai

Singhai Nirmal Chand v. Union of India, (1966) 1 SCR 986 : AIR

1966 SC 1068] and Bihari Chowdhary v. State of Bihar [Bihari

Chowdhary v. State of Bihar, (1984) 2 SCC 627] .) The service of

notice under Section 80 is, thus, a condition precedent for the

institution of a suit against the Government or a public officer. The

legislative intent of the Section is to give the Government sufficient

notice of the suit, which is proposed to be filed against it so that it

may reconsider the decision and decide for itself whether the claim

made could be accepted or not. As observed in Bihari

Chowdhary [Bihari Chowdhary v. State of Bihar, (1984) 2 SCC

627], the object of the Section is the advancement of justice and the

securing of public good by avoidance of unnecessary litigation.

15. It seems that the provision did not achieve the desired results

inasmuch as it is a matter of common experience that hardly any

matter is settled by the Government or the public officer concerned

by making use of the opportunity afforded by the said provisions. In

most of the cases, notice given under Section 80 remains

unanswered. In its 14th Report (reiterated in the 27th and 54th

Reports), the Law Commission, while noting that the provisions of

this section had worked a great hardship in a large number of cases

where immediate relief by way of injunction against the Government

or a public officer was necessary in the interests of justice, had

recommended omission of the Section. However, the Joint Committee

of Parliament, to which the Amendment Bill, 1974 was referred, did

not agree with the Law Commission and recommended retention of

Section 80 with necessary modifications/relaxations.

16. Thus, in conformity therewith, by the Code of Civil

Procedure (Amendment) Act, 1976 the existing Section 80 was

renumbered as Section 80(1) and sub-sections (2) and (3) were

inserted with effect from 1-2-1977. Sub-section (2) carved out an 

17

exception to the mandatory rule that no suit can be filed against the

Government or a public officer unless two months' notice has been

served on such Government or public officer. The provision mitigates

the rigours of sub-section (1) and empowers the court to allow a

person to institute a suit without serving any notice under subsection (1) in case it finds that the suit is for the purpose of obtaining

an urgent and immediate relief against the Government or a public

officer. But, the court cannot grant relief under the sub-section

unless a reasonable opportunity is given to the Government or public

officer to show cause in respect of the relief prayed for. The proviso

to the said sub-section enjoins that in case the court is of the opinion

that no urgent and immediate relief should be granted, it shall return

the plaint for presentation to it after complying with the requirements

of sub-section (1). Sub-section (3), though not relevant for the

present case, seeks to bring in the rule of substantial compliance and

tends to relax the rigour of sub-section (1).”

40. In this case, conduct of the Board betrays a callous and indifferent

attitude, which in effect is that if Asiatic Steel wished for its money to be

returned, it had to approach the court. This was despite its knowledge that at

least three other identically placed entities had asked for return of money and,

upon approaching the court, were refunded the amounts given by them

promptly. In view of these facts, nothing prevented the Board from deciding to

refund the amount, without forcing Asiatic Steel to approach the court.

41. This court notes that the High Court directed payment of interest for the

entire period (i.e. starting from 08.11.1994 and ending on 19.05.1998).

However, it is evident that Asiatic Steel had not paid the entire amount on

08.11.1994; in fact the sum of $1,153,000 /- i.e. the principal consideration,

excluding the earnest money deposit, was deposited on 24.03.1995. Therefore,

the impugned judgment erred in directing payment of interest on the entire

amount from 08.11.1994; instead, the direction to pay interest on ₹3,61,20,000/-

shall operate with effect from 22.03.1995 to 19.05.1998.

18

42. The appeal is dismissed, subject to the modification indicated above, to

the impugned judgment of the High Court.

.......................................................J

 [INDIRA BANERJEE]

.......................................................J

 [S. RAVINDRA BHAT]

New Delhi,

November 24, 2020.

