IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 18TH JANUARY 2010 / 28TH POUSHA 1931 OP.No. 38956 of 2001(K) -------------------------------- PETITIONER(S): ----------------------- K.K.PRABHARAN, S/O. K.BALAKRISHNA KURUP, AGED 58, RESIDING AT 29/41, 'PRASHOB', THIRUVANGAD, THALASSERRY. BY ADVS. MR.K.JAYAKUMAR MR.P.B.KRISHNAN RESPONDENT(S): -------------------------- 1. THE KERALA STATE FINANCIAL ENTERPRISES LTD., REP.BY ITS MANAGING DIRECTOR, BHADRRATHA, MUSEUM ROAD, THRISSUR 680 020. 2. THE BOARD OF DIRECTORS, REP.BY ITS CHAIRMAN, KERALA STATE FINANCIAL ENTERPRISES LTD., BHADRATHA, MUSEUM ROAD, THRISSUR 680 020. 3. THE MANAGING DIRECTOR , KERALA STATE FINANCIAL ENTERPRISES LTD., BHADRATHA, MUSEUM ROAD, THRISSUR 680 020. 4. SHRI. M.K.KARTHIKEYAN, MANAGING DIRECTOR, KERALA STATE FINANCIAL ENTERPRISES LTD., BHADRATHA, MUSEUM ROAD, THRISSUR 680 020. BY ADV. MR.A.M.SHAFFIQUE THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 18/01/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP. NO.39856/2001 APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE SENIORITY LIST OF SENIOR MANAGERS OF KSFE BEARING REF. NO.4105/S DTD. 15.5.99. P2:- COPY OF THE MEMO ISSUED TO THE PETITIONER BY RESPONDENT NO.1, BEARING NO.66770 DTD. 27.2.1998. P3:- COPY OF THE REPLY TO MEMO SUBMITTED BY THE PETITIONER DTD. 12.3.98. P4:- COPY OF THE FURTHER REPLY SUBMITTED BY THE PETITIONER DTD. 4.4.98 IN REPLY TO MEMO DTD. 23.3.98. P5:- COPY OF THE MEMO ISSUED TO THE PETITIONER BY RESPONDENT NO.1 BEARING NI.66770 DTD. 4.5.98. P6:- COPY OF THE MEMO ISSUED TO THE PETITIONER BY RESPONDENT NO.1, BEARING NO.4642 DTD. 21.8.98 REGARDING APPOINTMENT OF ENQUIRY OFFICER. P7:- COPY OF THE REPORT BEARING NO.RR/17/TPBA/96 DTD. NIL FILED BY THE DEPUTY TAHSILDAR. P8:- COPY OF THE ENQUIRRY REPORT DTD. 4.1.99 (WRONGLY SOWN AS 4.1.98 ® FILED BY THE ENQUIRY OFFICER. P9:- COPY OF THE REPLY SUBMITTED BY THE PETITIONER DTD. NIL ON THE ENQUIRY REPORT FILED AGAINST HIM. P10:- COPY OF THE MEMO ISSUED TO THE PETITIONER BEARING NO.4642/ENQ. DTD. 21.5.99. P11:- COPY OF THE REPLY SUBMITTED BY THE PETITIONER DTD. 26.6.99 IN REPLY TO THE MEMO PROPOSING PUNISHMENT. P12:- COPY OF THE MEMO BEARING NO.4642/ENQ. DTD. 31.7.99 ISSUED BY THE RESPONDENT REMOVING THE PETITIONER FROM SERVICE. P13:- COPY OF THE APPEAL SUBMITTED BY THE PETITIONER DTD. 7.9.99. P14:- COPY OF THE NOTICE BEARING REF. NO.4642 DTD. 25.1.2000 INTIMATING HEARING OF THE APPEAL BEFORE THE BOARD OF DIRECTORS. P15:- COPY OF THE COMMUNICATION SENT BY THE RESPONDENTS TO THE PETITIONER (PRODUCED ALONGWITH AMENDMENT APPLICATION, IA. NO./2002). DTD.18.3.2002. P16:- COPY OF THE STANDING ORDERS CHAPTER 1I TO IV OF THE KSFE LTD. AS APPROVED IN G.O.(MS) NO.40/74/TD DTD. 21.3.1974 (PODUCED ALONG WITH THE REPLY AFFIDAVIT.. OP. NO.38956/2001 P17:- COPY OF THE LETTER DTD. 27.5.02 ISSUED BY THE KSFE LD. (PRODUCED ALONGWITH THE RPELY AFFIDAVIT). P18:- COPY OF THE MINUTES OF THE 338TH MEETING OF THE BOARD OF DIRECTORS OF THE KSFE (PRODUCED ALONGWITH APPLICATION , IA. 467/2008. P19:- COPY OF THE MINUTS OF THE 370TH MEETING OF THE BOARD OF DIRECTORS OF THE KSFE. (PRODUCED ALONGWITH APPLCIATION IA. NO.467/2008.DTD. 12.4.07. P20:- DTD. NIL. CHART SHOWING THE SUMMARY OF THE CASES OF ALLEGED OVERVALUATION OF PROPERTIES AND THE TREATMENT METED OUT TO THE MANAGERS.(PRODUCED ALONGWITH APPLICATION, IA. NO.467/2008. P21:- COPY OF THE LETTER COMMUNICATING TO THE PETITIONER THE MINUTS DTD. 9.5.08, (PRODUCED ALONGWITH AMENDMENT APPLICATION, IA. NO. /2008. DTD. 20.5.2008. RESPONDENT'S EXHIBITS R3(a):- COPY OF THE REPORT NO.PR/1091/3393, DTD. 1.6.1994. R3(b):- COPY OF THE REPORT NO.92/95/98/RR. DTD. 25.6.1996 SUBMITTED BY VILLAGE OFFICER, NEW NADUVIL. R3(c):- COPY OF THE RELEVANT EXTRACT RESOLUTION ITEM NO.4 DT. 7.3.2000. TRUE COPY P.A. TO JUDGE tss S. SIRI JAGAN, J. - - - - - - - - - - - - - - - - - - - - - - - O.P. No.38956 of 2001 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 18th day of January, 2010 J U D G M E N T The petitioner was a Senior Manager of the 1st respondent Kerala State Financial Enterprises Ltd. On 25.04.1994, he was the Branch Manager of Kannur-I branch. At that time, one of the subscribers of a chitty being conducted by that branch, offered his property as security for repayment of chitty installments in respect of a chit auctioned in his favour. As the Branch Manager, the petitioner had to inspect the property offered as security and value the same. The petitioner submitted Ext.R3(a) valuation report dated 01.06.1994. The property comprised of 1.5 acres. In the petitioner's valuation he stated that there is a cartable road to the property and there were 75 arecanut trees and 100 coconut trees in the property. He O.P. No.38956 of 2001 -2- valued the property at Rs.7.5 lakhs and opined that in a distress sale it would fetch Rs. 5 lakhs. On the basis of his