A. L. Kalra v. The Project & Equipment Corporation Of India Limited

| 686

A. L, KALRA AALRA y - . . . ry ‘THE PROJECT & EQUIPMENT CORPORATION. : OF INDIA LIMITED.

May, 1984

Dp. A. DEsAl, O. CHINNAPPA REDDY AND’ A. VARADARATAN,, ay iB

Writ Suisdietion of the High Court under Anticle 225 of thé Constitution Public’ “sector ~ undertakings and other: -instrumentalities of the State, whether amenable to the writs Jurisdiction

Effect of concession iin the Supreme Court. by. the . State as to the: -maintainabitity or amenablity to the writ jurisdiction—Though the

.. normal procedure is to remitto the High Court, the , Supreme Court, in order not to protract tne litigatiou involving ‘the livelihood of d party before it can itself hear the appeal on meri fs. , ;

* Constitution of India, 1950 Art. 14—Whether there should be any” -spretfic pleading in the Pesition. pointing out whether anyone else was either similarly situated as the petitioner or disstmilarly treated for entertaining the charge of discrimination and” ‘granting relief on that

“ground. : :

Legislative Policy, whether judicially, reviewable by ‘the courts—Constttution of India, 1950. Arts. 226, 32 and q3. ‘

¥,

Constitution of India I 950—Distinetion between Part XIV and Part Il. ‘of the Constitution—Whether the employees of the Corporation entitled fo the protection under Part XIV of the Constitution:

Project and Equipment Corporation of India Lid, Employees’ (Conduct,

Discipline and Appeal) Rules, 1975——Rules "4, 5 and 25, Scope of Rule .

4 does not specify any misconduct and Rule. 5 does not specify that: violation of Rule 4 ‘is per se misconduct-—No disciplinary action, therefore . will arise under Rule 4 of the 1975 Rules.

‘The Project and Equipment Corporation of India House Building Advance (Grant and Recovery) Rules Rule 10. (1) (i) and the Profits and Equipments Corporation of India Ltd. conveyance Advance (Grant and

. Recovery) Rules 8 and 10 (1)— Whether the non-utilisation of the advances within the stipulated time for the purposes of and no refund

_ thereof immediately on the expiry Of the periéd, constitute ‘misconduct’?

within the meaning Ft the expression in Rule 4 (i), Git) of the 1975

“AL. KALRA y. PROJECT EQPT. CORPN.

Rules and if not whether the domestte enguiry ‘and. the ‘punishment of the dismissal of serviée is - ‘warranted.

_H. Relief for a declaraiion in cases sof contract for public employment — whether cannot be specifically enforced.

I.- Domestic . Engiiry —Whether the Inquiry Officer . and the Punishing Authority must give reasons before the major punishment is imposed ‘Whether’ non giving of the reasons. makes the decision of dismissal arbitrary and against principles of natural justice.

The ‘Project and Equipment Corporation of India Lid. was formed in 1971 as a wholly owned subsidiary company of State Trading Corporation, a Government ‘of India. Undestaking. In 1976 it was separated and since then it functions as a separate, Government of India Undertaking.

The appellant who joined the ¥ vice under the Sfate Trading Corpo. ration originally and Jater exercised his option to serve the Projec t and

" Equipment Corporation with effect from November 9, 1976. The appellant while working as Deputy Finance Manager Grade II applied for and obtained (a) an advance in the amount of Rs. 16,050 for purchasing a plot of land on April 4, 1979 for which he executed the requisite agreement as required by “the Project & Equipment Corporation of India Ltd., House Building Advance

(Grant and Recovery) Rules, and (b) an adyarce in the amount of Rs. 11,000 for purchase of a new motor cycle on July 7, 1979 as admissible under “‘the’

’ Project and Equipment Corporation conveyance Advance (Grant and Reco. . very) Rules. . Under these rules. non-utilisation of the amounts within the time. limit will impose a liability of the refuad of the entire amount forth:

with together’ with penal interest thereon. The appellant failed to'utilise the amouats and also to refund the same. Thoreforc, coercive steps were taken to recover the entire amount of the House Building advance from his

‘ pay by. stopping the’ payment of his salary from 16th’ November, 1979.

As regards the conveyance advance, the receipts otc. for purchase made in

*. 1980 were accepied, hd

Os July 22, 1980a ‘memorandum was served. upon the appellant stating thercia that the competent authority proposes to hold an enquiry against him under Rules 27 of the Project and Equipment Corporation of India Employees (Conduct, Discipline & “Appeals. Rules, 1975 in respect

" - _ of the aforesaid misutilization of the advances. The committee of Manage- ment in exercise of the powers conferred by sub-rule (4) of Rule 27 of the ‘1975 rules appointed one Sri A.S. Nangia, its Chief Marketiag Manager as the Enquiry Officer to enquire into the two charges against the appellant. The appellant submitted on June 13, 1980 a detailed statement pointing. out that for various reasons therein mentioned so as to explain why there

_ was delay in refunding the advance aad specifically pleaded that in‘ view . of .

the fact that’ the’ ficst advance was sought -to-be recovered by withholding his salary and, adjusting the pay towards the advance and charging penal interest and in the second case by. accepting. the document evidencing purchase of scooter: no misconduct could be said to have been committed

647,

G.

4H

648 « SUPREME COURT REPORTS. ° ~ {1984] 3s.4.z.

A by the appellant and the disciplinary enquiry was, uncalled for, . The enquiry Officer in his report after: recaputulating allegations and explanation simply concluded that the appellant has contravened Rulé 10 (1) (c} (i) of the House Building Advance Rules, and also rules 8 and 10 (1) of the” “Conveyance Advance Rules and therefore committed misconduct punishable under Rule 4 (iy (iid) of the 1975 Rules. .

Pursuant to the report of the Eaquiry Officer, ‘the Executive Director for and on behalf of the Committee of Management of the corporation made. an order PEC: P5 (8) 77 dated February 4, 1981 stating that the ~~ +” Committee. of management agrees with .he findings of the inquiry officer y and imposes the puaishmeat of removal. from service with effect from ‘the - date of the order. The appeal preferred to the Appellate Authority was C.. rejected’ as per the Memorandum dated May 21, ‘1981 signed by one Anand « Krishna, Claiming. to act for and on behalf of the Board of Directors.

“The appellant, therefore. approached the High Court of Delhi under Art. 226 of the Constitution questioning@he correctness and validity of the . findings ‘of. the inquiry officer and the decision of thé Disciplinary Authority - “2 ag well as the appellate authority, -inter, alia on the ground that the. inquiry D- ~ was held iu violation of the principles of natural justice and the quasi- - : judicial authority failed to. give reasons in support of its order and the action _taken against the appellant was per se arbitrary and wolative of Arts.14 and: 16 of the Constitution inasmuch as the -allegation cont&ined in the heads of: -, stharges, even. if .uarebutted, do not constitute .a misconduct within the - meaning of the expression in 1975 Rules. In order to-sustain the maintaiaa- . _ bility of the writ petition, the appsllant also contended that the respondent ° ‘E vis an instrumentality of the State and is comprehended in the expression ‘other. -* quthority? in Art. 21 of the Constitution. The writ petition came-up for admission before a Division Bench of the. Delhi'High Court. It was dismissed in liming . observing that the “writ petition is not maiatajnable on | A -the facts presently set out io the pstition. Hoenc2 this appeal by special leave. 7 F __ >. Allowing the appeal, the Court - @

HELD : 1: L Public sector “wadertakiags aad other iastrumeata.lities of thé State are comprehended in the expressioa ‘other authority”. jn Article. 12'of the Coustitutiog. [660A] .

G 122. Once it is conceded’ that the respondent—corporation is an” instrumentality of the State and ‘is therefore, -comprehended in the expres.’ sion ‘other authority’ in Art, 12 of the Constitution, it is indisputable that it is amenable to the writ jurisdiction under Arts. 32 and 226-of the

_, Copstitution.” Apart from the concession, the tests collated in the decision -

‘of the Constitution Banch of*this-.Court in Ajay Hasia etc.'v. Khalid Mujlb Sheravardi and Others etc, [1981] 25.CR. 79 for determining whether H a particular body is an instrumentality .of the State are fully satisfied and therefore on precedent and coné:ssion it is satisfactorily established that the respondent-Corporation » is an instrumentality of the ‘State within the writ petition. in limine on the ground that the respondent was not amenable

_ A. L, KALRA ¥. PROJECT EQPT. CORN. G49!

+ meaning of the expression ‘other authority’ under Art. 12 of the ‘Consti- A

_ tution and is amenable to the writ jurisdiction, The writ petition filed by the appellant in the High Court was thus maintainable. [é60D- E] -

2. When once it is conceded that the respondent was’ amenable to the writ jurisdiction, the question that will arise is whether the matter, should be remitted-to the High Court as the High Court has rejected the B to the writ jurisdiction of the High Court.: In order not to protract the ~

- litigation involving livelihood of the party approaching: the Supreme Court — for justice, the Court can set down the appeal for final hearing | on merits, which they did in the instant’ ‘case. [6s0F- -H]

3:1. It cannot be said that executive action which results in denial -. Ee".