A police officer in the Railway Protection Force is required to maintain a high standard of integrity in the discharge of his official functions. In this case, the charges proved against the Respondent “were of neglect of duty” which resulted in pecuniary loss to the Railways. The Respondent was a SubInspector in the Railway Police discharging an office of trust and confidence which required absolute integrity. The High Court was therefore not justified in setting aside the order of compulsory retirement, and directing re-instatement with consequential benefits, and payment of backwages to the extent of 50%

A police officer in the Railway Protection Force is required to maintain a high standard of integrity in the discharge of his official functions. In this case, the charges proved against the Respondent “were of neglect of duty” which resulted in pecuniary loss to the Railways. The Respondent was a SubInspector in the Railway Police discharging an office of trust and confidence which required absolute integrity. The High Court was therefore not justified in setting aside the order of compulsory retirement, and directing re-instatement with consequential benefits, and payment of backwages to the extent of 50%

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3820 OF 2020

(Arising out of SLP (Civil) No. 32580 of 2017)

DIRECTOR GENERAL OF POLICE,

RAILWAY PROTECTION FORCE AND ORS. …Appellants

Versus

RAJENDRA KUMAR DUBEY …Respondent

J U D G M E N T

INDU MALHOTRA, J.

Leave granted.

1. The issue which has arisen for our consideration is the validity of the

Judgment passed by the High Court in exercise of its writ jurisdiction to set

aside the order of compulsory retirement passed by the statutory authorities

against the respondent, and substituting it by an order of re-instatement with all

consequential benefits, and 50% backwages.

2. The Respondent was appointed in 1984 as a Constable with the Railway

Protection Force (R.P.F) in Jhansi. On 28.02.2006, he was posted as

SIPF(Adhoc) Sub-Inspector at the Pulgaon Railway Station, Maharashtra

(Outpost).

3. On 11.12.2006, the Respondent was placed under suspension with

immediate effect pending enquiry. On 04.01.2007, a charge sheet was issued

for major penalty under Rule 153 of the Railway Protection Force Rules, 1987

by the Sr. Divisional Security Commissioner R.P.F. The charges framed were:

“ (1) GROSS NEGLECT OF DUTY in that you failed to prevent

and detect with due promptitude and diligence: -

2

(a) The theft of 02 Nos. of Primary injections Kit Valued Rs.

28,000/- approx. from traction Sub-Station located at Km, No.

664/20-24 near Badnera Railway Station reported on 04.04.2006.

(b) The theft of 19 CST-9 Plates kept at Km. No. 678/13-15

between Railway Station Makhed- Timtala reported on

21.11.2006 and to submit the FIR and case diary related to the

said case to office of Sr. DSC/RPF/Nagpur.

(c) The theft of one Coach Trolley of Lot No. 14-04-06-02-2281

kept at Km. No.672/32 between Railway Stations TimtalaMalkhed reported on 05.12.2006

(2) “ABUSE OF AUTHORITY” in that you used unnecessary

Violence toward a passenger named Shaikh Ibrahim at the

waiting room of Pulgaon Railway Station on 31.10.2006.”

4. The Enquiry Officer (E.O) vide his Report dated 22.06.2007 exonerated

the Respondent of charge 1(a) as the same was not proved, Charges 1(b), (c)

and 2 were found to be proved.

5. On 12.07.2007, the Disciplinary Authority i.e. the Senior Divisional

Security Commissioner, R.P.F. Nagpur, accepted the findings of the E.O. In

view of the gravity of the charges of gross neglect of duty and abuse of

authority, the Disciplinary Authority imposed the punishment of removal from

service with immediate effect.

6. The Respondent preferred an Appeal before the DIG-cum- Additional

Chief Security Commissioner, R.P.F Mumbai.

The Appellate Authority partially allowed the Appeal, upholding the

findings with respect to charges 1(b) and 1(c). Charge 1(b) pertained to the

theft of 19 CST-9 plates; on verification, it was found that the shortage was of

6 pairs of CST-9 plates. Charge 1(c) was a special report case pertaining to the

theft of 1 coach trolley valued at Rs. 28,000 and was found to have been

proved. However, the appellate authority held that these charges did not

warrant the extreme punishment of removal from service as there was no

imputation of connivance or corrupt practice against the Respondent.

3

With respect to charge No. 2, it was held that the said charge was not

proved, since no witness in support of this charge had been examined. The E.O

had relied upon the complaint registered by a passenger-Shaikh Ibrahim in the

complaint book of the Pulgaon Railway Station, which was found to have been

proved by the E.O., without holding a preliminary enquiry, or examining the

complainant. The other evidence in support of this charge was a report

submitted by the Inspector, R.P.F Wardha about the complaint lodged at the

Pulgaon Railway Station of the incident. As per confidential information

received, it was informed that the Respondent was beating people and

collecting money at the Pulgaon Railway Station, which led to discontentment

amongst the people, and led to a dharna and agitation for transfer of the

Respondent from the Pulgaon Railway Station. The Appellate Authority held

that the said report had no evidentiary value in support of the charge.