report, an amount of Rs.2.5 lakhs was released to the subscriber. On 04.06.1994 the petitioner was transferred from that branch. The subscriber did not pay the balance installments. Recovery proceedings were initiated against him for recovery of the amounts due from him in respect of the chitty. In the recovery proceedings, the property mortgaged as security was brought to sale. Nobody was willing to purchase the same although five persons were present at the auction. The Village Officer valued the property only at Rs.45,000/-, which apparently was known to the prospective bidders. It was found that improvements mentioned by the petitioner in his report were not actually there in the property. The cartable road leading to property, mentioned in this report was also found to be non- existent. On the allegation that the petitioner colluded with the subscriber to over-value the property, Ext.P2 charge memo was issued to the petitioner. Petitioner filed Exts.P3 O.P. No.38956 of 2001 -3- & P4 explanations. The tenor of the explanations was that he misidentified the property since the party misled him, although he does not categorically say so. His contention was that the party showed him the wrong property and therefore probably there was a misidentification of the property. Dissatisfied with his explanation, an enquiry was ordered. Initially the Regional Manager was appointed as the Enquiry Officer. Later on he was changed and an Advocate was appointed as the Enquiry Officer. He conducted the enquiry, took evidence and submitted Ext.P8 report finding the petitioner guilty of the charges levelled against him. Petitioner was given opportunity to show cause against the proposed penalty of dismissal from service. Petitioner filed Ext.P9 reply to the same. However by Ext.P.10 order, the disciplinary authority, namely the Managing Director agreed with the findings of the Enquiry Officer to find the petitioner guilty of the charges of misconduct. By Ext.P12 order, the punishment of removal from service was imposed on the petitioner. Petitioner filed O.P. No.38956 of 2001 -4- Ext.P13 appeal before the Board of Directors of the 1st respondent. The appeal was placed before the Board of Directors and Ext.P14 notice dated 25.01.2000 was issued to the petitioner for a hearing on 02.02.2000 on the appeal. On 02.02.2000 the petitioner was heard by the Board of Directors. Petitioner contends that thereafter the 4th respondent Managing Director had a discussion with the subscriber and reached a settlement with him. Subscriber was offered an one time settlement, on payment of which the security documents were offered to be released, as per the agreement reached in the discussion held on 15.02.2000. According to the petitioner, in that discussion although the petitioner was also directed to be present, he was not allowed to participate in the discussion and he was kept out. The petitioner came to understand that on 28.02.2000 the Board of Directors had adopted a resolution, in which it was decided to accept Rs.3 lakhs from subscriber and to return the title deeds of the property given as security. The petitioner also learnt that it was O.P. No.38956 of 2001 -5- decided to obtain an indemnity bond from the petitioner to make good the loss caused to the company on account of the over-valuation. But that board resolution was not communicated to the petitioner. According to the petitioner, petitioner was constantly contacting the 4th respondent requesting for and enquiring about the orders in the appeal. The petitioner expected release of his terminal benefits. When nothing happened for a long time, the petitioner filed this writ petition on 10.12.2001. In the writ petition, respondents filed a counter affidavit dated 19.06.2002, wherein while controverting the contention of the petitioner, they produced Ext.R3 (c) resolution adopted by the Board of Directors in the petitioner's appeal, in which the following decisions were taken : “The Board considered the note. During discussion the M.D. explained that he has discussed the issue of default clearance with the mortgager, Sri. Shaju and also with Sri. K.K. Prabhakaran, M.D. also explained that Sri. Shaju has promised to pay Rs.3,00,000/- on condition that the title deed of the property mortgaged has to be given back to him or to the purchaser of the property as they have entered into an agreement to transfer the property concerned. Shri. Shaju also explained that he has no other source/means to pay the balance amount of default. The total amount to be realised in the above RR account come to Rs.5,30,000/- as on 30/9/99. The Board after discussion decided as follows: O.P. No.38956 of 2001 -6- 1. To authorize the Managing Director to collect Rs.3,00,000/- and release the property document as requested. 