‘of: equal protection of law of equality before law cannot be judicially revie- -wed nor can. be struck dawa on the ground of arbitrariness as being © violative of Art. 14. [661B- F]

3:2. The scope and ambit of Article 14 have been the subject matter . of a catena of decisions. It is well settled that Article 14 strikes at arbi-

_trariness*in executive/administrative action because any action that is arbi- lig trary must necessarily involve the negation of equality. One need -not confine, the denial of equality to a comparative evaluation between two. persons to arrive.at a conclusion of discriminatory treatment. An action

, z per.se arbitrary itself denies equal protection of law,” It is thus too late

‘ in the day to contend that an executive action shown to be arbitrary is. not either judicially reviewable or within the reach of Article 14. E (662A, F-G, 663A. Bj

: Ajay. Hasaia ete. Khaiid Majid Shehravardi and Ors [1981] 2 S.C. R 79; EB. P. Royappa v. State of Tami)’ Nadu and anr. [1974] 25.C.R:

348; .D. S. Nakara ¥. Union of India, [1983] 158. C. C.. ‘305 and Maneka

Gandhi +. Union of India [1978] 25. C. R. 621 followed. | ra

“4, Wisdom of the legislative policy may not. be open to judicial review but when the wisdom takes the concrete form of law, the same must stand the test of being in tone with the fundamental rights and if it. trenches upon any of the fundamental rights, it is void as ordained by Art. 13, . Conceding for the present purpose that legislative action follows a logislative policy and the legislative policy is not judicially reviewable, but ‘while giving con-* crete shape to- tha legislative policy in the: form of a statute, if the law G . violates any of the fundamental rights including Art. 14, the same is void to the extent as provided in Art. 13. If the Jaw is void being in violation:

_ of any of thé fundamental: rights set out in Part.1I of the ‘Constitution, it : cannot. be shielded on the ground that it enacts a legislative policy. [661F-H]

' §, Even if the respondent “Corporation is an: intrumentality of the #H ‘State as comprehended 3a Art. 12, yet the employees of the Corporation are not governed by Part XIV of the Constitution, However it could not be

650. 7 «SUPREME Coun RAPORTS: a [1984] 3 s.c.r.

AD seid that ae protection conferred by Part TH on the public servant is com:

paratively is; efeztiva than the one conferred by Part XIV. Therefore the distinctioa sought to ba drawn between protection: of part .XIV- of the Constitution and part ILE has no significance. [663B-C, 665A]

: Managing Director. Uttar Pradesh Warehousing Corporation & Anr, Vv. B Vinay Narayan Vajpayee; [1980] 2S CR. 773 at p. 784, relied upon .

v,

6:1. Even. if the facts alleged in two heads of charges are accepted as wholly -proved,. yet that would not constitute misconduct as prescribed in - Rule 5 and no penalty can be imposed for such conduct, for the reasoa that

-while Rule 25 which prescribes penalties specifically provides that. any of | the penalties therein mentioned can bs imposed on an employee for miscon~ duct committed .by him. Rule 4 does ‘sot specify a misconduct. Rule 4 " styled as ‘General’ specifies 2 norm of behaviour. but do’s not specify that its violation wilt constitute misconduct. In Rule ~ 5, it is nowhere stated

-¢hat anything violative of Rule 4 would be per se a misconduct in ‘any. of

‘the sub-cliuses of Rule 5 which specifies misconduct. — [6668 D]

éxpectation. Failure to keep to such - high standard of moral; ethical or

® decorous behaviour befitting an officer of the company by itself cannot ‘consti- "tute misconduct unless the specific conduct falls ia any of the enumerated’

. misconduct in Rule 5. Any attempt to telescope-Rule 4 into Rule 5 must- ; KE _ be looked upon with apprehension because Rule 4 is vague and of a general nature and what is unbecoming of a public servant may vary with individuals and expose “employees to vagaries. of subjective evaluation. What in a given context would constitute conduct unbecoming of a: public servant to be | treated as misconduct would expose a grey area not ame nable to objective evaluation. Where misconduct when proved entails penal consequences, ‘it

. is obligatory on the’ employer to specify and if necessary define.it with

F .precision and accuracy so that any ex post facta interpretation of some * incident may not. be camouflages as misconduct. [665D- G}.

M/s Glaxo Laboratories (1) Lid y. Presiding Ofjicer, Labour Court,

Meerut & Others; [1984] 1. S.C.C. A, followed. rel 7:1. Seeking advance and eranting the same under relevant rules is ‘at best a loan transaction. The transaction may itself provide for paymens and the conseqiences of failure to repay or to abide by the rules.. If the - ules for granting the advance themselves provided the consequence of the: ‘preach of conditions, it would be idle to go in. search of any other -consequence - by initiating any disciplinary action in that behalf unless the 1975 Rules specifically incorporate a rule that the breach of House Building H Advance Rul 2s und the ‘conveyance advance rules, would by themselves ‘constitute a” “misconduct”. Therefore Rule 4 (1) (1)-is not only, not attatac- _ted but in this case no atternpt. . was made to establish the’ correction. And a 6:2. A general expectation of a .certain decent behaviour in “respect ©. of employees keeping in view corporate culture may be a moral or ethical . :

- Ae Le KARLA ¥. PROJECT EQPT. CORPN.

as far as Rule.4 (1) (iii) is concerned, am advance not’ refunded in time . - _ where it was recovered by withholding the salary of a highly plactd officer | “may not disclose a conduct unbecoming of a public servant. Therefore, the first head of charge is an eye-wash, It.does not constitute’ a misconduct ° if it can-be said to be one even if it remains unrebutted. “The inquiry officer has not said one word how the uncontroverted facts consistute a

“conduct unbecoming of a public servant, or he failed to maintain absolute integrity. Regarding the conveyaice advance: the. Position is the same, The appellant for no fault has been punished sub-silencio, . ; Ce [667F-H, 668A, D-E, 669H]

7:2. Now. if what is alleged as tnisconduct does not constitute mis-

"conduct not by analysis or appraisal of evidenc’, but per se under 1975:

Rules the respondent had neither the authority nor the jurisdiction nor the power to impose any penalty for ths alleged misconduct. An administrative:

“631 authority who ‘purports to act by its reguiion must b> held bound by the _ regulation. [5 70H, 6714),

8. In the matter of public employme nt if the termination is, held - be dba, a declaration can. be granted that the. man continues to be service. [671G, 6724] ;

Sukhdev Stugh & Ors. v. Bhagatram Sardar - Stagh... Raghuvananshi & Anr. “{1975] 3 S.C.R,.619 @ 655. Western India Automobile Association’ v.

Industrial Tribunal, Bombay and Ors. [1949] F.C.R. 321 at: 340. - a ie

9:1. sThe ‘duty to give redsons would permit the court heating a petition for a writ of certiorari to” ex facie ascertain whether there is any error apparent on the record. A speaking order will at its best be. reasonable dud . © _ at its worst be atleast a plausible one, If reasons for an order are given _ there will be-less scope for arbitrary or pactial exercise of power and the order ex facie will indicate whether extraneous matters were taken into.

considération by authority, passing the order. Is72p- FE] .

M. P. Industries Ltd: y. Union of India and Others [1966) 1S. CR. 466 at 472; Vadachala. Mudaliar vy. State of Madras, A, \.R. 1952 Madras 276; Bhagat Raja v. Union of India and Others; [1967] 3 S.C.R. 302 @ 320;

referred to.

9: 2. Here, the findings of the inquiry officer’ are , merely his - ipse dixit. .

No. reasons -are assigned for reaching the finding and while recapitualating

_ evidence self-contradictory positions were adopted that.either there was no misconduct or there was some misconduct or double punishment was already imposed. Rule 27 (19) casts an obligation upoa ths inquiry. officer at the conclusion of the inquiry to prepire a report which must inter alia include the findings on each article of charge and the reasons therefor. The_ report is piepared in coatravontion of the aforementioned rule. The situation jis further compouaded by the fact, that the discipliaary. authority which is none

’ other ‘than Committee of _Management of the Corporatioa while accepting the report of the inquiry officer which itself was. defective did not. assign apy wl ai Ong 52

SUPREME COURTS REPORTS > [1984] 3 ser.

_ -Teasons for accepting “the report of the inguiry officer. Further sub rule (ii) of Rule 35 ‘provides amongst others.that the Appellate ‘Authority’ shall _ consider. whether the findings are justified or whether the penalty is excessive or inadequate and pass appropriate orders within three months of the date- of appeal. In order to ascertain whether the rule is complied with, the order of the appellate authority must show that it: took into consideratioa the findings the quantum of penalty and othor relevant considerations. ‘There © is no material for showing that the appellate: authority acted in conson ince : _ with its obligation under Rule 35.. [6728- H, 673A-D- E].

