IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.01.2010 CORAM: THE HONOURABLE MR. JUSTICE S. MANIKUMAR W.P.No.12326 of 2001 S.Arumugathiraviam ... Petitioner Versus Tamil Nadu Small Industries Corpn. Ltd., Rep. by its Chairman and Managing Director, Thiru-vi-ka Industrial Estate, Guindy, Chennai – 600 032. ... Respondent Prayer: Writ Petition is filed under Article 226 of the Constitution of India, praying for issuance of a Writ of Certiorari, calling for the records of the respondent in 9454/EG/99, dated 31.05.2001 and quash the same. For Petitioners : Mr.P.Sugumar For Respondent : Mr.S.Sathiamurthi O R D E R The order dated 31.05.2001 of the Chairman and Managing Director of TANSI, directing recovery of a sum of Rs.68,382/- being the loss caused to TANSI and the punishment of stoppage of increment for two years with cumulative effect are challenged in this writ petition. 2. It is the case of the petitioner that when he was working as an Independent Works Manager at the office of the Works Manager, TANSI Foundry and Engineering Works, Pettai between 03.12.1993 and 23.04.1995 and thereafter, as Works Manager from 24.04.1995 in the said place, he was holding additional charge of Unit TANSI Foundry and Engineering Works, Pettai from 24.04.1995 due to shortage of staff. The DGM, Head of the Department for both the units, who reviewed the units in May 1995 directed him to call for the rates for awarding labour contracts for Foundry Work by supply raw materials by TANSI, so that some pending works were to be carried out and also to canvass more orders for fabrication section. Taking into consideration of the DGM's instructions and the earlier instructions of the Managing Director vide letter dated 29.03.1995 and based on the Board's resolution No.23/95 held on 13.03.1995, he submitted proposals to the Corporate Office on 16.05.1995 to enter into a memorandum of understanding with the Management to achieve target for both the units for the year 1995- 96. 3. During the relavant period, the Highways Department Rural Roads Division, Tirunelveli approached TANSI for placing orders for certain name boards, specifying the type sign boards etc. The Divisional Engineer (Highways), TNUDP, Tirunelveli also approached TANSI for supply of cautionary sign boards and other varieties of sign boards. Earlier, the Highways Department had placed orders with the Tamil Nadu Khadi Department. As the petitioner did not have any idea about the prevailing rates for such stores, being purchased by the Highways Department, he obtained the previous years' rates entered into by the Highways Department with Khadi Department and adding 5% to the said rate for marginal escalation for one year, the rates were quoted to the Highways Department. In these circumstances no estimate was prepared. 4. Based on the quotation, purchase orders were placed by the Highways Department. This was discussed by the petitioner in detail with the DGM and he obtained the DGM's oral clearance, for the work as required for the best advantage of TANSI. Thereafter, necessary price enquiries were floated to local contractors to execute the orders of Highways Department at TANSI premises, as the orders were to be executed immediately. On receipt of quotations from sub-contract agencies for the job work, as required on the price enquiry dated 05.06.1995 and 23.06.1996, proposals were sent to the Chairman and Managing Director for approval of the sub- contract rates as per the norms laid down by Boards' Resolution No.23/95, seeking approval of the rates. As there was pressure from the Highways Department to expedite the supply by 30.06.1995, the petitioner issued formal orders to the sub-contract agencies to take up the work as already proposed to the office of the Chairman and Managing Director, subject to acceptance and approval of rates by the CMD. Accordingly the matter was personally discussed with the DGM on 18.06.1995 and on his guidance, work orders were directed to be executed. 5. These facts were explained to CMD in subsequent letters dated 07.07.1995, 10.07.1995 and 10.08.1995 and orders were obtained for value of Rs.4,70,000/- from both Rural Roads and TNUDP Divisions of Highways Department and sub-contracting the same, at the sub-contractors site by using contractors materials and labour at a total cost of Rs.4,21,581/-. Subsequently, the action of the petitioner was approved and ratified by the CMD in his letter dated 13.07.1995 and by TANSI Board in its Resolution No.102/95. 