2. To obtain an undertaking as well as an indemnity bond from Sri.K.K. Prabhakaran to compensate the loss to the Company amounting to Rs.2,30,000/- 3. Decided to realise the default amount with interest upto 30/9/1977. 4. To exempt collection of 2 ½% other charges on RR collection. 5. To authorise the Managing Director to give a proposal in the next Board meeting regarding the reinstatement of Sri. K.K. Prabhakaran.” 2. Thereafter the matter came up for hearing before a learned Single Judge of this court on 26.03.2008 and 03.04.2008. According to the petitioner, the matter was fully heard and the learned Single Judge expressed an opinion that for over-valuation no disciplinary proceedings would lie under the standing orders applicable for want of any specific provision in the same making the same a misconduct. In such circumstances, the court adjourned the matter treating the same as part heard, to be heard after vacation so as to enable the respondents to explore the possibility of an amicable settlement in the matter. However, thereafter, instead of settling the matter, the O.P. No.38956 of 2001 -7- Board of Directors passed Ext.P21 order, dismissing the petitioner's appeal. Consequently, the petitioner amended the writ petition including a challenge against Ext.P21 also. Petitioner seeks the following reliefs: “i) issue a writ of certiorari or any other appropriate writ or order quashing Exhibit P-8 and Exhibit P-12; ii) issue a writ of mandamus or any other appropriate writ, order or direction, directing the Respondents to pay the entire terminal benefits and suitable compensations to the petitioner forthwith; iii) issue a writ of mandamus or any other appropriate writ or direction directing the respondents to notionally grant the petitioner promotion to the post of Regional Manager from the date on which promotion fell due, treat him to be in service between 31-7-2000 and 30-9-2001 and pay arrears of salary and benefits of pay revision on that basis forthwith; iiiA) issue a writ of certiorari or any other writ, order or direction quashing Ext.P15; iiiB) issue a writ of certiorari or any other appropriate writ, order or direction quashing Ext.P21; and iv) Award the petitioner the cost of this Original Petition.” 3. The petitioner's contention is that although the allegation against the petitioner was that he over-valued the property in collusion with the subscriber, no evidence was led in the enquiry to prove the same, despite which in Ext.P8 enquiry report, the enquiry officer entered a vague finding that “the delinquent might have over-valued the O.P. No.38956 of 2001 -8- property in order to please the party for reasons best known to him”. Thereafter the enquiry officer found the petitioner guilty of all the three charges of misconduct levelled against him. Petitioner would contend that the finding in the enquiry is totally vitiated since it is based on no evidence, but purely on conjectures and surmises. The petitioner points out that the respondents were not also able to identify the property in question properly, since at different times, different reports were obtained by the respondents, containing contradictory details regarding the improvements in the property. According to the petitioner the valuation report of the Village Officer, which is now produced as Ext.R3 (b) along with the counter affidavit, was never produced in evidence in the enquiry, nor was the Village Officer who prepared the same examined as a witness. Petitioner points out that in Ext.R3 (b) itself, the Village Officer had noted 24 coconut trees aged four years and 30 cashew trees aged five years. But in Ext.P2 it is mentioned that as per the report of the Deputy Tahsildar O.P. No.38956 of 2001 -9- and Regional Manager no such improvements noted by the petitioner in his report were existing in the property. Petitioner points out that the report of the Deputy Tahsildar which is relied upon for this purpose, which is Ext.P7, did not deal with any improvements as existing or not existing in the property. In fact that report was only about the reasons why the auction could not take place and not at all concerned with the description of the property as such and does not give any valuation of the property. He points out that in the report of the Regional Manager, who inspected the property, who was examined as MW5 there were only about 50 plantains, 5 cashew nut trees and 50 arecanut plants. According to the petitioner these would show that respondents themselves were not also able to identify the properties properly. Petitioner contends that even assuming that the petitioner was guilty of anything, it can only be of committing the mistake in properly identifying or valuing the property and he cannot be found guilty of anything else. Petitioner points out that in the charge O.P. No.38956 of 2001 -10- memo there was no charge for even