IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY FIFTH DAY OF SEPTEMBER TWO THOUSAND AND NINE PRESENT THE HON'BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION No.14409 OF 2004 Between: L. Kotaiah, S/o. Late Kotaiah, Hindustan Shipyard Ltd. R/o. Visakhapatnam, Visakhapatnam District. ..... PETITIONER AND 1 The Board of Directors, rep by the Chairman and Managing Director, Hindustan Shipyard Ltd. Gandhigram, Visakhapatnam - 533 005. 2 The Chairman and Managing Director, Hindustan Shipyard Ltd. Gandhigram, Visakhapatnam - 533 005. 3 The Director (Technical), Hindustan Shipyard Ltd. Gandhigram, Visakhapatnam - 533 005. .....RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed herein the High Court will be pleased to issue a writ, order or direction more particularly one in the nature of writ of Mandamus declaring the action of the respondents herein issuing proceedings PD/EC/0113/13/2004, dated 30.01.2004 and further proceedings dated 03.08.2004 in PD/E/0113/73 issued by the respondents herein imposing the penalty of removal from service by declaring the same as illegal, arbitrary, without jurisdiction and void-abinitio and in violation of principles of natural justice and rights guaranteed under Article 311 of the Constitution and 21 of the constitution of India. Counsel for the Petitioner : MR.V.MALLIK Counsel for the Respondents : MR.A.RAJASHEKAR REDDY (ASST SOLICITOR GEN) The Court made the following : THE HONOURABLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO.14409 OF 2004 O R D E R The petitioner challenges the final order dated 30.01.2004 passed by the Chairman and Managing Director of the Hindustan Shipyard Limited, whereby he was visited with the major penalty of removal from service, and the proceedings dated 03.08.2004 intimating him of the confirmation of the said punishment by the Board of Directors of the Hindustan Shipyard Limited. The Hindustan Shipyard Limited is an undertaking owned by the Government of India. The petitioner was appointed as an Assistant Executive Engineer (Civil) in the respondent company on 02.03.1977 and at the relevant point of time, he was working as the Chief Manager (General Services). He was subjected to disciplinary proceedings under the Memorandum of Charges dated 11.04.2002 issued by the Director (Technical) of the respondent company whereby he, along with three other Officers’ was charged with various irregularities involving embezzlement of funds from the Company’s guest house. The petitioner was Charged Officer No.2 (CO.2). He submitted his explanation on 03.05.2002 denying the charges. Thereupon, a regular enquiry was instituted to look into the matter and the Report of Enquiry, holding the petitioner guilty of only two of the charges, was forwarded to him by the respondent company, under its letter dated 02.05.2003, calling upon him to make his submissions thereupon. The petitioner submitted his written statement dated 19.05.2003, denying his liability for the said two charges and requesting the respondent Company to exonerate him from all the charges. It is relevant to note that the petitioner was charged with misconduct under Rule 4, Clauses-1(a), (b), (c) and Rule 5, Clauses (1), (5), ((17), (20) and (21) of the Conduct, Discipline and Appeal Rules applicable to Officers of the respondent Company. The Rules under which the petitioner was charged are: Rule 4: Clause 1: Every officer of the company shall at all times: (a) maintain absolute integrity (b) maintain devotion to duty and (c) do nothing unbecoming of a public servant Rule 5: Clause1: Theft, fraud or dishonesty in connection with the business or property of the company. Clause 5: Acting in a manner prejudicial to the interests of the company. Clause 17: Commission of any act, which amounts to a criminal offence involving moral turpitude. Clause 20: Commission of any act subversive of discipline or good behaviour. Clause 21: Abetment of or attempt at abetment of any act, which amounts to misconduct. The Enquiry Officer found the petitioner guilty of the two charges under Rules 4(1)(b) and 5(5). A clean chit was given to the petitioner with regard to the alleged misconduct under the other provisions of the Rules. While so, the Disciplinary Authority, being the Chairman and Managing Director of the respondent Company, addressed the final order dated 30.01.2004 to the petitioner wherein, having referred to the findings of the Enquiry Officer, the Disciplinary Authority stated as under: “6.1 That enquiry proceedings established that he did not get any pecuniary benefit or wrongful gain in the alleged misappropriation in the Guest House funds. CO-2 was informed vide letter No.PD/ES/0113/13/2003 dt.2nd May 2003 that the Disciplinary Authority had forwarded the Enquiry Officer’s report to him to make CO-2’s submission and that the Disciplinary Authority would take his decision on the Enquiry Officer’s report thereafter after duly examining CO-2’s submissions. Consequently, the findings of the Enquiry Officer are not