6. Thereafter, there was a super check by a team of officials of the Government on 27.10.1998 and 28.10.1998 at Tirunelveli, where the name boards were supplied by TANSI. No deviation was noticed by the said officials. However, the CMD issued a charge memorandum dated 23.08.1995 alleging the petitioner had committed certain irregularities by manipulating the estimates; that he was responsible for the irregularities, omissions and commissions in the maintenance of cost records, with the view to suppress the facts; that he had misled the top management by suppression of facts to believes that the violation and the provisions of Resolution No.23/95 was due to supervening factors and also in the interest of the organisation TANSI deserving ratification; by manipulating the estimate in order to off-load the work at exorbitantly high rates, he had not only caused short recovery to 20% of overhead cost, but also defrauded the organization to the tune of Rs.2,79,955/-; that by commissions, omissions and irregularities violated Rule 20 of TANSI Employees Conduct Rules and for the irregularities and malpractices stated supra, the petitioner had proved himself unfit to hold the responsible post of Works Manager. 7. In response to the charge, the petitioner submitted his explanation on 12.09.1995. The enquiry officer submitted his report on 20.11.1995 finding that the mistakes committed by the petitioner would be construed as procedural lapse and suggested lenient action to be taken against him. On consideration of the enquiry report and the petitioner's further explanation dated 06.01.1996, the CMD, TANSI by his order dated 27.03.1996 awarded a punishment of censure and also strictly warned the petitioner that he should be careful in future in all the dealings. 8. When the allegations relating to manipulation of estimates, suppression of facts, defrauding of organization, etc., were finalised in the year 1996, after four years another charge memorandum dated 06.01.2000 was issued by the CMD, TANSI, alleging that the petitioner by corrupt motive and in abuse of his official position, while working as Works Manager Gr-II, TANSI Foundry and Engineering Works, pettai, Tirunelveli has connived with the officials of Highways Department, Tirunelveli and sent quotations at exorbitant rates, without preparing the estimates for the supply of village name boards and other types of boards, violating Government orders, departmental procedures and TANSI Board Resolution No.23/95. It was further alleged that by purchasing the name boards from private parties at exorbitant rates and without manufacturing the same as per rules, the petitioner along with others were responsible for causing pecuniary loss to the Government. The petitioner is further alleged that he had executed the supply orders received from Divisional Engineer (H), Rural Roads Division and Divisional Engineer, TNUDP, Tirunelveli with ulterior motive for illegal personal gains which resulted in pecuniary loss to the tune of Rs.1,11,492.60 to TANSI and that the above sum was not settled by the Divisional Engineer(H), Rural Roads Division, Tirunelveli. It was also alleged that he had indulged in corrupt practices and irregularities in getting the above supply orders and in execution of the same at exorbitant rates resulting in loss to the Government to the tune of Rs.4,28,208/- and also failed to maintain absolute integrity and devotion to duty. 9. As the allegations levelled against the petitioner had already been enquired into and resulted in a punishment of censure, the petitioner submitted his explanation on 06.03.2000 and the enquiry officer held the charges as not proved. However, the disciplinary authority without furnishing a copy of the findings of the enquiry officer's report and the deferring views to the petitioner imposed a penalty of recovery of Rs.68,382/-, besides punishment of stoppage of increment for two years with cumulative effect. The said order is challenged in this writ petition. 10. Taking this court through the nature of allegations, explanation, findings and the punishment of censure dated 23.08.1995 and comparing the same with the present set of allegations, levelled in the subsequent charge memorandum dated 06.01.2000, Mr.Sugumar, learned counsel for the writ petitioner submitted that the subject matter of both charges are one and the same except for the matter that in the latter charge, the loss alleged to have been caused to the department is sought to be recovered. He further submitted that the crux of the matter is violation of Resolution No.23/95 of TANSI Board regarding entrusting of labour, manufacturing of components and allied works with outside agencies and the execution of orders with outside materials, machinery, and labour, and not following the guidelines mentioned in the above said resolution. 11. Learned counsel for the petitioner further submitted that when the action of the petitioner in procuring orders from both Rural Roads and TNUDP Divisions of Highways Department and sub-contracting the same, execution of the work at the sub- contractor's site by using the contractors materials and labour at a cost of Rs.4,21,581/- was already approved and ratified by CMD on 13.07.1995 and by the TANSI board in their resolution No.102/95, the allegations of connivance with the officials of Highways Department and ulterior motive for illegal and personal gains are wholly arbitrary and without any basis and such an allegation cannot be raised after five years after finalisation of the earlier disciplinary proceedings which ended in a punishment of censure. 