IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN THURSDAY, THE 10TH MARCH 2011 / 19TH PHALGUNA 1932 WP(C).No. 34262 of 2006(D) ------------------------------------ PETITIONER: ------------------- K.SREEDHARSHAN, RETIRED MANAGER(LEGAL), KERALA FINANCIAL CORPORATION LTD., THIRUVANANTHAPURAM. BY ADVS. SRI.P.SANTHOSH KUMAR (PANAMPALLI NAGAR) SRI.LUIZ GODWIN D'COUTH RESPONDENT(S): ------------------------- 1. KERALA FINANCIAL CORPORATION LTD., THIRUVANANTHAPURAM, REP. BY THE MANAGING DIRECTOR. 2. THE MANAGING DIRECTOR, KERALA FINANCIAL CORPORATION LTD., THIRUVANANTHAPURAM. ADV. SRI.S.SREEKUMAR FOR R1 & 2 SRI.DEVIDAS.U.K SRI.M.M.SAYED MUHAMMED, SC, KFC FOR R1 & 2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10/03/2011, ALONG WITH WPC NO. 7386 OF 2007 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 34262 of 2006(D) ------------------------------------ APPENDIX PETITIONER'S EXHIBITS: EXT.P1 : COPY OF THE MEMO OF CHARGES ISSUED TO THE PETITIONER BY THE RESPONDENTS DT. 27.07.2002 EXT.P2 : COPY OF THE LETTER OF THE PETITIONER TO THE RESPONDENTS DT. 12.08.2002 EXT.P3 : COPY OF THE PROCEEDINGS OF THE 2ND RESPONDENT DATED 14.11.2002 EXT.P4 : COPY OF THE COMMUNICATION OF THE INQUIRY OFFICER DATED 21.11.2002 EXT.P5 : COPY OF THE NOTICE OF THE INQUIRY OFFICER DATED 05.12.02 EXT.P6 : COPY OF THE LETTER OF THE INQUIRY OFFICER DT. 13.12.02 EXT.P7 : COPY OF THE PROCEEDINGS OF THE 2D RESPONDENT DT.28.12.02 EXT.P8 : COPY OF THE MEMO ISSUED BY THE 1ST RESPONDENT DT.17.1.03 EXT.P9 : COPY OF THE REPLY DATED EXT.P10 : COPY OF THE CIRCULAR ISSUED BY THE RESPONDENTS DT.9.4.02 EXT.P11 : COPY OF THE MEMO DT. 16.02.06 EXT.P12 : COPY OF THE REPLY SUBMITTED BY THE PETITIONER DT.03.3.06 EXT.P13 : COPY OF THE COMMUNICATION ISSUED BY THE 1ST RESPONDENT DATED 13.11.06 TRUE COPY PA TO JUDGE SMT S. SIRI JAGAN, J. ------------------------------------------- W.P.(C) Nos.34262/06 & 7386 of 2007 ---------------------------------------------- Dated this the 10th day of March, 2011 JUDGMENT W.P.(C)No.34262/2006 is filed by an employee of the Kerala Financial Corporation challenging disciplinary proceedings and punishment imposed on him pursuant thereto by the Kerala Financial Corporation. W.P.(C)No.7386/2007 is filed by the Kerala Financial Corporation challenging the order of the Kerla Lok Ayukta directing payment of retirement benefits due to the same employee after obtaining a bond. 2. While in service, the employee was proceeded against in respect of two memoranda of charges. The employee was also suspended from service. An enquiry was conducted, in which, he was found guilty of the misconducts alleged against him. Show cause notices were issued regarding punishment to be imposed on him. During the pendency of those proceedings, the employee retried from service. But, the disciplinary proceedings were continued and ultimately by Ext.P13 order in W.P.(C) W.P.(C)Nos.34262/06 & Con.case 2 No.34262/06, the punishment of recovery of Rs.30.61 lakhs alleged to be loss sustained by the KFC, on account of the misconducts committed by the employee, was imposed on the employee. In the meanwhile, the employee filed a complaint before the Kerala Lok Ayukta complaining that the employee was not paid retirement benefits due to the employee. While the complaint was pending before the Kerala Lok Ayukta , the retirement benefits due to the employee amounting to Rs.12,06,772/- was adjusted against Rs.30.61 lakhs computed as the loss caused by the misconducts of the employee and the balance Rs.18,54,228/- was demanded from the employee. The employee is challenging Ext.P13 order of punishment imposed on him on several grounds including the ground of non-compliance with principles of natural justice, insofar as the petitioner was not given an opportunity to show cause against the enquiry proceedings and the findings of the enquiry officer. According to the employee, the various decisions of the Supreme Court on the subject categorically lay down that non- supply of enquiry report and failure to give an opportunity to give show cause against the enquiry and the findings in the enquiry report would vitiate the punishment imposed pursuant W.P.(C)Nos.34262/06 & Con.case 3 to the enquiry report. He relies on the decisions of Union of India v. Mohd. Ramzan Khan [AIR 1991 SC 471], Managing Director, ECIC Hyderabad and others v. B. Karunakar and others [1993(4)SCC 727], The High Court of Judicature at Bombay v. Shashikant. S. Patil and another [AIR 2000 SC 22], SARAVA UTTAR PRADESH GRAMIN BANK V. MANOJ KUMAR SINHA [AIR (2010) 3 SCC 556] and Damodarapillai v. State of Kerala 2010 (4) KLT 769. The Kerala Financial Corporation challenges the order of the Lok Ayukta on the ground that when huge amounts are due from the employee, the Lok Ayukta was not justified in directing disbursal of the retirement benefits of the employee and they contend that the Lok Ayukta had no jurisdiction to entertain and adjudicate the complaint filed by the employee. They also support the punishment imposed on the employee. They would contend that insofar as what has been imposed is only a minor penalty, the question of furnishing of enquiry report does not arise and as such the punishment cannot be set aside on that ground. 