Consequently, charge 2 was held not to be proved.

The Appellate Authority vide Order dated 05.09.2007 reduced the

punishment of removal from service to that of reversion in rank for a period of

6 months without future effect.

7. Review of DAR proceedings was sought by the Senior Divisional

Security Commissioner/NGP vide letter dated 10.09.2007 addressed to the

Chief Security Commissioner under Rule 219.4, since certain lacunae were

pointed out in the order of the Appellate Authority. It was submitted that the

image of R.P.F would deteriorate if the service of the Respondent was

continued. It had also come to light that the delinquent employee while under

suspension, had been arrested by the C.B.I, Nagpur in an Anti-Corruption case.

8. The Chief Security Commissioner/CR issued a show cause notice to the

Respondent dated 23.10.2007 under Rule 219.4 of the Railway Protection

Force Rules, 1987 proposing to impose the penalty of compulsory retirement

from service.

After considering his reply, the Authority vide Order dated 05.12.2007

held that the charges levelled against the employee were very serious in nature 

4

and had been proved beyond doubt, which were damaging to the reputation of

the force. In view of the gravity of charges, gross neglect of duty and abuse of

authority, a major penalty was directed to be imposed. It was further noted that

the delinquent employee had been arrested by the CBI, Nagpur in a trap case,

under Section 7 and 13 (1)(d) of the Prevention of Corruption Act, 1988 for a

major penalty of demanding illegal gratification. This had occurred while the

respondent had been placed under suspension. Accordingly, the punishment of

compulsory retirement from service with immediate effect was imposed.

It was concluded that the E.O. had conducted the Departmental Enquiry

as per extant DAR Rules, after giving a reasonable opportunity to the

delinquent employee to defend himself. There were no lapses or irregularities

in the enquiry proceedings.

9. The Respondent filed an appeal before the Director-General, R.P.F

Railway Board.

The Director General, R.P.F Railway Board vide Order dated

19/21.05.2008 rejected the appeal since no fresh material had been brought on

record which would merit interference. The enquiry was found to be conducted

in accordance with the procedure prescribed by the rules, wherein an adequate

and reasonable opportunity had been granted to the employee to defend

himself. The Director General affirmed the view of the appellate authority to

enhance the punishment in accordance with the R.P.F Rules. The punishment

was held to be commensurate with the gravity of the misconduct committed by

the Respondent.

10. The Respondent filed Writ Petition No. 941 of 2009 before the High

Court Judicature at Bombay, Nagpur Bench to quash and set aside the Orders

dated 12.07.2007 and 05.12.2007of compulsory retirement from service.

The High Court vide the impugned Judgment and Order dated

03.07.2017 partly allowed the Writ Petition. The High Court observed that the

findings with respect to charge 1 (b) pertained to the theft of 19 CST-9 Plates

between Malkhed and Timtala Railway Stations. The theft was reported to the

writ petitioner on 21.11.2006, who was in-charge of the R.P.F Chowki, 

5

Pulgaon. The delinquent employee attended the spot on 25.11.2006, and drew a

Panchnama with a site map, recording that 9 bars of CST-9 plates costing Rs.

20,520 were found to be short. The F.I.R was prepared in the prescribed

format. The allegation against the writ petitioner was that he failed to sign the

F.I.R., and proceeded on leave without sanction from 03.12.2006 to

14.12.2006.

The High Court noted that the charge against the writ petitioner was that

he did not submit the F.I.R. and the case diary to the office of the Senior

Divisional Security Commissioner, Nagpur. The F.I.R. and the case diary were

obtained by the Senior Divisional Commissioner, Nagpur/R.P.F in the absence

of the writ petitioner.

A second panchnama was thereafter prepared by Nirmal Toppo, who

was Incharge of the R.P.F Thana, Wardha who visited the spot on 26.11.2006.

The High Court held that the writ petitioner could not be held guilty for

not having detected the theft occurred on 21.11.2006, since the theft was

detected by Nirmal Toppo on 26.11.2006. In the view of the High Court, the

writ petitioner could not be held duty bound to report the theft to the Head

Office at Nagpur, since he was incharge of Police Chowki, Pulgaon under

R.P.F Thana, Wardha.

