ivil Appeal No 3 1543 155 of 1985
From the Judgment and Order dated 263
1985 of the Jammu  Kashmir High Court in LPA W No 59 of 1984
For the Appellant In Person in Civil Appeal No 3 15485 MN Tiku Rakesh Tiku and Pandey Associates for the Respondents
431 MN Tiku Rakesh Tiku and Pandey Associates for the Appellants
For the Respondent In Person in Civil Appeal No 315585
The Judgment of the Court was delivered by KULDIP SINGH J
Jammu  Kashmir Industries Limited hereinafter called company  is a company registered under the Indian and is wholly owned and managed by the State of Jammu  Kashmir
Pyare Lal Sharma was employed by the company as Chemical Engineer
His serv ices were terminated by the Managing Director of the company on June 14 1983
Sharma s writ petition was allowed by a learned Single Judge of the Jammu  Kashmir High Court
On appeal by the company the Letters Patent Bench upheld the judgment but denied back wages to Sharma
This is how these two appeals one by thecompany and the other by Sharma are before us
We may briefly notice the necessary facts
Pyare Lal Sharma joined the company as Assistant Chemical Engineer on July 12 1972
In 1974 he was sent to England as management trainee but he returned back without completing the train ing
Sharma s conflict with the company started in 1976 when he filed a suit against the company in Jammu  Kashmir High Court with various reliefs including a direction that he be again sent to England on company s expense
The suit was dismissed and further appeal to the Division Bench was also dismissed
He then filed another suit in the Delhi High Court claiming Rs50 lakhs as damages from the company but the same did not proceed on technical grounds
Thereafter it seems Sharma started suspecting mala fide in every action of the company and resorted to court proceedings even on slight pretext
He challenged the order of transfer from Baramulla to the headquarters by way of suit in the Jammu  Kashmir High Court
Interim stay initially granted was vacated by the High Court
In December 1979 he applied for leave on medical grounds without disclosing the ailment
He remained absent from December 7 1979 to March 7 1980 without any sanctioned leave
Disciplinary proceedings were initiated against him on the charge of unauthorised absence and he was placed under suspension on March 8 1980
He filed Writ Petition No 5880 in the Jammu  Kashmir High Court against suspension
Ultimately Sharma expressed re grets and he was reinstated into service by an order dated May 15 1980
In April 1981 he was transferred from head quarters to one of 432 the units
He again filed a writ petition in the Jammu  Kashmir High Court challenging the order of transfer but the same was dismissed
Thereafter he filed Writ Petition No 4086 of 1982 in this Court which was heard by Chinnappa Reddy J Vacation Judge on 1st of June 1982
The learned Judge passed the following order Issue notice returnable on June 15 1982
Notice be also served on the counsel for the State of Jammu  Kashmir Mr Altar Ahmad
Mr Altar Ahmad will take instructions from his clients and assist this Court to know the precise facts of the case which it is impossi ble to find from the petitioner
1 have sug gested to the petitioner that he may engage a counsel but he does not appear to be inclined to do so
Nor is he willing to be assisted by the counsel engaged by the court
 The writ petition was however dismissed as withdrawn on June 15 1982
Sharma filed two more writ petitions being 293 of 1982 and 410 of 1982 in the Jammu  Kashmir High Court challenging the promotions of some other officers
Sharma absented from duty on September 8 1982
He was asked to explain his absence
A para out of his reply is as under I have been submitting charge sheet against you since last one year to authorities about your corrupt practices communal character and illegal financial advancement you have made but no action has been taken against you since you utilise political pressure and bribed the chairman
 Sharma was served with a charge sheet dated September 24 1982 and he was placed under suspension
Use of deroga tory language in various communications was one of the charges against him
He submitted his reply to the charge sheet on October 7 1982
Part of the opening paragraph is as under You have become frustrated lost balance of mind and to cover the various irregularities committed by you for example  
You will be prosecuted for levelling false charge sheet and false charges against me
Coming to the charge sheet with above reverence I have to say as under On October 22 1982 an enquiry officer was appointed to enquire 433 into the charges against Sharma
He challenged the order of suspension by way of Civil Writ Petition 661 of 1982 in the Jammu  Kashmir High Court
The High Court stayed the sus pension by its order dated December 20 1982
The order of suspension having been stayed by the High Court it was incumbent on Sharma to have joined duty
But inspite of company s letters asking him to do so he remained absent
Sharma filed Writ Petition 47182 Writ Petition 12983 and Letters Patent Appeal 2483 for payment of his salary and allowances for various periods which were granted by the High Court
It is also on record that while in service Sharma unsuc cessfully fought assembly elections on two occasions