12. Learned counsel for the writ petitioner further submitted that when the enquiry officer, who dealt with the latter charges in memorandum dated 06.01.2000 has also categorically found that all the charges as not proved, the disciplinary authority without furnishing a copy of the deferring note and giving an opportunity to the petitioner to submit his further representation on his conclusions, has passed the impugned order of penalty, thus violating the principles of natural justice. 13. Learned counsel for the petitioner further submitted that when no fresh materials have been brought on record, reopening the disciplinary proceedings again for the purpose of inflicting a penalty, alleging that the petitioner and others have caused financial loss to the Government as well as TANSI board is nothing but an arbitrary exercise of power. Besides, charges of connivance and ulterior motive have been made without any basis. For the above said reasons, he prayed that the impugned order has to be set aside. 14. The Senior General Manager, TANSI Corporation Ltd., Chennai has filed a detailed counter affidavit and reiterating the same, Mr.S.Sathiamurthi, learned counsel appearing for the Board raised the preliminary objection regarding the maintainability of the writ petition. He submitted that as against the impugned order an appeal lies before the Administrative sub-committee comprising of the Commissioner and Director of Industries and Commerce and Chairman and Managing Director, TANSI and therefore he prayed for dismissal of the writ petition in limine. 15. Taking this Court through the charges contained in the 1st memorandum dated 23.08.1995 and the latter charge memorandum dated 06.01.2000, he submitted that though the department had enquired into the irregularities committed by the petitioner in manipulating the estimates, commissions and omissions in the maintenance of cost record and violation of the provisions of the boards' resolution No.23/95, the pecuniary loss sustained by the Government and the Board were not quantified at that time and therefore, merely because the entrustment of the work to sub- contractors and execution were ratified by the CMD, TANSI, that would not preclude the board from initiating action for recovery, for the loss caused to the Board. 16. Learned counsel for the respondent further submitted that for the loss caused, the Board is empowered to take action under Rule 38(b) of TANSI Service Rules, 1990. He submitted that the Government have initiated departmental action against 12 officials of the Highways Department in connection with the irregularities in the supply of village name boards, sign boards, etc., to the Highways Department. In G.O. (2D) No.11, Highways Department dated 05.05.2000, and Mr.T.P.Suresh Babu, Chief Engineer (Highways), Mechanical has been appointed as Enquiry Officer to conduct both oral enquiry and personal hearing, in respect of the disciplinary case initiated against the officials of the Highways Department. As the charges levelled against the petitioner relate to the irregularities in the supply of the name boards, the Government thought it fit to nominate the very same officer, as the enquiry officer to conduct a common enquiry and accordingly issued orders in G.O.(2D) No.24, Small Industries (SIE), Department dated 12.05.2000. 17. The petitioner has appeared before the said enquiry officer and the evidence let in on behalf of the management was not challenged by the writ petitioner. The records also revealed that the petitioner had sent quotations to a former Divisional Engineer, Highways, Rural Roads, Tirunelveli without inviting any quotations for the supply of village name boards, sign boards, etc. The witnesses have also spoken to the irregularities. It is the submission of the learned counsel for the respondents that when the petitioner had acquiesced himself to the jurisdiction of the enquiry officer and participated in the oral enquiry without any protest, it is not open to him to canvass the correctness of the charge or findings recorded by the disciplinary authority. It is his further contention that even though the charges framed relate to the same subject matter, nothing prevented the petitioner from challenging the same before the Court of law at the threshold and therefore it is not open to him to contend that both the charges are similar. He disputed the contention that there is similarity in the charges framed in both the memorandum. 18. Learned counsel for the respondent further submitted that the disciplinary authority has considered the entire records and found that the petitioner and others have caused loss to the board and therefore he has to make good the loss. In these circumstances, the disciplinary authority has imposed a penalty of stoppage of increment of two years with cumulative effect for the misconduct and also ordered for recovery. For the above said reasons, he prayed that there is no illegality in the impugned order warranting interference. 19. Heard the learned counsel for the parties and perused the materials available on record. 