933, “Therefore, the order of removal passed by the Disciplinary

‘Authority is illegal afd invalid for the reasons (i) that the action is thoroughly “ arbitrary and is violative or Att. 14; (ii) that the alleged misconduct does not constitute misconda:t within the 1975 Rules; (iii) that the inquiry Officer him-elf found. that p@aishment was already jmposed for the alleged misconduct by withholding the salary and the appollant could oot be exposed to double jeopardy; and (iv)-that the findings of the inquiry officer are uasup -

‘ ported by reasons and. the order of the Disciplinary Authority as well as the

Appellate Authority suffer from the same vice. [673H. 674A-B]

a’

“10:1; Once the order-of removal from service is held'to be illegal and invalid’ and the appellant being in public employment, the necessary decla~ ration must follow that he continues to be in service unintetruptedly. -Ordinatily, it is well-settled that if termination of service is held to be bad, no other punishment in the guise of denial of back wages can be imposed and | therefore; it must as a necessary corollary follow that he will be entitled to all the back wages on the footing that he*has continued to’ be ia service uninterruptedly. If the appellant had procured an alternative employment he would not. be entitled to wages and salary from the respondent. -But it is equally truc that an employee depending'on salary for his survival when he is exposed fo the vagaries of the court litigation cannot hold on to a slender ~ distant hope of jndicial process coming to his rescue and not try to survive

_ by accepting an alternative employment, a hope which may turn out to b3 a mirage. . Therefore, the appellant | was perfectly justificd in procuring an alternative employment. in order to keep his body and soul together as also - to bear the expenses of litigation to Vindicate his hoaour, integrity ; and character. [s74B. 0}

10:2. However, in tue instant case, the appellant should be paid 50% of the back wages for the rest of the period during-which he remained unemployed. This is so because the conduct of the appellant cannot be said - to be entirely in consonance with corporate culture, As.a-highly placed officer he was bouad to strengthen the corporate culture and he should have acted within the spirit of “the regulations both for house building advance

‘and cnnveyance advance, which are devised to help the employees. There has been lapse in totally complying: with thesé regulations -by the appellant

‘though it neither constitutes misconduct to attract a penalty nor substantially - good enough for initiation of disciplinary inquiry, Is 75A-C]

oat

ALL. KALRA_ v. PROJECT EQPT. CORPN. Desai, »)

Civit APPELLATE JoRDICTION Civil Appeal No. 2703 of 1981.

| From the Judgment and Order dated the 23rd July, 1981 of the -

Delhi High Court in C.W. No, 1648 of 1981.

MK. Ramamurthi, LC. Goyal and Ms. Sumitra Goyal for the Appellant.

Lal Narain Sinha, M. C Bhandar and PP. “Singh for the’

Respondent.

‘The Judgement of the Court was delivered by

- DESAT, I. Failure to adjust the antena to the operative channel:

and dipping the head like the proverbial ostrich in the sand so as not to view the changing’ kaleidoscope of thé Jaw ean alone be: said to be responsible for this trivial matter to be brought to this Court.

Respondent is the Project & Equipment Corporation of India: . _Ltd. Corporation’. for short) since its formation in 1971 a wholly ~ owned subsidiary company of State Trading Corporation (‘STC’ for. - ‘short), a Government.of India Undertaking upto 1976 when it was -.

separated and since then. it functions as a Government of India undertaking. The. appellant A.L. Kalra joined as Upper Division

Clerk inthe STC on August 6; 1963. On November 1, 1969, he , ‘came to, be promoted as Assistant. and earned-a further promotion on ~

May 22, 1974 as Accountant. On the setting up of the Corporation,

_ the appellant exercising his option came to be transferred as Accoun- , ‘tarit to the Corporation on November-9, 1976. Under the relevant.

conditions of transfer, he continued to be governed in the matter of

_ ‘recruitment: and promotion by the relevant rules of the STC. He was ‘promoted in an officiating capagty as Deputy Finance Manager

Grade II on June 29, 1978 and he was put on probation after being

. promoted as Deputy ‘Finance Manager Grade II on regular basis’. ‘effective from February 5, 1979. The appellant applied for and obtained am advance in the amount of Rs. 16,050 for purchasing a plot of ‘land on April 4, 1979 for which hé executed the requisite

7 _ agreement on April 4, 1979. The rules under which advance was ‘ obtained are styled as ‘The Project and Equipment Corporation was”

India ‘Ltd. House Building Advance (Grant & Recovery) Rules

- ‘Rules for House Building Advance’ for short) framed in exercise of. the ; powers conferred upon the’ Board of Directors by the Articles of. ’ Association of the Corporation. The appellant also applied for and obtained § an advance i in the amount of Rs. iH ,000/- for Purchase ¢ ofa

654 -

_ new motor cycle on July 1, 1979. This advance is governed by what . ate styled as: the Projects & Equipment Corporation of India Ltd. Conveyance Advance (Grant & Recovery) Rules (‘Conveyance -

Advance Rules’ for short).

In’ respect of the house building advance. according to the respofident-Corporation, in view of Rule 10 (1) (c) (i) the appellant

_ was required to utilise the amount-drawn by him for the purpose for which advance was granted within two months of drawal and submit the documents evidencing the purchase’ of plot within. the prescribed time failing whiclf he was-liable to refund at once the. entire amount . together with interest to the’ Corporation. The agreement dated . April 4, 1979 executed by the appellant also obligated him to utilise - the advance for the purpose for~ which.the same was sanctioned and ‘to produce ‘the; ;sale-deed for verification by the Corporation failing which the whole of the advance had to be refunded with interest. It was alleged thatthe appellant neither utilised the advance for the purchase of plot nor refunded the amount despite. several reminders and ultimately on November 13, 1979 a memorandum was served *”

‘+ upon him cautioning him that if he failed to refund the entire amount forthwith, disciplinary proceedings will be initiated against him. As the. appellant failed to comply. with the request made in. - the memorandum, his salary from November 7,.1979 as a whole-:was . withheld for adjusting the amount of advance anid the interest pay- able thereon. He was also charged penal interest for the default committed by him. -

In respect of the conveyance advance, whicli was sanctioned on, July 7, 1979, the, appellant i is alleged to have committed a default by not purchasing the motor cycle within a period of one month as required: by Rule 10 of the Conveyance Advance Rules, and on November ‘13, 1979 he was-advised%o refund the amount by Novem-

‘ber 14, 1979 failing which he was threatened with disciplinary action.

"It is, however, admitted that the appellant purchased a_ scooter in

April, 1980 and submitted the documents which. appear to have been accepted by the Corporation: The . balance. of advance was also refunded.

A memorandum dated july 22; 1980. was served upon. the .

appellant. stating therein that the competent authority proposes ta hold an enquiry against him under Rule 27. of the. Project and . Equipment Corporati¢n of India Ltd. Employees’ (Conduct, Disci- | pline & Appeal) Rules, 1975 (11975 Rules’ fos short). ‘There were

SUPREME COURT REPORTS . | [1984]°3 SCR. *

A, L. ‘KALRA ¥. PROJECT BQPT. CORPN. (Desai, J) - 655

-two heads of charges in the charge- sheet drawn-up against ‘the | A appellant on which disciplinary enquiry was proposed | to be held, "These two heads of charges read a as under 3

“Article I Shri A.L, Kalra while functioning as Deputy Finance Be

~ Manager-Grade Tl. in the Finance Division of. the PEC ~ during -April,-1979 applied and drew an ‘advance of © ' Rs. 16,050 for purchase of a plot of land at Faridabad. ~ at he did not furnish the relevant documents in the office nor did he refund the amount of advance to the Corporation within two months of the date of drawal of the advance as ‘required under Rule 10 (1) (©) (i) of PEC House Building ' Advance (Grant and Recovery) Rules.

' Shri Kalra by his above act exhibited lack of integrity - . and conduct unbecoming of a public servant and violated - Rule 4 (1) & (iii) and Rule 5 (5) of the PEC Employees’: ~ (Conduct, Discipline. & Appeal) Rules and Rule 10 (1) (¢) G) of PEC House Building Advance (Grant & Recovery Rules and thereby committed misconduct punishable under the PEC employees (Conduct, Discipline | and Appeal) Rules, , ‘1975, - -&

Artie

Shri, A. L. Kalra drew a conveyance ‘advance of Rs. 11,000 in-July, 1979 for purchasing a motor-cycle, but - did not utilise the amount for the above purpose and did ay not furnish cash ‘receipt etc. evidericing purchase of the

Vehicle within one-month as required under Rule-8 of the

_ PEC Conveyance Advance (Grant & Recovery) Rules. Nor * did he refund the amount of advance to the Corporation as required under Rule 10 GQ), ibid.

- Shri A.L. Kalra by his above act exhibitéd lack ofi integ- tity and conduct unbecoming of a Public servant and — violated Rule-4 (1) (i) & (iii) and’ Rule 5 (5) of PEC Emplo-

~ yees (Conduct, Discipline & Appeal) Rules and also violated — Rule-8 and Rule-10 (is of the PEC Conveyance Advance * OH (Grant & Recovery) Rules and thereby committed miscon- ; duct punishable under. the PEC Employees’ (Conduct, we

- SUPREME COURT REPORIS [1984] 3 scr. -

Discipline & Appeal) Rules, 1975.”