He filed his nomination papers for contesting elections to the Lok Sabha from Baramulla constituency
But the nomination papers were rejected
Regulation 1614 of Jammu  Kashmir Industries Employees Service Rules and Regulations before amendment was as under The service of the permanent employee shall be terminated by the company if a his post is abolished or b he is declared on medical grounds to be unfit for further service after giving three months  notice or pay in lieu thereof
For similar reasons the service of a temporary employee also be dispensed with after giving him one month s notice or pay in lieu thereof
 The above quoted regulation 1614 was amended on April 20 1983
Amended regulation is as under 1614
the services of an employee shall be terminated by the Company if a his post is abolished or b he is declared on medical grounds to be unfit for further service or c if he remains on un authorised absence ord if he takes part in active politics
In the case of a and b above the services shall be terminated after giving three months notice to a permanent 434 employee and one month s notice to a temporary employee or pay in lieu thereof
In the case of c and d above the services of an employee shall be terminated if he fails to explain his conduct satisfactorily within 15 days from the date of issue of notice
The management shall be empowered to take a decision without resorting to further enquiries
By order of the Board of Directors
 The company issued a show cause notice dated April 21 1983 in terms of clause c of amended regulation 16
The notice was in the following terms In compliance to the orders of the Hon ble High Court Your suspension was stayed till further orders vide Order No JKI31982 dated 211282 issued vide endorsement No AdmP 80 654866 dated 211282
From that date also you have continuously remained absent unautho risedly from your duties
You are therefore served this notice to show cause within a period of 15 days as to why your services should not be terminated under rules of the Corporation No reply to the show cause notice was submitted by Sharma
By an order dated June 14 1983 the Managing Direc tor of the company terminated his service
The termination order is reproduced as under Shri Pyare Lal Sharma Chemical Engineer Jammu and Kashmir Industries Limited has remained on unauthorised absence continuously from 211282 since the date of his suspen sion was stayed as per orders from the Hon ble High Court
Shri Sharma was served with a notice under Jammu  Kashmir Industries Limit ed Employees Service Rules to show cause within a period of 15 days as to why his services should not be terminated
This notice was served to him under registered post but the same was received back in this office and later on delivered to him in person on 7583 as per his request
Shri Sharma has failed to explain his position
It has now also been established that Shri Sharma was 435 taking part in active politics during the period of his un authorised absence and has filed nomination papers for contesting elec tion from 1 Baramulla Parliamentary Con stituency
Now that his unauthorised absence as well as his taking part in the active politics has been established and in exercise of the powers vested in the management under Jammu  Kashmir Industries Employees Services Regulations the services of said Shri Pyare Lal Sharma Chemical Engineer J  K Industries Limited are hereby terminated
 Sharma challenged the order of termination by way of Writ Petition No 70 of 1984 before the Jammu  Kashmir High Court
Learned Single Judge by his judgment dated October 16 1984 allowed the writ petition on three grounds
The learned Judge found the impugned order violative of Rules of Natural Justice as no opportunity to show cause was afforded to Sharma in respect of the ground of taking part in active politics
It was also held that the Board of Directors having appointed Sharma The Managing Director who is subordinate authority could not terminate his services
Finally the learned Judge held regulation 1614 to be arbitrary and as such violative of Article 14 of the Consti tution of India
The Letters Patent Bench of the High Court dismissed the appeal of the company but denied back wages to Sharma
The Bench held that Sharma s services could not be terminated by an authority subordinate to the authority which appointed him
The Bench also found that either three months notice or salary in lieu thereof under regulation 1614 was mandatory
The Division Bench did not agree with the other reasons given by the learned Single Judge in support of his judg ment
Mr Pyare Lal Sharma appeared in person and argued his case
He has been of no assistant to us
During the course of arguments we suggested to Mr Sharma to engage a counsel which de declined
We also repeatedly offered to him to have the services of a counsel engaged by the Court but he did not agree and insisted on arguing the case himself
From the pleadings of the parties documents on the record the judgment of the learned Single Judge and of the Letters Patent Bench 436 and from Sharma s arguments the following points arise for our consideration 1
Whether Regulation 1614 is arbitrary and as such ultra vires Article 14 of the Constitution of India
Whether three months  notice or pay in lieu of the notice period was required to be given under Regulation 1614