The High Court held that the order of the Senior Divisional Security

Commissioner dated 05.09.2007 wherein it had been observed that such thefts

are found to be common, and in the absence of any pecuniary loss being

caused, would not warrant the extreme punishment of removal from service

was the correct view, particularly since there was no imputation of connivance

or corrupt practice. This according to the High Court had not been considered

by the Chief Security Commissioner and the Director General of the Railway

Protection Force.

The High Court observed that the arrest of the writ petitioner by the

C.B.I., Nagpur in a major Charge Sheet, was an irrelevant consideration since it

was a separate case, and no charge had been framed on this issue in the present

case.

6

With respect to charge No.1(c) regarding the theft of 1 coach trolley

valued at Rs.28,000 kept at Km 672/32 between Railway Station Timtala and

Malkhed, the High Court held that the theft of the trolley was detected by

another officer, hence the allegation of delay by the Respondent herein of not

reporting the case loses its significance. In paragraph 25 of the Judgment, it

was held that the finding recorded by the Senior Divisional Security

Commissioner could not have been disturbed.

With respect to charge 2, the High Court held that the material witness

was the passenger Shaikh Ibrahim, who had not been examined. Reliance was

placed only on the complaint registered by the passenger, and the morcha

carried out by the auto-ricksha walas. Hence, the said charge was unproved.

The High Court quashed the Order dated 12.07.2007 passed by the

Senior Divisional Security Commissioner, as also the Order dated 18.02.2007

passed by the Chief Security Commissioner, ordering compulsory retirement,

and the Order dated 19/21.05.2008 passed by the Director General Railway

Protection Force confirming the said Order. The High Court restored the Order

of the first appellate authority dated 05.09.2007 by the Senior Divisional

Security Commissioner, Railway Protection Force. It was directed that the writ

petitioner be re-instated in service, and would be entitled to all consequential

benefits, including backwages to the extent of 50% on the remitted post,

without future effect.

11. The Department has filed the present Civil Appeal to challenge the

judgment of the High Court setting aside the Order of compulsory retirement,

and directing the Railways Department to re-instate the Respondent with

consequential benefits, and payment of 50% backwages.

This Court vide Order dated 17.11.2017 issued notice, and directed stay

of the operation of the Judgment passed by the High Court.

7

12. Discussion and Analysis

We have heard learned Counsel for the parties, and perused the record,

and written submissions filed on their behalf.

12.1 We will first discuss the scope of interference by the High Court in

exercise of its writ jurisdiction with respect to disciplinary proceedings. It is

well settled that the High Court must not act as an appellate authority, and reappreciate the evidence led before the enquiry officer.

We will advert to some of the decisions of this Court with respect to

interference by the High Courts with findings in a departmental enquiry against

a public servant.

In State of Andhra Pradesh v S.Sree Rama Rao,

1

a three judge bench of

this Court held that the High Court under Article 226 of the Constitution is not

a court of appeal over the decision of the authorities holding a departmental

enquiry against a public servant. It is not the function of the High Court under

its writ jurisdiction to review the evidence, and arrive at an independent finding

on the evidence. The High Court may, however interfere where the

departmental authority which has held the proceedings against the delinquent

officer are inconsistent with the principles of natural justice, where the findings

are based on no evidence, which may reasonably support the conclusion that

the delinquent officer is guilty of the charge, or in violation of the statutory

rules prescribing the mode of enquiry, or the authorities were actuated by some

extraneous considerations and failed to reach a fair decision, or allowed

themselves to be influenced by irrelevant considerations, or where the

conclusion on the very face of it is so wholly arbitrary and capricious that no

reasonable person could ever have arrived at that conclusion. If however the

enquiry is properly held, the departmental authority is the sole judge of facts,

and if there is some legal evidence on which the findings can be based, the

adequacy or reliability of that evidence is not a matter which can be permitted

to be canvassed before the High Court in a writ petition.

 1 AIR 1963 SC 1723.

8

These principles were further reiterated in the State of Andhra Pradesh v

Chitra Venkata Rao.