_The appéllant was also asked to submit his defence statement within 10 days from the date of-the receipt.of the memorandum. The appellant by his. letter dated February 13, 1980 requested for extension‘of time to file the defence statement. It-appears :that he sought further extension of.time by three weeks which request was .

declined by the memorandum dated Feb. 23, 1980.

The Committee of Management ‘in exercise of: the powers

| conferred ‘by sub-rule (4) of Rule. .27 of the 1975 Rules appointed . Shri A. S. . Nangia, Chief Marketing Manager as the Enquiry Officer

‘to enquire into the charges against the appellant submitted. on

June - 13,1980 a detailed statement pointing-out that the inquiry was the outcome of malice for various reasons therein mentioned and

“also explaining why there was delay in refunding the advances and specifically pleaded that in view of the fact that the first advance was © sought to be recovered by withholding his salary and adjusting the pay towards advance ‘and charging penal interest and in the second -

-case by accepting the document evidencing purchase of scooter, no misconduct: could be: said to have-been committed by the appellant. and the disciplinary enquiry was uncalled-for. Various other conten« - tions were also raised in the defence statement. The inquiry officer

_ conducted the enquiry in respect of the afore-mentioned two charges. - One'U.S. Aggarwal, Finance Manager of the-Corporation appeared as Presenting Officer. The appellant conducted his own defeuce. | :

~ In Para 4 of fis report, the Inquiry officer states that the -

‘preliminary hearings of the inquiry was held on 3rd. and 9th April,

. 4980 and then inquiry was held regularly on various dates from 23rd ~ April 1980 to 22nd May, 1980. The appellant was called upon to submit his Statement of defence which he had submitted on June

30, 1980. The findings purported to have been recorded: -by the itquiry officer were the subject matter of a heated debate between tif parties and therefore, the report. of the. Inquiry Officer may be broadly scanned here. After recapitulating in paras 1 to 4 the various stages through which the enquiry progressed, in para 5,it is stated that at

‘the ‘preliminary hearing om 3rd April, 1980, Shri-A.L. Kalra, (appel- ' fant) pleaded guilty to all the charges mentioned in Annexure . Tand. also agreed to the stateinent of imputation of his misconduct in- ‘support of the articles of charges framed against him.’ In part 5 (3), the ‘inquiry officer discussed the f first head of charge in Tespect of the

>

’

A. L. KALBA ¥, PROJECT EQP?. CORPN. (Desai, J.) 7 Tt

- house building advance. It was found asa fact that the advance:

was taken for the purchase of-a-plet and that the appellant had negotiated for d purchase ofa plot from Shri J.C. Chugh .who was

‘examined as a management witness and who admitted that he waited for six months to complete the transaction but after that he disposed of the plot. Evidence of Shri J.C. Chugh revealed that the deal was

‘delayed because Haryana Estate Officer demanded some additional amount and there was dispute between the appellant, the vendee and

J.C. Chugh, the vendor as to who should bear the extra burden. In_ paragraph 5.1.4 after 1ecapitulating the reminders sent to - the appellant to refund the advance, it is observed that it is not clear from the relevant rule asto which is the competent authority to grant extension of time for utilisation of the amount. And then in paragraph 5.1.5. he recommended that the sanction of the competent authority should be taken before granting any extension. There erids the discussion on the. charge in respect of ‘house building

; advance,

The inquiry officer then proceeded to examine ‘the second head , ‘of the charge. After recapitulating the fact about sanction of -

‘advance and drawal of the same, it was observed that the appellant

’ drew, the advance on July 9, 1979 and on April 7, 1980 he submitted the documents such as cash receipt in respect of purchase of a

" scooter, insurance certificate, receipt-of balance amount deposited

' with the cashier, original insurance’ policy and registration- book evidencing the purchase of scooter. It is then observed that under the relevant rules motor cycle had to be purchased within one month

- from the date of the drawal*of the advance or else he should have obtained fresh sanction for the purchase of a scooter instead of a

~. motor cycle. “Shen comes the particular observation which may be extracted : . 7

“He (appellant) did not obtain any fresh sanction for purchase of a scooter but simply submitted the papers‘ for regularisation of the advance and although no specific letter ‘for. sanction of the purchase of . a scooter was istued by the: Personnel Division yet the fact that he was asked to refurid © the balancé amount tantamourfts to agreeing defacto sanction for the Purchase of the same.” -

~The inquiry officer then proceeds to dispose of the contention

_ of the, appellant. that in other cases of similar advance and. default, no action was taken but he was singled out fora harsh treatment .

‘ being Annexures M to the petition. This is a bald document of two |

SUPREME COURT REPORTS . [1984]:3 s.c.R..

- for the reasons alleged by him but with which we are not concerned * at this stage. The inquiry offieer then noticed that the full salary payable every month to the appellant was stopped" by the Corpora- tion from November 16, 1979 in addition to the inquiry under which — disciplinary action was proposed to be taken. The inquiry officer concluded his report as under :

“While deciding the case, the fact that the salary’ was.

stopped from 16th November, 1979 may be kept in view as this may, I feel, tantamount to double punishment. Nor- _ mally even where an employee is suspended certain amount _ of subsistence allowance is granted whereas in this case the salary - was completely stopped and nothing has been paid ~ * since then

What is referred to as the report of the enquiry which is minu-’ - tely scanned in the. preceeding: paragraphs merely seems to be the | record of inquiry and recapitulation of allegations and explanation. “What is styled as findings of the inquiry officer are separately filed paragraphs i in which the inquiry officer records that the appellant has contravened Rule 10 (1) () (i) of House Building Advance Rules and has thereby committed misconduct punishable under Rule 4 (1) (iti) _of 1975 Rules. In paragraph 2, it is stated that the appellant has committed breach of Rule 8 and Rule 10 (i) of: the Conveyance ‘Advance Rules and has thereby committed misconduct punishable under Rule 4 (1) (iii) of 1975 Rules. By what process this conclusion - is reached or what evidence appealed to him. is left to- speculation.

_. The reasons in support of the conclusion are conspicuous by their ‘absence, The findings are the ipse dixit of the inquiry officer,

Pursuant -to this report of the inquiry officer the ‘Executive Director for and on behalf of the Committee of Management of the Corporation made an Order No. PEC,P ; 5 (8)/77 dated Februaty 4, 1981. - The heads of charges are reproduced ‘in paragraph 1. Para- graphs 2 and,3 are devoted to. the stages through which. the enquiry .

progressed. ‘In _paragraph 4, the findings tnsupported by reasons are reproduced. In paragraph S, it is stated that the Committee of Management agrees with the findings of jhe inquiry Officer and imposes the punishment, removal from setvice with effect t from the date, of the order.

The appellant preferred an 1 appeal t to the “Appellate Authority being the Board of Directors, of the Corporation on February 21,

A. L. KALRA ¥, PROJECT EQPT.. CORPN. (Desdi, J. ). °

- 1981." One Anand Krishna claiming to act for and on. behalf of the

Board of Directors, Appellate Authority issued smemorandum dated

May 21,1981, Annexure P to the ‘petition in which it is stated that . ‘the appeal of the appellant was considered by the Appellate Authority and after going through the records of the case, the. Appellate

Authority has decided to uphold the decision of thé authority andto confirm the penalty of removal imposed upon him.

The salient feature which flies into the face about the findings recorded by the inquiry officer and the order by- the Disciplinary

. Authority as well as@he Appellate Authority is that none of them _ made a reasoned order or speaking order and their conelusions are _ mere ipse dixit unsupported by any analysis of the evidence or tgason in support of the conclusions.

- The appellant approached the High ‘Court of Delhi under. Art.

- 226 of the Constitution questioning the . correctness and validity of the findings of the inquiry officer and the decision of the Disciplinary

Authority as well as the Appellate Authority inter alia’fon the ground "that the enquiry was held in violation of the. principles“fof natural justice and the quasi-judicial authority failed to give reasons in sup- _ port of its order and the action taken against the - appellant was per ° se arbitrary and in violation of Art. 14 and Art. 16. of the Consti- tution inasmuch as the allegations contained in the heads of charges, even if unrebutted, do not consitute a misconduct within the meaning of the expression in,1975 Rules. In order .1o sustain the maintain- - abilit of the writ petition, the appellant also contended that the respondent i is an instrumentality of the ‘State and is comprehended

- in the expression ‘other authority’ in Art. 12 of the © Consti- tution.

The writ ‘petition | camhe-up for admission before a Division

‘Bench of the Delhi High Court. It was dismissed in limine abserving that the writ petition is not maintainable on .the facts presently set gut in the petition, Hence this appeal oy special Ie leave.

In order to obtatn any decision on merits, the appellant will o .