accepted in toto and therefore CO-2”s assumption that the Enquiry Officer has not found CO-2 guilty of fraud and embezzlement and that it is established that CO-2 has not derived any pecuniary benefit or wrongful gain in the alleged mis-appropriation in the Guest House funds is not accepted for reasons recorded hereinafter. As the Controlling Officer, CO-2 ought not to have passed the food claim bills without making enquiries about the details of official guests who are stated to have been entertained and satisfying himself that the said food claim bills are in order. By CO-2’s consistent and repeated actions in approving false and fictitious food claim bills without verification CO-2 has also colluded and abetted with CO-3 and CO-4 in the misappropriation and embezzlement of Guest House funds. Therefore, the contention that CO-2 has not been a party to the fraud and embezzlement carried out by CO-3 and CO-4 is untenable. …” Stating so, the Disciplinary Authority held that the misconduct committed by the petitioner was grave and serious in nature and imposed upon him the major penalty of removal from service with immediate effect. Thereafter, by proceedings dated 03.08.2004, the Chief Manager (Personnel and Administration) of the respondent Company informed the petitioner that the Board of Directors of the respondent Company had confirmed the punishment of removal from service imposed upon him vide the final order dated 30.01.2004. Challenging the final order dated 30.01.2004 and the proceedings dated 03.08.2004, the petitioner is before this Court. The respondent Company filed its counter supporting the disciplinary auction taken by it against the petitioner on merits. It is further stated that the petitioner had participated in the enquiry, that the respondent Company had followed the due procedure giving a reasonable opportunity to the petitioner to prove his innocence and that there was no breach of the principles of natural justice. Sri V.Mallik, learned counsel for the petitioner, attacked the impugned proceedings on the ground that the procedure followed was in violation of the settled tenets of service jurisprudence. It is his contention that the Disciplinary Authority could not have passed the final order dated 30.01.2004, by forming its own opinion as to the guilt of the petitioner in respect of charges for which he had been held innocent by the Enquiry Officer. The learned counsel submitted that, had the Disciplinary Authority entertained a different opinion and wished to differ with the findings of the Enquiry Officer, it was incumbent upon him to communicate to the petitioner the reasons as to why he wished to disagree with the findings of the Enquiry Officer, give the petitioner an opportunity of hearing and only then proceed further in the matter. The learned counsel pointed out that in the present case, no such procedure had been followed and on the other hand, the Disciplinary Authority had straightaway declared that the findings of the Enquiry Officer were not acceptable in toto and proceeded to disagree, recording his reasons. No opportunity of hearing was afforded to the petitioner in this exercise. Basing on such reappraisal of the Enquiry Officer’s findings and his own conclusions drawn therefrom, the Disciplinary Authority imposed the major penalty of removal from service. The learned counsel contended that the above procedure, which culminated in the order of removal from service, was in utter violation of established legal principles. He placed reliance on a catena of Judgments in support of his contention. I n PUNJAB NATIONAL BANK V/s. KUNJ BEHARI MISRA[1], the Supreme Court was dealing with a situation where the Disciplinary Authority disagreed with the findings of the Enquiring Authority and the issue was whether a hearing was required to be given to the delinquent officer before the Disciplinary Authority did so. Relying on it’s earlier Judgments on this aspect, the Supreme Court held that it was necessary for the Authority, which was to finally record an adverse finding, to give a hearing to the delinquent officer. The observations of the Court in this regard are apposite: “17. ................... If the enquiry officer had given an adverse finding, as per Karunakar case [(1993) 4 SCC 727] the first stage required an opportunity to be given to the employee to represent to the disciplinary authority, even when an earlier opportunity had been granted to them by the enquiry officer. It will not stand to reason that when the finding in favour of the delinquent officers is proposed to be overturned by the disciplinary authority then no opportunity should be granted. The first stage of the enquiry is not completed till the disciplinary authority has recorded its findings. The principles of natural justice would demand that the authority which proposes to decide against the delinquent officer must give him a hearing. When the enquiring officer holds the charges to be proved, then that report has to be given to the delinquent