2 The jurisdiction to issue a writ of certiorari under Article

226 is a supervisory jurisdiction. The court exercises the power not as an

appellate court. The findings of fact reached by an inferior court or tribunal on

the appreciation of evidence, are not re-opened or questioned in writ

proceedings. An error of law which is apparent on the face of the record can be

corrected by a writ court, but not an error of fact, however grave it may be. A

writ can be issued if it is shown that in recording the finding of fact, the

tribunal has erroneously refused to admit admissible and material evidence, or

had erroneously admitted inadmissible evidence. A finding of fact recorded by

the tribunal cannot be challenged on the ground that the material evidence

adduced before the tribunal is insufficient or inadequate to sustain a finding.

The adequacy or sufficiency of evidence led on a point, and the inference of

fact to be drawn from the said finding are within the exclusive jurisdiction of

the tribunal.

In subsequent decisions of this Court, including Union of India v. G.

Ganayutham3

,Director General RPF v. Ch. Sai Babu4

, Chennai Metropolitan

Water Supply and Sewerage Board v T.T. Murali,

5 Union of India v. Manab

Kumar Guha,

6 these principles have been consistently followed.

In a recent judgment delivered by this Court in the State of Rajasthan

&Ors. v. Heem Singh7 this Court has summed up the law in following words :

“33. In exercising judicial review in disciplinary matters, there are two

ends of the spectrum. The first embodies a rule of restraint. The second

defines when interference is permissible. The rule of restraint constricts

the ambit of judicial review. This is for a valid reason. The determination

of whether a misconduct has been committed lies primarily within the

domain of the disciplinary authority. The judge does not assume the

mantle of the disciplinary authority.Nor does the judge wear the hat of an

 2 (1975) 2 SCC 557.

3 (1997) 7 SCC 463

4 (2003) 4 SCC 331

5 (2014) 4 SCC 108 6 (2011) 11 SCC 535

7 Judgment dated 29.10.2020 passed in C.A. No. 3340 of 2020 by a bench comprising of Justice D.Y

Chandrachud and Justice Indira Banarjee.

9

employer. Deference to a finding of fact by the disciplinary authority is a

recognition of the idea that it is the employer who is responsible for the

efficient conduct of their service. Disciplinary enquiries have to abide by

the rules of natural justice. But they are not governed by strict rules of

evidence which apply to judicial proceedings. The standard of proof is

hence not the strict standard which governs a criminal trial, of proof

beyond reasonable doubt, but a civil standard governed by a

preponderance of probabilities. Within the rule of preponderance, there

are varying approaches based on context and subject. The first end of the

spectrum is founded on deference and autonomy – deference to the

position of the disciplinary authority as a fact finding authority and

autonomy of the employer in maintaining discipline and efficiency of the

service. At the other end of the spectrum is the principle that the court

has the jurisdiction to interfere when the findings in the enquiry are

based on no evidence or when they suffer from perversity. A failure to

consider vital evidence is an incident of what the law regards as a

perverse determination of fact. Proportionality is an entrenched feature

of our jurisprudence. Service jurisprudence has recognized it for long

years in allowing for the authority of the court to interfere when the

finding or the penalty are disproportionate to the weight of the evidence

or misconduct. Judicial craft lies in maintaining a steady sail between

the banks of these two shores which have been termed as the two ends of

the spectrum. Judges do not rest with a mere recitation of the hands-off

mantra when they exercise judicial review. To determine whether the

finding in a disciplinary enquiry is based on some evidence an initial or

threshold level of scrutiny is undertaken. That is to satisfy the conscience

of the court that there is some evidence to support the charge of

misconduct and to guard against perversity. But this does not allow the

court to re-appreciate evidentiary findings in a disciplinary enquiry or to

substitute a view which appears to the judge to be more appropriate. To

do so would offend the first principle which has been outlined above. The

ultimate guide is the exercise of robust common sense without which the

judges’ craft is in vain.”

In Union of India v. P. Gunasekaran,8 this Court held that the High

Court in exercise of its power under Articles 226 and 227 of the Constitution of

 8 (2015) 2 SCC 610.

B.C.Chaturvedi v Union of India, (1995) 6 SCC 749;

 Union of India v G.Ganayutham, (1997) 7 SCC 463;

 Om Kumar v Union of India (2001) 2 SCC 386;

 Coimbatore District Central Co-op Bank v Employees Association, (2007) 4 SCC 669;

 Coal India Ltd. v Mukul Kumar Choudhuri, (2009) 15 SCC 620;

 Chennai Metropolitan Water Supply and Sewerage Board v T.T. Murali Babu, (2014) 4 SCC 108.

