THE HON’BLE SRI JUSTICE G.CHANDRAIAH W.P.NO.25211 OF 1999 O R D E R Heard both the counsel. 2. The petitioner was appointed as Field Oﬃcer, working as Area Oﬃce at Naidupet in A.P. Co-operative Oil Seed Growers’ Federation Limited and subsequently promoted as Area Oﬃcer on 28.7.1991 and since then he is working at Naidupet. During 1992, the Federation entrusted the extraction of GN Pod Procured from the Primary Oil Seeds Co-operative Societies of Naidupet areas to M/s Sapthagiri Industries, Naidupet duly entering into an agreement. In pursuance of the said agreement, a quantity of 1,302 MTs of GN Pod was carted to the premises of M/s Sapthagiri Industries. As per the terms and conditions of the agreement, the miller is responsible for the safety of the raw material, as well as the ﬁnished products. The custom milling operations have to be controlled, supervised and guided by Divisional Oﬃcer, Piler, the Area Oﬃcer and the Chemist at Naidupet. Alleging that the petitioner, in violation of the Regulations of the Federation and detailed and elaborate instructions issued for carrying out the said custom milling operations, who is associated with the project, colluded with the Chemist and Miller i.e., M/s Sapthagiri Industries and allowed them to stealthily sell away the stocks of GN Pod and this caused a loss of about Rs.38,00,000/- to the Federation. On 30.12.1992, the Chemist made a telephone call to Sri A.Narasimha Rao, Field Oﬃcer, H.O., Hyderabad and informed that against 228 MTs of G.N. Kernal, only 30 MTS is available at M/s Sapthagiri Industries, Naidupet. The M.R.O., Naidupet has made physical verification of the stocks and arrived at the above quantity. After making a thorough enquiry by Manager (P&P) and Federation Officials at Naiduept, it came to light that the employees, including the petitioner, were responsible for the entire loss of Rs.36,00,000/- to the Federation, as they colluded with the miller and allowed them to sell away the stocks stealthily. Accordingly preliminary enquiry was conducted for missing of 200 MTs of ground nut Kernal and procurement of groundnut pod of Federation stocks given to M/s Sapthagiri Industries for custom milling. The following charge was framed against the petitioner: “That he has deliberately committed fraud of misappropriating Federations property worth of Rs.35,51,864/- in collusion with chemist Sri K.Ratangapani Reddy and miller in criminal breach of trust with a malaﬁde intention in violation of service Regulations Nos.24.2, 24.6, 24.11, 24.21, 24.28, 24.36, 24.37 and 24.39 of Andhra Pradesh Co- operative Oil Seeds Growers’ Federation Limited, Hyderabad.” 3. The enquiry oﬃcer found that the petitioner has no complicity in the loss with criminal motive. But however, as the petitioner is an Officer, at Naidupet, held him vicariously responsible for negligence of duty and failure to protect the property. Accordingly, the enquiry oﬃcer submitted report holding that the charge to the extent of criminal collusion is not proved, but partially proved to the extent of negligence of duties and failure to protect the Federation’s property. The petitioner was served with memo dated 16.8.1997, enclosing the report of the enquiry. Petitioner submitted his explanation and not being satisﬁed with the same, the Managing Director, by proceedings in P&A/PF/83 dated 23.2.1998 imposed the penalty of reduction to a lower post of Field Officer. Aggrieved by the same, the petitioner ﬁled appeal and by proceedings in LC/P&A/WP1298/93/42 dated 28.9.1998, the appeal was rejected. Hence, the present writ petition. 4. The learned counsel appearing for the petitioner contended that the appellate authority passed the order dated 28.9.1998 without any reasons and no grounds raised by the petitioners were considered. He stated that the petitioner was not having any control over the Oﬃcer-in- charge/chemist, who was under the direct control of the Manager, Plant and Projects. He stated that as per the instructions issued in order No.P&I/Proc/INST/Rabi/92-93 dated 1.2.1992, the responsibility of Area Oﬃcer is the organization of OGCS, inputs, supplies to the societies, implementation of PEP, Supervision of procurement operations and dispatch procedure stocks into mill and release of payments to the societies. The learned counsel contended that the Oﬃcer-in- Charge/Chemist was speciﬁcally posted at the mill premises to look after the custom milling and the duty of the petitioner ends the movement, the ground pod is supplied to the custom miller and that it is the duty of the Chemist to look after the custom milling and that he is directly under the control of the Manager (P&P) of the Federation. The Chemist regularly sends the processing reports to the Manager (P&P). He stated that though the Chemist claims that he works under the control of the petitioner/Area Oﬃcer, but in practice there is not even a single correspondence between the Chemist and Area Oﬃcer, there is also no correspondence from the Head Oﬃce to the Area Oﬃcer pertaining to custom milling operations of M/s Sapthagiri Oil Industries, Naidupet. This fact was also noticed by the enquiry oﬃcer, who categorically held that the it can amply be assumed that the operation was going on by the direct instructions either written or oral from Head Oﬃce (Plants Wing) i.e., Manager (P&P) and/ Sr. Field Oﬃcer (P) to the Chemist Sri K.Ratangapani Reddy. Therefore, he contended that when there is no control over the Chemist, who was posted to look after the custom milling, the petitioner cannot be found guilty of loss caused to the Federation. He