The termination order having been passed by the Managing Director who was an authority subordinate to the Board of Direc tors which appointed Sharma the order was bad on that ground
Whether the impugned order is viola tive of rules of natural justice so much so that the ground of taking part in active politics was not mentioned in the show cause notice whereas it was relied upon in the termination order
Whether the period of absence which was prior to the date of coming into force of the amended Regulation 1614 could be taken into consideration for invoking ground c of the Regulation
We see no arbitrariness in Regulation 1614
The Regula tion has been framed to meet four different eventualities which may arise during the service of a company employee
Under this regulation services of an employee may be termi nated a if his post is abolished or b if he is declared on medical grounds to be unfit for further service or c he remains on unauthorised absence or d if he takes part in active politics
In the case of a and b three months notice to a permanent employee and one month notice to temporary employee or pay in lieu thereof is to be given
In case of c and d a show cause notice to explain his conduct satisfactorily is to be given
So far as grounds a and b are concerned there cannot be any objection
When a post is abolished or an employee is declared medical ly unfit for further service the termination is the obvious consequence
In the case of abolition of post the employee may be adjusted in some other post if legally permitted
Ground c has also a specific purpose
Remains on un authorised absence means an employee who has no respect for discipline and absents himself repeatedly and without any justification 437 or the one who remains absents for a sufficiently long period
The object and purport of the regulation is to maintain efficiency in the service of the company
The provision of show cause notice is a sufficient safe guard against arbitrary action
Regarding ground d acting politics means almost whole time in politics
Company job and active politics cannot go together
The position of the civil servants who are governed by Article 311 is entirely different but a provision like grounds c and d in Regu lation 1614 concerning the employees of companiescorpora tionspublic undertakings is within the competence of the management
We do not agree with the Division Bench of the High Court that three months  notice or pay in lieu thereof was to be given to Sharma under Regulation 1614
It is clear from the plain language of the regulation that three months notice or pay in lieu is only required when termination is under ground a or b
Regarding c and d the regula tion provides for a 15 days notice to explain the conduct satisfactorily and there is no requirement of any other notice or pay in lieu thereof
We may now take up the third point
Sharma was appointed as Chemical Engineer by the Board of Directors
The powers of the Board of Directors to appoint officers of Sharma s category were delegated to the Managing Director on Septem ber 12 1974 and as such from that date the Managing Direc tor or became the appointing authority
Needless to say that employees of the company are not civil servants and as such they can neither claim the protection of Article 3111 of the Constitution of India nor the extension of that guaran tee on parity
There is no provision in the Articles of Association or the regulations of the company giving same protection to the employees of the company as is given to the civil servants under Article 3111 of the Constitution of India
An employee of the company cannot therefore claim that he cannot be dismissed or removed by an authority subordinate to that by which he was appointed
Since on the date of termination of Sharma s services the Managing Direc tor had the powers of appointing authority he was legally competent to terminate Sharma s services
The learned Single Judge allowed the writ Petition on the fourth point though the same did not find favour with the Division Bench
Grounds c and d in regulation 1614 exclusively and individually are sufficient to terminate the services of an employee
Once it is established to the satisfaction of the authority that an employee 438 remains on unauthorised absence from duty the only action which can be taken is the termination of his services
Similar is the case when an employee takes part in active politics
The finding in the termination order regarding taking part in active politics cannot be sustained because no notice in this respect was given to Sharma but the order of termination can be supported on the ground of remaining unauthorised absence from duty
This Court in State of Orissa vs Vidyabhushan Mohapatra 1963 1 Supp
SCR 648 and Railway Board vs Niranjan Singh has held that if the order can be supported on one ground for which the punishment can lawfully be imposed it is not for the courts to consider whether that ground alone would have weighed with the authority punishing the public servant
Thus there is no force in this argument
This takes us to the last point which we have discovered from the facts
Regulation 1614 before amendment consisted of only clauses a and b relating to abolition of post and unfitness on medical ground
The company had no authori ty to terminate the services of an employee on the ground of unauthorised absence without holding disciplinary proceed ings against him