20. The charges levelled against the petitioner in Memorandum dated 23.08.1995 are as follows: "Charge-I: That Thiru.S.Arumugathiraviam, Works Manager had committed irregularities by manipulating the estimates; Charge-II: That he is responsible for the irregularities, omissions and commissions in the maintenance of cost records with the view to suppress the facts; Charge-III: That he had misled the top management by suppression of facts to believe that the violation and the provisions of Resolution No.23/95 was due to supervening factors and also in the interest of the organization deserving ratification; Charge-IV: That he by manipulating the estimate in order to off-load the work at exorbitantly high rates, had not only caused short recovery to 20% of overhead cost but also has defrauded the organization to the tune of Rs.2,79,955/-. Charge-V: That he by his commissions, omissions and irregularities has violated Rule 20 of TANSI Employees Conduct Rules, not only by failing himself to maintain absolute integrity and devotion to duty but also by failing to persuade his subordinates to maintain absolute integrity and devotion to duty. Charge-VI: That in view of the irregularities and malpractices pointed out, Thiru.S.Arumugathiraviam, Works Manager has proved himself unfit to hold the responsible post of Works Manager in this organisation." 21. The charges levelled against the petitioner in Memorandum dated 06.01.2000 are as follows: Charge-I: That actuated by corrupt motive and in abuse of his official position, while he was working as Works Manager Gr-II, TANSI Foundry and Engineering Works, Pettai, Tirunelveli from 03.12.93 to 16.08.95, Tr.S.Arumugathiraviam, in connivance with Tr.S.Sabapathy, formerly Divisional Engineer, Highways, Rural Works, Tirunelveli and H.Ayoob, formerly Divisional Engineer (H), TNUDP, Tirunelveli had sent quotations at exorbitant rates, without preparing estimates for the supply of village Name boards and other types of boards to the D.E.(H), R.R.Division, Tirunelveli and D.E.(H), TNUDP, Tirunelveli on 23.05.1995 and 26.05.1995 respectively, violating Government Orders, Departmental Procedures and TANSI Board Resolution No.23/95 and supplied village Name Boards and other Boards to the D.E.(H), R.R. Division, Tirunelveli to a value of Rs.5,29,833/- and to the Divisional Engineer (H), TNUDP, Tirunelveli to a value of Rs.2,57,494/- at exorbitant rates, by purchasing the boards from private parties at exorbitant rates and without manufacturing the same as per rules, resulting pecuniary loss to the Government to the tune of Rs.4,28,208/-. Charge-II: That he had executed the above supply orders received from DE(H), RR D., and DE(H), TNUDP, Tirunelveli with ulterior motivation for illegal personal gains which resulted in pecuniary loss tot he tune of Rs.1,11,492.60 to TANSI as the above sum is yet to be settled by DE(H), RR Division, Tirunelveli. Charge-III: That he had indulged in corrupt practices and irregularities in getting the above supply orders and in execution of the same at an exorbitant rates resulting in loss to the Government to the tune of Rs.4,28,208/- and by his failure to maintain absolute integrity and devotion to duty has observed himself unfit to hold a responsible position in the services of this Corporation." 22. Admittedly, the department had taken action against the petitioner in the year 1995 by formulation of charges alleging irregularities in manipulating estimates, commissions and omissions in maintenance of cost records, etc., as stated supra. There was also an allegation of defrauding the organisation to the tune of Rs.2,79,955/-. The findings of the enquiry officer, regarding the charges levelled in the year 1995 are as follows: "Even though there are priority / preference Government orders in existence to enable the various government department undertakings to scrupulously follow to place orders with TANSI, it is seldom practiced in spirit by the indenting departments. Oflate this has become a serious affair and TANSI has to struggle to compete with other agencies to get its reasonable share in the purchases of government departments / undertakings. The Unit officers therefore are driven to the extent of manipulation of various methods to get business in maintaining their work centres. The head office is also aware of the peculiar situation, but has the moral responsibility to pull the erring officers." 23. He has further observed that, "In the instant case, the delinquent officer has brought out all the facts, which warranted for a deviation from the normal working / estimation based on ideal condition, to carry out an urgent job under the direct scrutiny of the concerned Hon'ble Minister. This has resulted in short recovery , but however based on the facts of his proposal, his action was ratified for a recovery of 10% in file No.18799/SA3/95 dated 13.07.1995. The subsequent proposals of the unit to carryout the execution of repeat Highways orders at TANSI premises were also scrutinised and approved for a recovery of 15% and as such the recovery of 10% for the job executed at the contractor's site may have to be accepted, depending on various factors. The mistake committed by the unit officer may therefore have to be construed as a procedural lapse and a lenient action taken, since the Head Office is also contemplating to lift the ban on sub-contracting by suitably amending Board's Res.No.23/95." 