further submitted that the petitioner was on leave when the loss was caused to the Federation’s property and this fact was found proved during enquiry and therefore, the enquiry oﬃcer has removed any doubt of the petitioner ‘s complicity in the loss with criminal motive. But the appellate authority, without any evidence, disagreed with the said ﬁnding and hence the same cannot be sustained. He stated that when the petitioner is having no direct control over the Chemist who was speciﬁcally posted in the mill premises to look after the custom milling and when the enquiry oﬃcer also found that there was no single correspondence between the Chemist and the Area Oﬃcer and that the chemist was under direct instructions from the Head Oﬃce, holding the petitioner vicariously liable by the enquiry oﬃcer, is without any basis. He further contended in the criminal case in C.C.No.10/1993 on the ﬁle of Judicial Magistrate of I Class, Sullurpet for the theft of Federation property, the Manager, Plants and Projects, who was examined as P.W.1, has admitted that the custom milling is within his jurisdiction and that his preliminary enquiry showed that the chemist permitted the miller to lift 200 mts. of groundnut kernel. Therefore, even from this evidence also it is clear that the petitioner is not concerned with the missing of the stocks. He stated that the suit ﬁled by the Federation in O.S.No.41/1993 on the ﬁle of the Additional Senior Civil Judge, Gudur also was dismissed, as settled out of court. The criminal case in C.C.No.24/1994 also ended in acquittal. Therefore, in the above facts and circumstances, as there is no evidence to show that the petitioner was responsible for the loss of the ground nut stock, holding him guilty of negligence, for not exercising control over the chemist, is nothing but a perverse ﬁnding and imposing the punishment of demoting to the lower post, which is a major penalties un 25.1 of the Regulations, is shockingly disproportionate and the same is liable to be set aside. With these submissions, he sought to allow the writ petition. 5. On behalf of the respondent – Federation, counter aﬃdavit is ﬁled denying the averments made in the writ petition and supporting the impugned action taken by the Federation. In the counter aﬃdavit it is stated that the Custom Mill agreement in question between the Federation and M/s Saptagiri Oil Industries, Naidupet, was within the jurisdiction of the petitioner. The petitioner was in charge of procurement of ground-nut pod of the Federation located at Naidupet and the Federation has speciﬁcally posted a Chemist to the said mill and he was at the disposal of the petitioner. It is the duty of the petitioner to look after the custom mill operations. It is born on record that it is the Area Oﬃcer, i.e., the petitioner, who was assigned the speciﬁc job of entrusting the analysis work to the Chemist at the aforesaid Factory. There were two chemists under the control of the petitioner and he had the discretion to post one each at the two diﬀerent oil Industries i.e., Karuna Oil Industries, Tirupathi and Saptagiri Oil Industsry, Naidupet. The petitioner has post the Chemist M.Ratangapani Reddy to M/s Saptagiri Industries, Naidupet and therefore, the contention of the petitioner that the said Chemist was not under his control, cannot be accepted. It is stated that the Manager (P&P) is at Head Oﬃce, Hyderabad and where as the petitioner and the chemist were physically posted at Naiduept, where the processing and custom milling operations were taking place. In fact, the Chemist was duty bound to send daily statements similarly to the Divisional Oﬃcer at Pileru who is the Report Oﬃcer for Area Oﬃcer Naidupet as well as to Manager (P & P), Manager, (P&I), both at Head oﬃce, Hyderabad. Further, as per the job chart OF Area Oﬃcer is responsible for procurement and so also custodian of the stocks so procured on behalf of the Federation, irrespective of where the said stocks are stored. The Area Oﬃcer has power to release 80 per cent of the value of the procured material, even before testing. The record shows that the appointment order of the Chemist dated 12.1.1991 speciﬁcally stipulated that he should report to the Area Oﬃcer and accordingly he reported to the Area Oﬃcer and the same was intimated to the head oﬃce on 24.4.1991. Further, the evidence of P.W.1 in C.C.No.10/1993 on the ﬁle of Judicial First Class Magistre, Sullurpet, cannot a criterion in view of the overwhelming evidence on record. It is eventually stated that the petitioner was available at Naidupet when the loss was reported and that the theft of stocks worth 200 MT cannot be said to be occurred on a single day without the knowledge and connivance of the local oﬃcers and just because the petitioner was not available on a single day, it cannot be said that he is not responsible. However, the enquiry oﬃcer after conducting enquiry in conformity with the principles of natural justice found the petitioner guilty and the appellate authority by giving independent reasons, conﬁrmed the ﬁndings of the enquiry oﬃcer. It is stated the as the appellate authority conﬁrmed the order of the disciplinary authority, it agreed with the said reasoning and hence no independent reasons need be given. With these averments, the writ petition was sought to be dismissed. 6. No reply affidavit has been filed. 