10

India shall not venture into re-appreciation of the evidence. The High Court

would determine whether : (a) the enquiry is held by the competent authority;

(b) the enquiry is held according to the procedure prescribed in that behalf; (c)

there is violation of the principles of natural justice in conducting the

proceedings; (d) the authorities have disabled themselves from reaching a fair

conclusion by some considerations which are extraneous to the evidence and

merits of the case; (e) the authorities have allowed themselves to be influenced

by irrelevant or extraneous considerations; (f) the conclusion, on the very face

of it, is so wholly arbitrary and capricious that no reasonable person could ever

have arrived at such conclusion; (g) the disciplinary authority had erroneously

failed to admit the admissible and material evidence; (h) the disciplinary

authority had erroneously admitted inadmissible evidence which influenced the

finding; (i) the finding of fact is based on no evidence.

In paragraph 13 of the judgment, the Court held that :

“13.Under Articles 226 / 227 of the Constitution of India, the High

Court shall not :

(i) re-appreciate the evidence;

(ii) interfere with the conclusions in the enquiry, in the case

the same has been conducted in accordance with law;

(iii) go into the adequacy of the evidence;

(iv) go into the reliability of the evidence;

(v) interfere, if there be some legal evidence on which

findings can be based;

(vi) correct the error of fact however grave it may appear to

be;

(vii) go into the proportionality of punishment unless it shocks

its conscience.”

12.2 In the present case, there is no allegation of malafides against the

disciplinary authority i.e. Chief Security Commissioner, or lack of competence

of the disciplinary authority in passing the order of compulsory retirement, or

of a breach of the principles of natural justice, or that the findings were based

on no evidence.

 

11

12.3 We find from the record of this case that the Charges under 1 (b) and 1

(c) have been concurrently found to have been proved by the Disciplinary

Authority, Appellate Authority - the Chief Security Commissioner, R.P.F. and

the Director General of the R.P.F. Railway Board.

The issue under charge 1(b) was the non-registration of an F.I.R

pertaining to a theft case of CST-9 plates of the Railways. The finding was that

even though the Respondent had prepared the F.I.R. after conducting

investigation, he did not sign the F.I.R., and thereafter proceeded on leave

without sanction. As a consequence, the F.I.R. was not registered, and the

investigation got thwarted right at the threshold. After some delay, a second

panchnama was prepared by Nirmal Toppo, who was the in-charge of R.P.F

Thana, who visited the spot, and then registered the F.I.R.

It is relevant to note that the High Court has not disturbed the finding

with respect to charge 1(b).

12.4 With respect to charge 1(c), this charge was a case of a Special Report,

which are covered by Rule 229 of the Railway Protection Rules which reads as

under:

“229. Special Reports. - In cases of theft at the post involving loss of

booked consignment or railway material exceeding the value fixed by

the Director General from time to time, the Divisional Security

Commissioner shall submit special report to the Director General with

copy to the Chief Security Commissioner and to the concerned officer

as may be specified through the Directives.”

Charge 1 (c) pertained to the theft of one coach trolley of the Railways

which was to be sold as scrap and had been valued at Rs.28,000. The allegation

was that the Respondent had taken sick leave, so as to avoid being present at

the time of handing over the trolley on 04.12.2006.

This charge was found to have been proved by the Disciplinary

Authority, the Appellate Authority, and the Director General of Police-R.P.F.

Railway Board. 

12

With respect to this charge, the High Court has given a contradictory

finding. In para 24 of the Judgment, the Court held that the theft of the trolley

was detected by another officer prior to the writ petitioner proceeding on leave.

Hence, the question of delay in reporting the theft by the writ petitioner was

held to have lost its significance. In para 25, the High Court however took a

contrary view by holding that it concurred with the view taken by the Senior

Divisional Security Commissioner in the Order dated 05.09.2007, wherein the

charge was held to be proved. The High Court concluded by holding that the

charge was not so serious so as to warrant the extreme punishment of removal

from service, as there was no imputation of connivance or corrupt practices.

In our view, the aforesaid findings are erroneous, since the Respondent

has not been awarded the punishment of removal from service, but compulsory

retirement from service vide Order dated 05.12.2007.