negligence. He also submits that in Ext.P16 Standing Orders, over-valuation of a property as such is not shown as a misconduct at all. Therefore the petitioner could not have been found guilty of any of the misconduct detailed in Ext.P2 is his contention. He further points out that over-valuation is not a rare thing in the 1st respondent's establishment. The Board of Directors themselves, in Ext.P18, recognized the fact that such over-valuation is likely to occur in the course of normal valuation itself. Therefore, according to the petitioner, over- valuation cannot be considered as a misconduct at all. Again the petitioner submits that in fact as evidenced by Exts.P19 & P20, 84 similarly situated senior managers, who were found to have over-valued properties, were not proceeded against at all and their retirement benefits were ordered to be released after deducting a part of the loss caused to the 1st respondent on account of the over- valuation, therefrom. The petitioner also alleges malafides on the part of the 4th respondent in initiating the O.P. No.38956 of 2001 -11- disciplinary action. According to him, the petitioner was second in the seniority list of Senior Managers and the 4th respondent wanted a person lower down in the seniority list to be promoted over the seniors, for which purpose he deliberately instituted the disciplinary proceedings against the petitioner as also the first person in the seniority list. The first person in the seniority list challenged the same in W.P.(C) No.34691/2004, in which the disciplinary proceedings were quashed. He further submits that the malafides is clear from the fact that in Ext.R3 (c), the Managing Director was directed to give a proposal for reinstatement of the petitioner, which he never did and did not even communicate Ext.R3 (c) to the petitioner. According to the petitioner the Manging Director deliberately did not communicate Ext.R3 (c) to the petitioner so as to keep the petitioner away from service. According to the counsel for the petitioner from the above facts coupled with the fact that in the entire history of the 1st respondent, no officer was ever proceeded against for O.P. No.38956 of 2001 -12- over-valuation of property would lead to the irresistible inference that the entire disciplinary proceedings against the petitioner was actuated by malafides on the pat of the 4th respondent. 4. Therefore the petitioner submits that the entire disciplinary proceedings against him is liable to be quashed and he should be directed to be given all benefits due to him till he attained superannuation on 30.09.2001. 5. With the help of the counter affidavit filed by the 4th respondent on behalf of all the respondents, the respondents would deny the allegations of the petitioner. According to the respondents, it was the duty of the Manager to value the property offered as security after identifying the property properly. They submit that the petitioner himself had admitted that he committed a grave error in identifying the property and consequently in the valuation itself. According to them, the fact that the petitioner himself admits that he blindly trusted the subscriber, would go to show that there was collusion by O.P. No.38956 of 2001 -13- showing an inflated value for the property so as to enable the subscriber to get the auction amount of the chitty on the security of a property the market value of which was far below the amounts due from the subscriber. Therefore, according to them, collusion between the subscriber and the petitioner is clearly evident, which only has been found by the Enquiry Officer. They contend that, even assuming that collusion could not be proved, gross negligence, which is one of the misconducts enumerated in the Standing Orders, has clearly been proved, for which itself the petitioner is liable to be imposed with the penalty of removal from service. They therefore argue for sustaining the impugned orders. 6. I have considered rival contentions in detail. At the outset I am of the opinion that it was not proper, if not illegal, for the respondent to pass Ext.P-21 order, when the original petition was part heard by a learned Single Judge of this court. From the records of this case I find that the original petition was posted for hearing on 26.03.2008 on O.P. No.38956 of 2001 -14- which date it was directed to be posted for hearing on top of the list on 31.03.2008. The same again came up on 03.04.2008. On that date, the matter was part heard and was posted to 26.05.2008 after vacation. It is after those proceedings, Ext.P21 order was passed on 20.05.2008. Of course the learned counsel for the respondents would submit that in the course of arguments on 03.04.2008 it was noticed that Ext.R3 (c) was not a final order in the appeal filed by the petitioner and therefore the Board of Directors was