The regulation was amended on April 20 1983 and grounds c and d were added
Amended regulation could not operate retrospectively but only from the date of amendment
Ground c under which action was taken came into existence only on April 20 1983 and as such the period of unauthorised absence which could come within the mischief of ground c has to be the period posterior to April 20 1983 and not anterior to that date
The show cause notice was issued to Sharma on April 21 1983
The period of absence indicated in the show cause notice is obviously prior to April 20 1983
The period of absence prior to the date of amendment cannot be taken into consideration
When prior to April 20 1983 the services of person could not be terminat ed on the ground of unauthorised absence from duty under Regulation 1614 then it is wholly illegal to make the absence during that period as a ground for terminating the services of Sharma
It is basic principle of natural justice that no one can be penalised on the ground of a conduct which was not penal on the day it was committed
The date of show cause notice being April 21 1983 the unauthorised absence from duty which has been taken into consideration is from December 20 1982 to April 20 1983
Whole of this period being prior to the date of amendment of regulation 1614 the same could not be made as a ground for proceeding under ground c of Regulation 1614
The notice served on the appellant was thus illegal and as a consequence the order of termination cannot be sustained and has to be set aside
439 When the termination order is set aside by the courts normally the servant becomes entitled to back wages and other consequential benefits
This case has a chequered history
From 1976 onwards there has been continuous litiga tion and mistrust between the parties
The facts which we have narrated above go to show that Sharma has equally contributed to this unfortunate situation
In view of the facts and circumstances of this case we order that sixty per cent of the back wages be paid to Sharma
Money already received by Sharma under orders of this Court or the High Court shall be adjusted and the balance paid to him
If the money already paid to Sharma is more than what we have ordered then there shall be no recovery from him
Civil Appeal 315485 is allowed to the extent indicated above Civil Appeal 315585 filed by the company is dis missed
CMP 1213 88 is dismissed as infructuous
There shall be no order as to costs


Summary:
The respondents were manufacturing various medicinal preparations and in that process were using tincture con taining alcohol
On the enforcement of the they became liable to pay duty and also to obtain licence but they continued their manufacture without doing so
The Commercial Tax Officer issued demand notices under Rule 12 of the Medicinal and Toilet Preparations Excise Duties Rules 1956 requiring payment of the duty which the respondents had failed to pay
The respondents filed writ petitions in the High Court challenging the aforesaid notices and the proceedings for recovery of duty
Allowing the writ petitions the Division Bench quashed the notices as well as the proceedings for recovery on the ground that the Act was silent on the ques tion of levy of duty on escaped turnover and hence Rule 12 which provides for recovery of escaped duty was outside the purview and scope of the Act and therefore ultra vires
In these appeals it was contended that Rule 12 was invalid and 466 unreasonable and violative of Article 14 of the Constitution because it does not provide for any period of limitation for the recovery of duty
Allowing the appeals and setting aside the judgment of the High Court this Court HELD 1
The liability to pay tax is created by the charging section 3 and Rule 12 confers power on the autho rised officer to recover duty if the same has not been paid on account of any short levy or deficiency or any other reason
Rule 12 is referable to section 192i of the Act and carries out the purposes of the Act as it seeks to provide for recovery of duty as contemplated by section 33 of the Act
It is designed to confer residuary power for recovery of duty if unpaid on account of short levy or deficiency or for any reason it remains unpaid
If recovery of duty or any amount of sum payable to the Government under the Act is not covered by any specific Rule additional supplementing provision is made for its recovery by this Rule
This Rule does not create any additional charge or liability on the manufacturer for the payment of the duty
The High Court Committed error in holding that the Rule is ultra vires the Act
470C D 470A B 2
Rule 12 does not prescribe any period within which recovery of any duty as contemplated by the Rule is to be made but that by itself does not render the Rule unreasona ble or violative of Article 14 of the Constitution
In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period
What would be reasonable period would depend upon the facts of each case
Whenever a question regarding the inordinate delay in issuance of notice of demand is raised it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice or demand for recovery was made within reasonable period
No hard and fast rules can be laid down in this regard as the determination of the ques tion will depend upon the facts of each case
470F G H 471A