12.5 It is further relevant to note that charges 1(b) and 1(c) fall under Rule

146.2 of the Railway Protection Force Rules, 1987 which provide:

“146.2 Neglect of duty:

No member of the Force without good and sufficient cause shall -

i) neglect or omit to attend to or fail to carry out with due promptitude

and diligence anything which is his duty as a member of the Force to

attend to or carry out; or

ii) fail to work his beat in accordance with orders or leave the place of

duty to which he has been ordered or having left his place of duty for a

bonafide purpose fail to return thereto without undue delay: or

iii) be absent without leave or be late for any duty: or

iv) fail properly to account for, or to make a prompt and true return of

any money or property received by him in the course of his duty.”

The various allegations made against the Respondent arise out of gross

neglect of duty with respect to theft of railway property. The findings of gross

neglect of duty under charges 1(b) and (c) have been concurrently upheld. The

findings of the E.O. and the Disciplinary Authority are based on materials on

record. The High Court was not justified in re-appraising the entire evidence 

13

threadbare as a court of first appeal, and substituting the Order of punishment,

by a lesser punishment, without justifiable reason.

12.6 Section 11 of the Railway Protection Force Act, 1957 provides that it

shall be the duty of every superior officer and member of the force to protect

and safeguard railway property and passengers. The primary object of

constituting the Railway Protection Force is to secure better “protection and

security of the railway property.” The restricted power of arrest and search

conferred on members of this Force is incidental to the efficient discharge of

their primary duty to protect and safeguard railway property, and to uphold the

law.

A police officer in the Railway Protection Force is required to maintain

a high standard of integrity in the discharge of his official functions. In this

case, the charges proved against the Respondent “were of neglect of duty”

which resulted in pecuniary loss to the Railways. The Respondent was a SubInspector in the Railway Police discharging an office of trust and confidence

which required absolute integrity. The High Court was therefore not justified in

setting aside the order of compulsory retirement, and directing re-instatement

with consequential benefits, and payment of backwages to the extent of 50%.

12.7 With respect to the registration of a criminal case by the C.B.I Nagpur,

the High Court held that it was an irrelevant consideration taken note of by the

Senior Divisional Security Commissioner.

On this issue, we were informed during the course of hearing that the

Respondent had been convicted by the Special Judge, Wardha vide Judgment

and Order dated 02.08.2017 for offences punishable under Sections 7 and 13(2)

read with 13(1)(d) of the Prevention of Corruption Act, 1988 and sentenced to

undergo R.I for one year with Fine.

The Counsel for the Respondent informed the Court, that an Appeal has

been filed against the said judgment, which is pending consideration.

14

We have therefore considered it appropriate not to advert to the findings

in the C.B.I case, lest it prejudices the case of the Respondent which is pending

in Appeal against the order of conviction.

We have decided the issue of the validity of the order of compulsory

retirement on the basis of the material in the enquiry proceedings, and the

orders passed by the statutory authorities in this regard.

12.8 The Respondent was compulsorily retired pursuant to the Order dated

05.12.2007 passed by the Chief Security Commissioner. The order of

compulsory retirement took effect on 05.12.2007. The Respondent is being

paid pension after he has been compulsorily retired.

The direction of the High Court for payment of backwages was

consequent upon the re-instatement of the Respondent-employee. Since we are

upholding the order of compulsory retirement dated 05.12.2007 passed by the

Chief Security Commissioner, there is no question of granting backwages. In

any case the Respondent is being paid pension after his compulsory retirement.

13. We order and direct that:

(a) The appeal is allowed, and the Judgment of the High Court is set aside

for the reasons mentioned hereinabove, and the Order of compulsory

retirement passed on 05.12.2007 by the Chief Security Commissioner, as

affirmed by the Director General, R.P.F. vide Order dated 19/21.05.2008 is

restored.

(b) The Respondent has stated in his written submissions that the Gratuity

which was payable to him, has not been released by the Department so far.

We direct the Appellant-Department to release Gratuity, if due and

payable to the Respondent from 05.12.2007, within a period of six weeks

from today, alongwith interest as provided by Section 7(3A) of the Payment

of Gratuity Act, 1972 read with the applicable Office Memorandum /

Notification issued by the Government of India.

The Appeal is accordingly allowed in the above terms, with no order as

to costs.

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Pending applications, if any are disposed of accordingly.

..………...…...….......………J.

 [Dr. Dhananjaya Y. Chandrachud]

.....……………….….............J.

[Indu Malhotra]

………...……………………J

[K. M. Joseph]

New Delhi

November 25, 2020.