“have to clear the roadblock about the maintainability of the writ “petition in the High Court. “Happily this untenable contention was “not pursued in'this Court. In ‘para 2 (vi) of .the counter-affidavit filed by one Mahanand Khokher on behalf of the respondents it was unambiguously stated, that the ‘respondent-Corporation is advised not to 0 dispute the “tiaintsinability of the Petitjoner’s petition as

SUPREME COURT REPORTS _ [1984] 3 s.c.r.

regards, applicability of Art. 12_of the Constitution.’ Further. in para’ 5.1 of the same affidavit, it was stated that as regards the assertion of the appellant that the respondent- Corporation i is an instrumentality of the Central Government and hence within Art.-12 of the Constitution, the respondent. Corporation does not dispute the same. This admission was reiterated-in para 5.2: Further in the written submis-

-sions dated September 30, 1983 filed on behalf of the respondent, ‘it is conceded that the respondent is a State within the meaning of Art. 12.for the purposes of Part III of thé Constitu’ion, with this reser- vation that the employees of the respondent are not members of a civil service of the Union or all India civil service or a -civil service of a State or holds the civil posts under the Union or -the State and. .

therefore, would not be entitled to the protection of Part XIV of.the

. Constitution. This concession absolves us from the obligation: to examine the status and character of the respondent-Corporation to determine’ whether it is an.instrumentality of the State and therefore, - ‘comprehended: in the expression ‘other authority’ in Art. 12° of the

Constitution. Once it is conceded that the’ respondent-Corporation is an instrumentality of the State and is therefore, comprehended in the expression ‘other authority’ in Art. 12 of the Constitution, it is indisputable that it is amenable to the writ jurisdiction under Arts.

32 and 226 of the Constitution. Apart from the concession, the tests collated i in the decision of the Constitution Bench of this Court in Ajay Hasia étc. v. Khalid Mujib Sehravardi & Ors. etc.,(*) for deter- _ mining whether a particular body is an instrumentality of the State are fully satisfied and. therefore on precedent and. concession it is satisfactorily ‘established that the respondent-Corporation is an

_instrumentality of the State within the meaning of the expression -

‘other authority’ under Art. ‘12 of:the Constitution and amenable to the writ jurisdiction. The writ petition filed by the appellant i in the High Court was thus maintainable.

Once when in this Court it was connceded that the respondent

" was argenable to the writ jurisdiction of the High Court, the question arose whether-the matter should be remiited to the High Court as the High Court has rejected the writ petition .in limine on the- ground that the respondent was not amenable to the writ " jurisdiction of the

‘High Court. Ultimately, in order not to protract the litigation involving livelihood of the appellant, the. appeal was set down: forfinal hearing on merits. The respongnt«Corporation was accordingly directed to file its affidavit as also the documents on which it seeks to _

, rely. The appeal was thereafter heard on merits, ;

(1) ) se 2 scR 79,

= . . .

ACL KAURA Y PROJECT EQPT. CORPN. (Desai, J)

Before we ‘deal with the contentions raised on behalf of the appellant, it is necessary:to dispose of a contention having a flavour of a preliminary objection raised by’ Mr- Lal Narain-Sinha on behalf | of the respondent-Corporation. It was urged that in the absence of any mination cannot be entertained and no relief can be claimed on the.

allegation of contravention of Art. 14 or Art. 16 of the Constitution.

It was submitted that the expression discrimination imports the concept of comparison between equals and if the resultant inequality 1s pointed out in the greatment .so meted out the charge of discrimina-— tion can be entettained and one can say that equal protection of Jaw .

has been denied. Expanding.the submission, it was urged that the use of the expression ‘equality’ in Art. 14 imports duality and comparison which is predicated upon more than one person of situation

‘and in the absence of available material for comparison, the plea of discrimination must fail. As a corollary, it was urged that in’ the absence of material for ‘comparative evaluation not only the charge of discrimination cannot be sustained but the executive action canhot be struck down on the ground that. the action fS per se arbitrary.

’ Broceeding along, it was urged that making Jaw is ¢ matter of legis- lative policy and the degree of reasonableness in every sich law is equally a matter of policy and policy of the legislature is - not _judicially reviewable 6; On the specious plea that it is either arbitrary. or unreasonable.

It is difficult to accept: the submission that executive action which results in. denial of equal protection of law or equality before ‘law cannot be judicially reviewed nor can it bestruckdown on the ground of -arbitrariness as being violative of Art. 14.

Conceding for the present purpos?é that legislative action follows

' specific pleading pointing out whether any one else was either similarly ©. _ Situated as the appellant or dissimilarly treated the charge of discri-- a legisiative. policy and the legislative policy is not judicially review , able, but while giving concrete shape to the legislative policy in the form of a statute, if the law violates .any of the fundamental rights” including Art.. 14, the same is void to the extent as ‘provided.in Art.

13. If the law is void being in violation of a any Of the fundamental rights set out in Part III of the Constitution, it cannotbe Shielded on

. the ground that it enacts.a legislative policy. Wisdom of ‘the legisla- ° “tive policy may not be open to judicial review but when the wisdom takes the concrete form of law, the same must stand the test of being in tune with the fundamental rights and if it trenches upon any of tig fundamental rights, it is ‘vaid as ordained by Art: 13,

664 SUPREME COURT. REFORTS £19845 3 S.C.R.* ms A a The: scope and ambit of Art. 14 have been the subject matter of " acatena of decisions. One fact of Art. 14 which has been noticed in E.P. Royappay. State of Tamil Nadu & Ann?) deserves special men tion . because that effectively answers the contention of Mr. Sinha. -. The Constitution Bench speaking through Bhagwati, J. in concurring ‘ judgment i in Royappa’ 5 case observed a as under :

“The. basic principle which, therefore, informs: both’.

Aits. 14 and 16 is equality and inhibition against discrimination. Now what is the content.and reach of this great , - ~ equalising. principle? It is a founding faith, fouse the , -€ | - words of pedantic or lexicographic approach. We cannot | countenance’ any attempt to truncate its all-embracing, scope and meaning, for to do so would be to violate its activist

, ‘ magnitude. Equality is a dynamic concept with many as- pects and dimensions and it cannot be “cribbed, cabined ‘and confined” within traditional and doctrinaire limits.

Ds. From a positivistic point of view, equality is antithetic to . arbitrariness... In. fact equality and arbitrariness are sworn — enemies ; conti belongs to the rule of law in a republic while |

- the other, to the whim and caprice of an absolute monarch.

Where an act is arbitrary it is implicit in it that it is unequal

, both according to political logic and constitutional law and i: _. . Ig therefore violative of Art. 14, and if it affefts any matteg , relating to public employment, it is also violative of Art. 16. >

Arts. 14 and. 16 strike at arbitrariness in State action and ensure fairness and equality of treatment.”

This vi view was s approved by the Constitution Bench in Ajay Hasia case It thus appears: well-settled that, Art. 14 strikes at arbitrariness in - fexecutive/administrative action because any action that is arbitrary _» must: necessarily involve the: negation of equality. One need ‘not , confine ‘the denial of equality to a comparative evaluation between two | | persons to arrive at a conclusion of discriminatory treatment. An - G * action per se arbitrary itself denies equal of protection by law. The. “Constitution Beach pertinently obsered - in Ajay Hasia’s case and put the matter beyond controversy when it said ‘wherever therefore, there is arbitrariness in State action whether it be Of the legislature or of the executive or ofan “authority” under Article 12, Article 14 immediately springs into action and strikes down such State action.’

(1) [1974] 2 SCR 348, al

A. L. KALRA v; PROJECT EQPT. CORPN. (Desai, J.)

This view was further elaborated. and affirmed in D.S..Nakgra v.

' Union of India.2)-In Maneka Gandhi v. Union of India(®) it was obset- ved that Art. 14 strikes at arbitrariness in State action and ensure fair-s . ness and equality of treatment. It is thus. too late in the day to contend _ ‘that an executive action shown to be-atbitrary is not either judicially reviewable or within tle reach of Art, 14. The ‘contention as fotmulated by Mr. Sinha must ‘accordingly ‘be hegatived.

It must be conceded in‘fairness to Mr. Sitiha that he j is right in submitting that even if the respondent-Corporation is an instrumen: tality of the State as comprehended in Art. 12, yet the employees of _ the Corporation are not governed by Part XIV-of the Constitution. Could it however -be said: that @ protection conferred by Part I on public. sérvent* is comparatively less effective than the one conferred by Part XIV? This aspect.was examined by this Court in Managing Director, Uttar Pradesh Warehousing ‘Corporation & Anr. v. Vinay Narayan Vajpayee(?) where O. Chinnappa Reddy, J. in a concurring ‘ » Judgment ‘has Spoken re) elogiently about ig that it deserves quota- . tion: . . a?