7. The learned Standing Counsel for the respondent – Federation further submitted that the Chemist, who is involved in this charge, was removed from service and he ﬁled another writ petition before this court in W.P.No.8122/1999 and this court by order dated 7.4.2005 allowed the writ petition and challenging the same, the Federation ﬁled writ appeal and though the writ appeal was dismissed for default, a petition was ﬁled for its restoration. He stated that in the said writ petition, the learned single Judge has categorically found that the petitioner was responsible for the loss caused to the Federation. With these submissions and supporting the impugned action taken by the Federation, he sought for dismissal of the writ petition. 8. The learned counsel appearing for the petitioner relying on a judgment of this court reported in P.V.RAMANAYYA v. COMMR., LAND REVENUE [1] submitted that as the petitioner was not a party to the writ petition in W.P.No.8122/1999, any ﬁndings aﬀecting his rights, are not binding on him. 9. In view of the above rival contentions, the point that arises for my consideration is whether the impugned action of the respondent – Federation in demoting the petitioner from the post of Area Oﬃcer to Field Oﬃcer on the ground that he was found vicariously responsible for the loss caused to the Federation, calls for any interference of this court? 10. In order to consider the above facts, certain admitted facts are required to be noticed. The petitioner was working as Area Officer at Naidupet in the respondent – Federation. The Federation alleged that the stocks of GN pod to an extent of 200 mts. were stealthy sold away by the petitioner along with the chemist and miller i.e., M/s Sapthagiri Industries, which was valued at Rs.38,00,000/-. Accordingly, the charge was framed against the petitioner. The case of the petitioner is that the chemist K.Ratnagapani Reddy was speciﬁcally posted at the mill premises to look after the custom milling and thus, his duty ends the moment, he supplies groundnut pod to the custom miller and thus the chemist has to look after the custom milling and thus he is in no way connected with the loss of the stock. To support this, he relied on the instructions of the Federation dated 22.1.1992 and 1.2.1992 and ﬁndings of the enquiry oﬃcer with regard to his control over the chemist and the evidence of Manager, who deposed in the criminal case as P.W.1. 11. But before adverting to the merits of the respective contentions, it is to be noticed that the disciplinary authority in the present case, has diﬀered with the ﬁndings of the enquiry oﬃcer. Therefore, it is be considered whether before diﬀering with the ﬁndings of enquiry officer, any notice has been issued to the petitioner. 12. The disciplinary authority i.e., Managing Director, by proceedings in P&A/PF/83 dated 23.2.1998, has disagreed with the ﬁndings of the enquiry oﬃcer. But before diﬀering with the ﬁndings of the enquiry oﬃcer, the disciplinary authority has not issued any speciﬁc notice to the petitioner. The Apex Court in PUNJAB NATIONAL BANK v. KUNJ BEHARI MISRA [2] held when the disciplinary authority diﬀers with the view of the inquiry oﬃcer and proposes to come to a diﬀerent conclusion, opportunity of hearing shall be given to the charged oﬃcer. The relevant portion of the judgment is extracted as under for better appreciation: “. . . When the disciplinary authority diﬀers with the view of the inquiry oﬃcer and proposes to come to a diﬀerent conclusion, there is no reason as to why an opportunity of hearing should not be granted. It will be most unfair and iniquitous that where the charged oﬃcers succeed before the inquiry oﬃcer, they are deprived of representing to the disciplinary authority before the authority diﬀers with the inquiry oﬃcer’s report and, while recording a finding of guilt, imposes punishment on the officer. In our opinion, in any such situation, the charged oﬃcer must have an opportunity to represent before the Disciplinary Authority before ﬁnal ﬁndings on the charges are recorded and punishment imposed. The result of the aforesaid discussion would be that the principles of natural justice have to be read into Regulation 7(2). As a result thereof whenever the disciplinary authority disagrees with the inquiry authority of any article of charge then before it records its own ﬁndings on such charge, it must be record its tentative reasons for such disagreement and give to the delinquent oﬃcer an opportunity to represent before it records its findings. . . ” 13. In the present case, as already notice above, the disciplinary authority while issuing notice to the petitioner in proceedings P&A/PE/398/91 dated 16.8.1997 has not recorded its tentative reasons for disagreement with the ﬁndings of the enquiry oﬃcer and has not given an opportunity to represent his case. This amounts to violation of the principles of natural justice. 14. For the foregoing reasons, the proceedings of the 2nd respondent – Managing Director, in P&A/PF/83 dated 23.2.1998 and the proceedings in LC/P&A/WP1298/93/42 dated 28.9.1998 are set aside and the 2nd respondent shall issue notice afresh to the petitioner, as stated above, and pass appropriate orders in accordance with law, within a period of four weeks from the date of receipt of a copy of this order. 15. Since the petitioner was imposed punishment of demotion to the post of Field Oﬃcer, and this court has passed interim order dated 8.12.1999, suspending the impugned proceedings and as it is represented that the petitioner is working as Area Oﬃcer, status quo shall be continued till the passing of the orders by the 2nd respondent. 16. The writ petition is accordingly disposed of. No costs. AVS --------------------------------- 16—11—2011 [1] 1975(II) Andhra Weekly Reporter 390 [2] AIR 1998 SC 2713