3. I have considered the rival contentions in detail. I am of opinion that I need not consider the issues raised by the parties before me insofar as I am of opinion that the W.P.(C)Nos.34262/06 & Con.case 4 punishment could not have been validly imposed on the employee after his retirement as done in this case. Admittedly the punishment was imposed after superannuation of the employee. It is settled law that on superannuation of an employee the employer-employee relationship ceases and therefore, the question of imposition of punishment on the employee by the employer does not arise after the retirement of the employee unless the service conditions applicable to the employee specifically contains a rule empowering the employer to continue disciplinary proceedings for any purpose. In view of the said legal position, when the matter was heard on 1.3.2011, I passed the following order: “In this case punishment of recovery of alleged loss caused to the Corporation on account of the misconduct of the petitioner was admittedly imposed on the petitioner after the petitioner retired from service. The law is that after retirement the employer-employee relationship ceases and thereafter the disciplinary proceedings cannot be continued unless there is a provision in law empowering the employer to continue the disciplinary proceedings even after retirement of the employee. When it was put to the learned counsel for the K.F.C. as to whether there is any provision empowering the K.F.C. to continue the disciplinary proceedings against the petitioner after his retirement, the learned counsel for the K.F.C seeks time”. Today, when the matter was again taken up for hearing, the learned counsel for the KFC frankly admits that the service W.P.(C)Nos.34262/06 & Con.case 5 conditions of the employees of the KFC do not contain a provision empowering the KFC to continue the disciplinary proceedings for any purpose after the retirement of the employee. But, he would contend that in this case the employee is guilty of very serious misconducts which caused loss of crores of rupees to the KFC and therefore, this Court should not exercise its discretionary jurisdiction in favour of the employee. 4. I am of opinion that, on that ground, I cannot refuse to exercise my discretionary jurisdiction in favour of the employee against a patent illegality, however grave the misconducts committed by the employee are. When there is no jurisdiction for the KFC to impose punishment on the employee after his retirement, I cannot simply refuse to exercise my discretionary jurisdiction on the ground that the charges were grave and on account of the same the KFC has suffered huge financial loss. Therefore, I have no other go but, to quash Ext.P13 in W.P.(C)No.34262/2006. I do so. As far as the writ petition filed by the KFC is concerned, admittedly, as is revealed from Ext.P13 in the other writ petition, an amount of Rs.12,06,772/- is due to the employee W.P.(C)Nos.34262/06 & Con.case 6 towards retirement benefits. Therefore, once I quash Ext.P13, then the liability to pay that amount to the employee cannot be disputed by the KFC. 5. It is not as if the KFC has no remedy in the matter. If actually any loss has been caused to the Corporation on account of the misconduct of the employee, it is perfectly open to the KFC to file a suit for recovery of any loss to the Corporation on account of the misconducts committed by the employee to the Corporation. The learned Standing Counsel for the KFC submits that a suit has already been filed, in which the KFC has sought to recover only the amount, after adjusting the retirement benefits due to the employee. He submits that now that the punishment has been set aside, they will have to amend the suit appropriately for recovery of the whole amount of Rs.30.61 lakhs. He points out that if at this moment, the Lok Ayukta's order is to be implemented, then the KFC would not be able to recover the said amount even if the suit is ultimately decreed. Taking into account all the facts and circumstances of the case, I direct that the implementation of the order of the Lok Ayukta be postponed for a further period of two months. In the meanwhile, the KFC shall take W.P.(C)Nos.34262/06 & Con.case 7 appropriate steps to amend the suit field by them and also seek injunction against disbursal of the retirement benefits due to the employee notwithstanding the order of the Lok Ayukta. It would be open to the lower court to consider the application for injunction without reference to the order of the Lok Ayukta. Accordingly, the writ petitions are disposed of with the above direction. S. SIRI JAGAN, JUDGE acd