> find it very y hard indeed to “discover any distinétion, ‘on principle, between a person directly under the employment of. ‘the Government and a person under the employment of an agency or instrumentality of the Government or: a Corporation, sét up under a statute or incorporated but wholly owned by the Government. It is self evident and trite - to say that the function of the State has long since ceased -to be confined to the preservation of the public peace, the exaction of taxes’ andthe defence oftits frontiers. It now _ the function of the State to secure ‘social, economic and ‘ political justice’, to preserve ‘liberty of thought, expression, belief, faith and worship’,. and to ensure ‘equality of status and. of opportunity’, That is the proclamation of the people ‘in the preamble to the Constitution. The desire to attain these objectives has necessarily resulted in intense "Governmental activity in manifold ways. Legislative and -executivity have ‘reached very .far and have touched very “many aspects of acitizen’s life. The Government, directly - or through the Corporations, set up by it or owned by it, - OW owns or manages, a large number of industries and ; ‘institutions. It is the, biggest. builder j in the country. Mam- (1) [1983] 1 SCC 305 (2) [1978]2 SCR 621° (3) {1980] 2 SCR 773 at p, 784

A fh rary

Cc;

SUPREME COURT REPORTS 4 ~——s{ 1984] 3 s.c.R moth and “minor irrigation projects, heavy and light engi-

: “neering projects, projects of various kinds are undertaken by | the Government. The'Government is also the biggest trader . -in the- country. - The State “and:the. Mul.itudionous agencies ' and Cor ‘porations set up by’ it aré the prjncipal purchasers — ofthe produce and the products of our country and they control a vast and complex machinery of distribution. The — . Government, its agenciés and instrumentalities, Corpora- tions, set up by the Government under statutes and Corporations incorporated | under the Companies ‘Act but owned by the Government have thus become the biggest employers ‘ in the country. There is no “good reason why, if Govern-~ ment is bound to observe the equality clauses of the consti- | _ tution in the matter of employment and in its dealings with - ‘the employees, the Corporations. set' up or owned, by the - _ Government should not be. equally. bound and why, instead, such Corporations, could become citadels of patronage and oe arbifsaty action. In a country like ours which teems with ’ population, where the State, its agencies, its’ instrumentalities and its Corporations are the biggest employers and.

where millions seek employment, and security, to confirm the applicability of the equality clauses of the constitution, in relation to matters, of employment, strictly to direct.’ employment ander the Government is.perhaps to mock at the Constitution and the people. Some element of public’ employment is all that is necessary to take the employee beyond the reach of the rule which denies him access toa. *

Court to enforce a contract of employment’ and denies him the protection of Arts. 14 and 16 of the. Constitution. After - .

all employment in the public sector has grown to vast dithensions and employees in the public sector often discharge as onerous duties as civil servants and participate in activi- - ties vital to.our country’s economy. . In growing realization of the importance of employment in the. public sector, Parliament and the Legislatures of the States have declared persons in the service of .local - authorities, Govertiment companies and statutory corporations as-public servants and extended to. them by express. enactment the protection. usually extended to civil servants from suits and prosecution.

It is, therefore, but right that the independence * and intégtity of those employed in the public sector slfould be secured as © tauch as the independence and integrity of civil servants,”

* «

‘A. L. KALRA Y. PROJECT EQPT. coren. (Desai, J.)

_ There fore’ the distinction sought - to be drawn ‘between. protection of

| part XIV of the Constiution and Part III has no significance.

. And now to. the facts. The gravamen of the two heads of

‘charges i is that the appellant is'‘guilty of misconduct as prescribed in- Rule 4 (1) @) and (iii).

It t reads as under : : 7 “4 (1) Every eniployee shall at all times : (i) maintain absolute integrity : —

Gi do nothing which is unbecoming of a public ; servant? »

‘Rule 5 prescribes various misconducts for which.action can be taken against an employee governed by the rules.

Rule 4 bears the heading ‘General’. Rule 5 bears in the heading

_‘taisconduct’. The draftsnien of the 1975 Rules Made a clear distinction about what would constitute misconduct. A general expectation of a certain decent behaviour in respect of employees keeping in view Corporation culture may be a moral or ethical expectation. to keep to ‘such high standard of moral, ethical or decrous behaviour befitting an officer of the company by itself cannot constitute miscon-

‘duct unlgss the specific conduct falls in any of the gnumerated miscon-* duct in Rule 5. Any attempt to telescope Rule 4 into Rule 5 must be looked upon with apprehension because Rule 4 is vague and of a general nature and what is unbecoming ofa public. servant may vary with individuals and expose. employees to vagaries of subjective

. evaluation. What in a given context would constitute conduct un- becoming. of a public servant to be treated as misconduct would expose a grey”area not amenable to objective evaluation. Where misconduct when proved entails penal ‘consequences, it is obligatory

-on the employer to specify and if necessary define it with precision — . and accuracy so that any ex post facto interpretation of some incident

_ may not be camouflages as misconduct. It is not necessary to: dilate on this point in view ofa recent decision. of this Court in M/s Glaxo ~ ‘ Labouratories (1) Ltd. v.. Presiding Officer, Lobour Court, Meerut.

- & Others (') where,this Court held that ‘everything which i is ‘required to be prescribed has to be prescribed with precision and no argument | can be entertained that something not prescribed can yet be. taken o [1984] 1S.C.C. 1,

Failure

66S | re

666, _ + SUPREME COURT REPORTS [1984] 3 SCR.

A into account as varying what is prescribed. In short it canhot be - . left to the vagaries of management to say ex post fucto that some‘acts .

of omission’ or ‘commission nowhere’ found to be enumerated in-the “\ relevant standing or is nonetheless a misconduct not strictly falling within the enumerated misconduct in the relevant standing order but yet a miscondyet’ for the purpose of imposing a penalty.’ Rule 4 |

B . -Styled as ‘General’ specifies a norm of behaviour but does not specify

~ that its violation will constitute misconduct. In Rule 5, it is nowhere.

stated that anything violative of Rule 4 would be per as a misconduct in the sub-clauses of Rule 5 which | specifies misconduct. It would therefore appear that even ifthe facts alleged. in two heads of char-

G 88 are accepted as wholly proved, yet that would not constitute ~~ ~“: misconduct, as prescribed in Rule 5 and no penalty can be imposed __

‘for such conduct. It may as well besmentioned that Rule 25 which prescribes penalities ‘specifically provides that any of the penalities therein mentioned can be imposed on an emyloyee for misconduct

_ committed by him. Rule 4 doés not specify a misconduct. B "Mr. Ramamugthi, leatned counsel for the appellant further contended that the very,initiation of the disciplinary enquiry and imposition of punishment. of removal from service is thorotghly dent Corporation. It was trged that the two heads of charges per se do not’ constitute any misconduct and they.can be styled as. trumped-up which even if held approved would not render the appellant liable for any punishment. The-two;, heads of charges have been’ | extiacted hereinbefore. Charge No. 1 refers to the drawal of a House

_ Building Advance and failure to comply with the requisite rules oS -E° . prescribed for House Building Advance. According® to the. finding ~~

“- secorded by the inquiry officer, the failure of the appellant to refund the amount of advance to the ‘respondent-Corporation within two months of the date of the diawal would be violative of Rule 10 (i) (c) Gi) of the House Building Advance Rules and it would constitute misconduct within the meaning of the expression in Rule 4(1) (iit) of 1975 Rules.” Rule 10 (1) provides that’ the advance shall, be drawn

- ‘jh instalments as prescribed iti various sub-clauses. - The relevant sub-clause in this’ case is sub-el- (C} which ‘provides that “when

“ gdvance is required partly -for purchase of land and partly for constructing a single storeyed new house thereon ; (i) not more than 20% arbitrary and discloses a vindictive attitude on the part of tle respon- - of the sanctioned advance on execution by the applicant ‘employees ~

HD an agreement in the required form for repayment of the advance. .

‘The amount will be-payable to the applicant only for purchasing. a

* we, vos yet na

AL. KALRA Y, PagHECT BQFT corPN. (Desai, J.) _ 667. developed plot of land on which | construction can commence imme-" A. diately and sale deed in respect thereof be produced -for the inspection = *, of CPM/RM. within.two months -of the date on which 20% of the advance is drawn or within such further time as the. CPM/RM ‘may allow in this behalf failing which the employee shall be liable to refund at once the entire amount tothe Corporation together with. | . interest thereon.” A bare reading of the relevant rule will show that B ~ it provides for obtaining. advance which ‘in this. case Was taken: for purchasing a plot. The inquiry ‘officer accepts the evidence of Mr: Chugh that the appellant had “negotiated with him for purchase ofa ' plot but some. dispute arose about ‘some additional’ expenditure and _the negotiations protracted ovér a period of six months, Now para Cc. 1 sub-cl. (C) confers on CPM/RM power to extend the time for fina- , lising the dea! or call upon the employee to refund: the entire amount. and he is liable to pay interest thereon. This is the only consequence . oftaking advance and failure to keep to the time-schedule. The relevant rul¢ is a self contained provision providing for the condition . -° | - for grant of advance, time table for repayment’ and consequence of - D failure to keep to the time schedule. The House Building Advance = -was drawn on April:4, 1979.. On November 13; 1979 the appellant - _ was asked to refund the entire amount. Immediately on November 16,1979, an order was made withholding the entire sdlary of the appellant. Even the inquiry officer was constrained to observe that . '-the appellant was exposed to double jeopardy inasmuch as his salary - E as a whole was withheld and he was being removed from service. It _, is also pertinent to note. that the inquiry officer is not clear when he said ‘that once the power to extend the time to repay the advance is conferred and penal interest is charged, is any rule yiolated.’ This is’ not an. attempt to reappreciate evidence in the case’ but the entire ‘F

' thing is being analysed to point out that the action apart from being | arbitrary is motivated and unjust.