officer who can make a representation before the disciplinary authority takes further action which may be prejudicial to the delinquent officer. When, like in the present case, the enquiry report is in favour of the delinquent officer but the disciplinary authority proposes to differ with such conclusions, then that authority which is deciding against the delinquent officer must give him an opportunity of being heard for otherwise he would be condemned unheard. In departmental proceedings, what is of ultimate importance is the finding of the disciplinary authority.” Thus, the Disciplinary Authority when it seeks to disagree with the Enquiring Authority on any finding recorded by such Enquiring Authority, must record tentative reasons for such disagreement and communicate the same to the delinquent officer so as to afford an opportunity to him to represent his case before it records it’s final findings. The Supreme Court followed this principle in YOGINATH D. BAGDE V/s. STATE OF MAHARASHTRA[2]. That was a case, similar to the case on hand, where the Enquiry Officer had recorded findings that the charges were not proved. The Disciplinary Committee which disagreed with these findings issued a notice to the delinquent officer requiring him to show cause as to why he should not be dismissed from service. In this show cause notice the reasons on the basis of which the Disciplinary Committee disagreed with the findings of the Enquiry Officer were communicated but instead of forming a tentative opinion the Disciplinary Committee had come to a final conclusion that the charges against the delinquent officer were established. The same did not find acceptance with the Court. The Court observed that a final decision with regard to the charges levelled against the delinquent officer had already been taken by the Disciplinary Committee without providing an opportunity of hearing to him and held that such procedure was contrary to the law laid down in PUNJAB NATIONAL BANK (1 supra). The Supreme Court reiterated the above principle in STATE BANK OF INDIA V/s. K.P.NARAYANAN KUTTY[3] and LAV NIGAM V/s. CHAIRMAN & MD, ITI LTD.[4]. In LAV NIGAM, the Supreme Court reaffirmed that in a case where the Disciplinary Authority wishes to differ with the view taken by the Enquiry Officer he is bound to give a notice setting out his tentative conclusions to the delinquent officer and after hearing the delinquent officer, the Disciplinary Authority could arrive at a final finding. Finding fault with the procedure at variance followed in that case, the Court permitted the proceedings to be re-commenced from the stage of issuance of a fresh show cause notice by the Disciplinary Authority to the delinquent officer indicating his tentative disagreement with the findings of the Enquiry Officer. The above Judgments are only reflective of the crystallized principle that it would be unfair and iniquitous if a charged officer who had succeeded before the Enquiry Officer is denied an opportunity of hearing before the Disciplinary Authority deprives him of the benefits of such Enquiry Officer’s findings by taking a different view. Principles of natural justice require that such a charged officer should be given an opportunity to put forth his case before the Disciplinary Authority before such Authority overturns the favourable findings recorded by the Enquiry Officer. In the light of the aforestated legal position, it is clear that the procedure followed by the respondent company in the present case is in violation of the expected norm. The punishment which followed thereupon embodied in the final order dated 30.01.2004 and it’s confirmation vide proceedings dated 03.08.2004 are therefore unsustainable in law. Sri S.V.Bhatt, learned standing counsel for the respondent company, requested that the disciplinary proceedings may be permitted to re-commence, as was done in LAV NIGAM. In the result, the final order No.PD/EC/0113/13/2004 dated 30.01.2004 passed by the Chairman and Managing Director of the respondent company removing the petitioner from service and the proceedings No.PD/E/0113/73/2004 dated 03.08.2004 intimating the confirmation of the said punishment by the Board of Directors of the respondent company are held to be illegal and unsustainable. The respondent company is at liberty to re-commence the disciplinary proceedings against the petitioner from the stage of issuance of a fresh show cause notice indicating the tentative reasons for disagreement with the findings of the Enquiry Officer as regards the charges held not proved. The respondent company shall endeavour to complete the disciplinary proceedings, if re-commenced, within a period of three months from the date of receipt of a copy of this order. The writ petition is accordingly allowed. In the circumstances of the case, there shall be no order as to costs. ---------------------------- SANJAY KUMAR, J. 25th SEPTEMBER, 2009. PGS / VGSR [1] (1998) 7 SCC 84 [2] (1999) 7 SCC 739 [3] (2003) 2 SCC 449 [4] (2006) 9 SCC 440