expected to pass a final order in his appeal. It is under the said circumstances that Ext.P-21 final order was passed. But after having taken a stand in their counter affidavit that Ext.R3 (c) order was the order passed in the appeal, which was passed as early as on 07.03.2000, they could not have passed further orders without first informing this court. I also note that the 4th respondent has not properly denied the averment of the petitioner that Ext.R3 (c) was not communicated to the petitioner. They have not also given any satisfactory explanation for the change of mind in O.P. No.38956 of 2001 -15- passing Ext.P-21 order on 09.05.2008 contrary to Ext.R3 (c), after more than 8 years, that too without communicating Ext.R3 (c) to the petitioner and ascertaining from him as to whether he is agreeable for the course of action suggested therein. 7. Ext.P2 is the memo of charges, which contains three charges and reads as follows: “1. That you had with ulterior motive cheating the company, over valued the above property for Rs.7.5 lakhs, and the forced sale value was arrived at Rs.5/- lakhs and thus flushed out company funds to outsiders. 2. That you in collusion with the owner of the property and with malafide intention reported vide Ref. No.(1) above that there was a cartable road providing direct access to the property, which was not actually existed at the time of your visit to the property. 3. That you had also reported vide reference cited (1) above, that there were 75 number of arecanut trees and 100 numbers coconut trees in the property. But, in fact, no such improvements were existing in the property.” The serious charge therein was that the petitioner and the owner of the property had colluded with each other for overvaluing the property with the intention of cheating the company. But in Ext.P8 enquiry report, I do not find that the enquiry officer has referred to any evidence in support of the finding that the petitioner was guilty of any collusion O.P. No.38956 of 2001 -16- with the subscriber, pursuant to which, the petitioner has overvalued the property to help the subscriber. In fact the finding of the enquiry officer itself is thus: “Delinquent might have over valued the property in order to please the party for reasons best known to him”. From this sentence it is abundantly clear that there was no evidence whatsoever to find that the petitioner had overvalued the property in collusion with the subscriber. In fact, there was no reference in the enquiry report to any deposition by any of the management's witnesses or to any other material on record to the effect that there was collusion between the petitioner and the subscriber. As such, the finding of the enquiry officer as noted above is clearly without any evidence in support of the same. As such, that finding was based on no evidence and therefore, it is totally perverse. In fact in the arguments advanced by the respondents, they have emphasised the fact that the petitioner had noted 100 coconut trees and 50 arecanut trees in the property and also a cartable road to the property, which were not present O.P. No.38956 of 2001 -17- in the reports of the Village Officer, who submitted Ext.R3 (b) report, and the officer of the 1st respondent who conducted an inspection in this respect. In this context, I find an interesting circumstance. In Ext.P2 charge memo, report from the Deputy Tahsildar dated 30.12.1997 is relied upon and in the third charge, they have stated that “in fact no such improvements were existing in the property”. Strangely, in Ext.P7, which is the report of the Deputy Tahsildar referred to in the charge memo, he has not dealt with the improvements in the property or the valuation of the property. He has not stated anything whatsoever regarding trees in the property. On the other hand, he has stated therein that in the auction conducted on the particular day, although five persons were present to take part in the auction, in spite of the upset price having been reduced to Rs.3,75,000/- from Rs.5,00,000/-, none of them participated in the auction. He specifically stated that their non-participation was because they knew about the valuation of the Village Officer as Rs.45,000/-. Ext.R3(b) O.P. No.38956 of 2001 -18- report of the Village Officer has not even been brought on record in the enquiry. The Village Officer was not examined as a witness also in the enquiry. It is interesting to note that in Ext.R3(b) report of the Village Officer, he refers to 24 coconut plants, having age of 4 years and 30 cashew trees of 5 years of age. But MW5-Mohanrajan, who is stated to have inspected the property, reported that there were 50 numbers of plantains, 5 cashew trees and 50 arecanut plants. As such, I doubt very much whether all these persons were able to identify the particular property properly. The