If the “rules for granting the advance themiselves provided the consequence of the breach of conditions, it would be ‘idle to go in search of any other consequence by initiating any disciplinary action G in that behalf unless the 1975- Rules specifically. iticorporate' a -Trule _that the breach of Hose Building’ Advancé Rules would by itself _constitute a misconduct. That i is a the case here as will be ¢ Presently pointed 0 out. . , Seeking advance and granting the same under relevant rules, is -: H. at best a loan transaction. The ‘transaction may itself provide ‘for

©

* _ SUPREME COURT REPORTS | . - i984} 3 $.C.R.

. repayment. ‘and the consequence of failure to repay or to abide by the rules. That has been done in’ this case. Any attempt to. gq in search ofa possible other consequence of ‘breath of contract itself appears to be arbitrary and even motivated, However, the more serious infirmity in framing this head of charge is that according to the inquiry, officer this failure to refund the advance within the time:

frame in which it ‘was sanctioned constitutes violation of Rule 4 (1)

. Gi. Let.us turn to the charge-sheet drawn-up against ‘the appellant. _ " Under the first head of charge it was stated that the appellant was guilty of misconduct as prescribed in Rule 4 (!) (i) and (iii). Rule*4 (1). (i) provides. that every employee: shall at all times maintain absojute integrity. How did the question of. integrity arise passes comprehension. The appellant applied for House Building Advcane.

<; Inquiry Officer says that the appellant had negotiated with Mr. ~ Chugh. for Ppurcltase of a plot. There is not even negative evidence or evidence Which may permit.an inference that the honse building ad- vance was utilised for a purpose other than ‘for which it was granted.

Thierefore Rule 4 (1) (i) is not only attracted but no. attempt was

’ made before us to sustain it? And. as far as Rule 4 (4) (iii) is: con- cerned, we fail to see’-how an‘advance not refunded in time where it was recovered by withholding the’ salary of a highly placed officer.

discloses. a conduct unbecoming of a public servant. Therefore, the first héad of charge i is an eye- -wash. It does not constitute a miscon- duct-if it can be said to be one even ifit- remains unrebutted. The inquiry officer has not said” one word how the uncontroverted facts constitute a conduct unbecoming of a public servant, or he failed to maintain absolute integrity . - RO . .

Turning to the second head of charge, it is alleged that the

“appellant applied for and obtained a conveyance ‘allowance of Rs. 11,000 on July 7, 1979 but did, not utilise the ‘amount for the |

*. purpose for which it was ‘granted and did not furnish cash Teceipt

’ evidencing purchase of a vehicle within orie month as required by

Rule 8 of the Conveyance’ Advance Rulés, nor,did he refund the amount to the Corporation as required-by Rule 10 (1). It is notin dispute that the respondent applied fora motor-cycle advance which was sanctioned and on being - -sanctioned: -he “drew the same on July 9, 1979.. ‘AS required by the resporident, the appellant executed an agreement on July 6, 1979, a day preceding the- sanction of the

_ advance guaranteeing that if the motor-cycle was not purchased and hypothecated within ohe month from the date of the drawal of the t .

A. L. KALRA ?. PROJECT EQPN. CORPN, (Desai, J.)

advance, the whole of the advance together with the interest acctued

. thereon would become refundable. As the appellant did not keep to te the time-schedule, memos dated. August 20, September 24, Novembér

"12 and November (3, 1979 were served upon him calling upon him to either furnish the requisite documents orto refund the advance latest by November 14, 1979. ‘The inquiry officer in tis connection, recapitulated the facts in paragraphs 5°2, 5:21, and 5°2'2.- Then he proceeded to record a finding that the appellant on April, 7, 1980 submitted the documents namelycash receipt in respect of purchase of a scooter, insurance certificate, receipt showing deposit of the balance of advance with cashier, original insurance policy and registration book for purchase of the scooter. The report does not .

_ Show the date of purchase which could have been ascertained with certainty from the insurance certificate as well as the cash receipt. After recapitulating these undisputed facts, he stated that the fact

. that ‘he (appellant) was.asked to refund the balance amount tanta- “mount to agreeing de facto sanction for the purchase of the same -

(scooter). In the,last paragraph, he has stated that a stoppage of the salary effective from November 16, 1979 in the opinion of the inquiry officér tantamounts fo imposition of double punishments and this is compounded by not, paying even a Subsistance allowance. We:

scanned the report’ minutely with the able assistance of the learned: os --counsel for the respondent subjecting it to microscopic analysis to ascertain whether the inquiry officer recorded any finding in respect of this charge adverse to the appellant. We found none. On the contrary, 4 comprehensive. reading of the report .clearly indicates: | that the inquiry officer, was satisfied that ~ the delay in submitting the documents and purchasing a scootet instead of a motor cycle should not have been visited with such’ drastic punishment of stoppage of

7 salary altogether and yet compelling the appellant to render service without guid pro quo. Curiously, however, in a separate document recorded as finding, the inquiry officer has held that. the appellant |

--contravened Rule 10 (1) of the Conveyance Advance Rules which _ would constitute misconduct within. the meaning of the expression in - Rule 4 (1) (iii).of the 1975,Rules. ‘The report and the findings are © wholly irreconcilable and left us guessing about the approach of the inquiry officer, his‘conclusion and his finding.- This aspect considerably troubled us because we would presently point out thai the. disciplinary Authorfty as well as the appellate authority have declined a peep into the working of their minds by making a reasoned | _or a speakng order. - The appellant appears to us ‘to.have been con- victed sub silencio, we

’ ” SUPREME COURT REPORTS eo 1984] 3 scr.

The first question we tiiust Bose to outiselves is whether taking the findings of facts as recorded by” the inquiry officer and actepting for the present Purpose that they are not opento q judicial review, -.

do they constitute misconduct so as to invite.penalty.?. According to the inquiry. officer, failure either to produce the documents or to ror tefund the anfount within a period of one.month .from the drawal of. , the conveyance advance constitutes contravention of Rule 10 () of the C onveyance Advarice Rules. Rule 10 reads as under ;

“10, (1). Where an employee. after taking advance is unable to purchase the vehicle for any reason, he shall refund within one month of drawal of advance the full amount with interest thereon to the Corporation. If he fails to do so, he’ ~ shall be liable to disciplinary . action for misconduct in addi- ;

tion to Hability. for payment of addittonal interest in accor ae dance with Sub Rule (2).

(2) Where an amount. of advance is retained by an _employee beyond one month or where the employee fails to produce evidence of purchase, insurance policy of registra- _ tion book, the normal rate of interest under Rule’ 5 will be ‘charged for the first month and for the period in excess of one month in addition to the normal rate of interest, addi- tional interest at a rate equivalent to difference between the - _ borrowing rate of the Corporation and the normal rate chargeable under Rule 5 will be charged. The additional rate of interest will be compound interest and it will be merged with the principal at monthly. inte¥vals for the purpose of calculating interest for subsequent periods.”

In this connection, our atténtion was drawn to Circular dated .

December 11, 1979 issued by the- respondent-Corporation which provides that henceforth a penal interest will be Icvicd/charged ‘on

‘the total drawn. amount under the Conveyance Advance Rules in ~ cash vouchérs or receipts are not produced. to the Personnel Division within the prescribed period, or in case iffe amount drawn is refunded

| ‘without utilisation.” Tt thus transpires that drawal of the advance,

‘if not utilised within the prescribed period or if not refunded within ‘the same time, will expose the drawer to a liability to penal interest.

| “And i in this case, it has been sO ‘charged.

Now if what j is alleged as misconduct does not constitute miscon- duct not by analysis cr appraisal of evidence, but per se under 1975

Ny

\s

; A L, KALRA v. PROJECT EQPN, GORPN. (Desai, J. 7 s

‘Rules the tespondent had neither the authority“nor- the jurisdiction not the power fo impose any penalty forthe alleged misconduct. An

“en administrative authority who purports to act by its regulation must be ~ .

held bound by the regulation. ‘Even if these regulations have no force’ of law: the employment under these corporations. is public employment, and’ therefore an employee ‘would get - .astatus which would enable him to obtain‘a declaration for continuance in service, if he was dismissed or discharged contrary to the regulations.’