24. Material on record shows that a resolution has also been passed by the Board, ratifying the action of the petitioner in the execution of the work order, for supply of name boards by Highways department. The said resolution is extracted hereunder. "An extract of Resolution No.102/95 of the 210th Board Meeting held on 04.12.1995. Item No.15/210 : Ratification of supply of name board to Highways Department executed by sub- contracting. Item No.102/95 : The Board ratified the execution of order for the supply of Name Board to Highways Department by TANSI Foundry and Engineering Works, Pettai through Sub- contracting, as a special case." 25. Pursuant to the resolution, the General Manager (Finance and Administration) and Secretary by his U.O.Note No.32693/BS1/95 dated 07.12.1995 has indicated the decision as follows: "U.O.Note No.32693/BS1/95 dated 07.12.1995 Sub: Meeting - 210th Board Meeting held on 04.12.1995 – Decision communicated. Ref: File No.18799/F/95 An extract of resolution No.102/95 passed at the 210th Board Meeting held on 04.12.1995 is communicated for information and necessary action. The Board in its Resolution No.72/88 desired that a note be submitted to it showing the follow up action taken on the decision of the earlier meeting. Hence, action taken on this resolution may please be indicated before 03.01.1996 so as to put up a consolidated report to the Board at its ensuing Meeting" 26. Though the enquiry officer has held the charges framed in Memorandum dated 23.08.1995 as not proved, the disciplinary authority by observing that mere ratification does not resolve the delinquent, has imposed a punishment of censure. The petitioner has also been warned to be careful in future in all the dealings of this nature and any such recurrence would be viewed very seriously. The suspension period undergone by the petitioner during the disciplinary proceedings was also treated as leave to which he was eligible. 27. As regards the latter charge, though the petitioner has not objected to the formulation of the charges at the threshold and participated in the oral enquiry, perusal of the latter charge memorandum dated 06.01.2000 and the explanation submitted by the petitioner shows that the very same allegations which were earlier enquired into by the department in the year 1995 have been now reframed, with an addition of causing pecuniary loss to the Government and the Board, by violation of the resolution and procedure in the execution of the above said work. 28. Another aspect to be noticed in the latter charge memorandum is involvement of corrupt motive, connivance with the officials of Highways Department and ulterior motive for illegal personal gain. As rightly contended by the learned counsel for the writ petitioner, perusal of statement of allegations of both the charge memorandums, no fresh materials have been unearthed by the department to impute corrupt motive and connivance with Highways officials for making wrongful personal gains. There are no supporting materials to impute that by violation of the boards' resolution No.23/95 and other orders, the petitioner has made personal gains or received money in execution of supply orders received from the Divisional Engineer, Highways Rural Road Division and Divisional Engineer, TNUDP, Tirunelveli. 29. As rightly contended by the learned counsel for the writ petitioner that when the very same allegations have been enquired into by the department, resulting in imposing a penalty of censure, it is not open to the board to conduct successive enquiries into the same set of facts. Further, as stated supra, the action of the petitioner in execution of the orders for supply of name boards to Highways Department by TANSI Foundry and Engineering Works, Pettai, through sub-contracting has already been ratified and approved by the board. When the price fixation, execution of at the sub-contractors' site and other acts have already been ratified and approved by the Board, conducting successive enquiries on the same set of facts, and ordering another penalty of stoppage of increment and recovery, is nothing but an arbitrary exercise of power. In this context, it is useful to consider some of the decisions on this point. 30. In Union of India v K.D.Pandey reported in 2002 (10) SCC 471, disciplinary proceedings were initiated against the delinquent in respect of six charges. None of the charges were proved. The disciplinary authority examined the matter and found that four out of six charges could be sustained on the basis of documentary evidence and therefore, remitted the matter for further enquiry. On the said direction, the enquiry officer submitted a report, finding that the delinquent was guilty of four charges. Based on the same, the Railway Board dismissed the delinquent. The Tribunal as well as High Court set aside the said order, as it was