[Sukhdev Singh & Ors: vy. Bhagatram Sardar Singh Raghuvanshi and

Anr OL

If thus it is satisfactorily established that the employment under such Corporation like the. respondent which is.an instrumentality of the State, is public employment, it is difficult to entertain the submis-

_ sion of Mr. Sinha which did prevail for some time in the days goneby.

that contract of public service‘cannot be specifically enforced. Mr. —

. Sinha in this connection relied upon Sec. 14 of the Specific Relief

‘Act, 1963 arid urged that where the origin of employment isin a contract the breach of it cannot be remedied by directing specific performance of a contract. of personal service. He also drew our attention to Western India Automobile Association y. Industrial

Tribunal, Bombay and Ors. (2) Where a Constitution Bench of this: Court has observed as under’: ;

“It is true that this Tribunal can do what no Court can, namely, @dd ‘to or alter the terms or conditions of the contract of service. Express power to do so is given by the regulation, while there are no words conferring a power to reinstate or revive a contract lawfully determined.” . *

Reference was also. made to Dr. SB. Dutt v. University of Delhi

_ Wherein it was held that an arbitrator appointed by the parties and functioning under the Arbitration Act, 1940 cannot by his award enforce a contract of personal service in contravention of the provi-

“sions of the Specific Relief Act and this discloses an error apparent -

“on the face of the award. But neither Sec. 14 nor the aforementioned two decisions: can render. any assistance to the respondent because it ‘is well-settled that in the matter of ‘public: employment if the termina- (1) £1975] 3 SCR 619 at 655. (2) [1949] F.C.R. 321 4t340 -- St @) [19591S.CR. 1236 a

G!

. SUPREME COURT REPORTS | [1984] 3 s.c.r.,

“*tion is held ‘to be bad; in’ view of the latest decisions in Sukhdev

‘Singh and Uttar Pradesh Warehousing Corporation's cases a declara tion can be granted that the man continues to bei in service.

“Mr. Ramamurthi on 1 behale of the appellant further contended . that' the order of removal from service is void as it is passed i in viola- tion ofthe principles of natural justice and at any- rate an order imposing penalty by a quasi-judicial ‘tribunal must be supported’ by reasons in support of its conclusions. Jt was urged that duty to give

‘reasons would permit the court hearing a’ petition. for a writ ‘of certiorari to ex facie ascertain whether .thefe is any error apparent on the record,) It was conceded that for the present submission adequacy or sufficiency of reasons is not questioned. What is contended is

_ that the inquiry officer. has merely recorded his ipse dixif and no _ feasons ate assigned in support of the findings. The mental process is conspicuosly silent. A speaking order will at its best be reasonable and at its worst be at least a plausible one (4¢.P. Industries Ltd. v..

Union of India & Others).2) What’prevents the authority authorised to.impose penalty from giving reasons ? If reasons for an order are- given, there will be less scope for atbitrary or partial exercise of power -and the orders éx facie will indicate. whether extraneous circumstances were taken into consideration by authority passing the ordér. This.

view in Vedachala Mudaliar v. State of Madras(?) was approved by

~ this Court in Bhagat Raja v. Union of India and Others(®) As poirted out earlier, the findings of the inquiry officer are merely his ipse dixit. No reasons are assigned for reaching the finding andmyhile recapitu- lating evidence, self-contradictory position .were adopted that either — there was ho misconduct or there was some misconduct or double punishment was already imposed. ‘Rule 27 (19) casts an cbligation ‘upon the inquiry officer at the conclusion of the inquiry to prepare a report which must inter alia include the findings on each article of charge and the reasons therefor. The report is _ Prepared in contra-

~ vention of the aforementioned rule.

. The situation is farther compounded by the fact that the disciplinary authority which is none other than Committee of Management

-of the Corporation’ while accepting the report of the inquiry- Officer which itself was defective did not assign any reasons for accepting the report of the inquiry officer. After reproducing the findings of the

(1) [1966}. 1 SCR 466 at 47. Co, | (2) AIR 1952 Madras 276. ee : ~ (3] [1967] 3 SCR 302 at 320, ts oe y™ a

- , liable to quashed: and set aside. |

A, L. KALRA ¥. PROJECT EQPN. CORPN. (Desai, J.} inquiry officer, it is stated that the Committee: of Management agrees with the same. It is even difficult to make out how the Committee of Management agreed with the observations of the inquiry, officer because at one stage while recapitulating thé evidence the inquiry

- officer unmistakably observed that appellant was subjected to!double - punishment and at other place, it was observed that granting exten- sion of time and acceptance of documents and balance advance would tantamount to extending the time which would make the affair look wholly innocuous. This shows utter non-application of mind of the Disciplinary Authority and the order is vitiated.

A detailed appeal w4s submitted by the appellant to the Board of Directors running into about § pages. .The only order while dismissing thé appeal - brought,to, our notice is a communication by _ a gentleman Anand Krishna whose authority and designation are notstated, but who purported to act oni behalf of the Board of Directors, of-Rule-'35 provides amongst others. that the Appellate Authority shall consider whether the findings are justified or whether the penalty is.excessive or inadequate and, Pass - ‘appropriate orders within three

_ménaths of the-date of appeal. In order to ascertain whether the rule ig complied with; the order of the: appellate authority must show that it took into-consideration . the. findings the quantum of penalty and other relevant-considerations. There.is no material for showing thatthe appellate authority’ acted in consonance with its obligation under Rule’ 35>‘ However, in para 5.14 to 17 of the counter-affidavit, it was stated that ‘full inquiry-report with annexure can be shown: to ;

the court. at the time of hearing, if desired.’ If the respondent’ was anxious to sustain its action, it was obligatory upon it to disclose the fullinquiry report. Nothing was shown to us nor any attempt to show. the proceedings of the appellate atithority to disabuse out mind that the appellate © authority was: guilty of utter non-application of mind and discharged its duty under Rule 35., No attempt was ‘made to urge that the three authorities had ever assigned reasons in support of their conclusions. For this-additional reason also, the initial order of the Disciplinary Authority as well as the Appellate Authority are

Tosum up the order of removal passed by. Disciplinary Autho-

Tity is illegal and invalid . forthe. reasons : : (i) that the ‘action is tho- roughly avbitrary and is violative Of Art. 14, that the. alleged

AL

Q that the appellate. authority, after going through the recordsof the _. . “case, has decided-to uphold the decision of the disciplinary authority " and'to confirm: the penalty of removal from service itfiposed upon the . appellarit. Rule 35-of 1975 Rules. deals with appeals, Sub-rule (ii)

“Once the order of removal from service is held to be illegal and inva- © misconduct does not constitute misconduct within the 1975 Rules’; (iii) that the inquiry officer himself found that punishment was already imposed for the alleged misconduct by withholding the salary and the appellant could riot be exposed to “double jeopardy ; and (iv) that the findings of the inquiry officer are unsupported by reasons and the: order of the Disciplinary Authority as well as the Appellate Authority suffer from the same vice. _ Therefore, the order of removal from service as well as the appellate order are quashed and set aside.

’ The last question then is to what relief the appellant is entitled ?

lid.and the appellant being in public employment, the necessary declaration must follow that he continues to-be in service uninterrup- — tedly. This aspect does not t present any difficult’ and. the declaration is hereby granted.

When removal from service is held to be illegal and invalid, thé next question is whether: the victim of such action is entitled to. ‘backwages. Ordinarily, it is well-settled that if termination of service - #8 held to be bad, no other punishment if the guise of denial of back “wages can be imposed and therefore, it must as a necessary‘corollary _ follow that he will be entitled to all the back wages on the footing that -

‘- he has continued to be in service uninterruptedly. But it was pointed

_out in this case that the appellant was employed as Factory Manager by M/s KDR Woollen Mills, A-90, Wazirpur Industrial Area, Delhi ‘« from where he resigned with effect from August 8, 1983. It was also submitted that he was. drawing a salary of Rs. 2500 per. month. Now ifthe appellant. had procured an alternative employment, he

_ would not be entitled to wages and salary from the respondent. But. it is equally true that an employee depending on salary for his survival when he is exposed to the vagaries of the court litigation cannot.

hold on to aslender distant hope of judicial process coming to:his rescue and not try to survive by accepting an alternative employment, a hope which may turn out fo be a mirage: Therefore, the appellant was perfectly justified in procyring an alternative employment in '. order to keep his\body and soul together as also to bear the expenses : of litigation to vindicate his honour, integrity and character.

The submission n of the respndent that the appellant had accepted employment with M/s KDR Woollen Mills may be accepted in view.

" of the evidence teridered in the case. Therefore, the appellant would not be entitled to salary for the period he was employed with M/s KDR . - Woollen Mills. °

\

984] 35.0.8, | Py a4,

4h

é .

y> of the appellant quantified at Rs. 3000.

} . A. L. KALRA Y, PROJECT EQPT, CORPN. (Desai, J. ) 675

" Bven for the rest of the period, the conduct of the appellant A cannot be said to be'entirély in consonance with corporate culture. As a highly placed officer he was bound to strengthen the corporate culture and he should have acted: within the spirit of the. regulations both for house building advance and conveyance advance, which are devised to help the employees. There has been lapse in. totally . complying with these regulations by the appellant though it neither B Fconstitutes ‘misconduct to attract a penalty nor substantially good enough for initiation of disciplinary inquiry. Accordingly, having. regard to all the.aspetcs of the case, the appellant should: be paid 50% of the back wages for the period since his removal from service upto his reinstatement excluding the period for which he had procured} ‘an alternative employment. The respondent shall also pay thecosts C

?

SR. oo pes otonet |