IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR TUESDAY, THE 10TH APRIL 2007 / 20TH CHAITHRA 1929 WP(C).No. 25375 of 2004(U) -------------------------- PETITIONER: ------------ MOHAN JAIDAS. S., NOW WORKING AS SENIOR MANAGER, KELTRON COMPONENT COMPLEX LTD., KELTRON NAGAR, P.O. KALLIASSERI, KANNUR-670 562. BY ADV. SRI.K.RAMAKUMAR SRI.B.PREMNATH (E) SMT.SREEJA SOHAN.K. RESPONDENTS: ------------- 1. KERALA STATE ELECTRONICS DEVELOPMENT CORPORATION, REPRESENTED BY ITS MANAGING DIRECTOR, THIRUVANANTHAPURAM. 2. KELTRON COMPONENT COMPLEX LTD., REPRESENTED BY MANAGING DIRECTOR, KELTRON NAGAR, P.O. KALLIASSERI, KANNUR-670 562. 3. STATE OF KERALA, REPRESENTED BY ITS CHIEF SECRETARY, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. 4. THE SECRETARY, INDUSTRIES DEPARTMENT, TRIVANDRUM. 5. MR. V. RAMKUMAR, NOW MANAGING DIRECTOR KERALA STATE ELECTRONICS DEVELOPMENT CORPORATION TRIVANDRUM-2. 6. MR.S. GOPALAKRISHNA PILLA, NOW MANAGING DIRECTOR IN CHARGE, KELTRON COMPONENT COMPLEX LTD., KELTRON NAGAR, P.O. KALLIASSERI, KANNUR-670 562. 7. THE DIRECTOR OF VIGILANCE, THE VIGILANCE DEPARTMENT, GOVERNMENT OF KERALA, TRIVANDRUM. R1 & R2 BY ADV. SRI.T.P.KELU NAMBIAR (SR.) SRI.M.GOPIKRISHNAN NAMBIAR R3, R4 & R7 SHRI D. ANILKUMAR, GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 28/3/2007, THE COURT ON 10/4/2007 DELIVERED THE FOLLOWING: ORDER ON IN NOS.6814/05 & 3938/07 DISMISSED. 1. 10/4/2007 SD/- . T.R. RAMACHANDRAN NAIR, JUDGE. APPENDIX EXT.P1-TRUE COPY OF THE EXTRACT OF THE MINUTES OF THE COMPANY BOARD MEETING NO.140 DATED 27.6.2002 EXT.P2-TRUE COPY OF DO. DATED 7.9.2002 EXT.P3- DO. DT.19.12.2002 EXT.P4-TRUE COPY OF VIGILANCE COMPLAINT LAUNCHED BY THE PETITIONER DT.28.5.2003 EXT.P5-TRUE COPY OF LETTER SENT BY MANAGING DIRECTOR (IC) TO THE PETITIONER DATED 29.7.2003 EXT.P5(A)- DO. DATED 26.6.2003 EXT.P5(B)-TRUE COPY OF SHOW CAUSE NOTICE CUM MEMO OF CHARGES DATED 3.7.2003 SENT TO THE PETITIONER BY MANAGING DIRECTOR (IC) EXT.P6-TRUE COPY OF THE RPELY SENT BY THE PETITOINER TO R6 DATED 20.8.2003 EXT.P7-TRUE COPY OF ORDER PASSED BY THE ENQUIRY COMMISSIONER AND SPECIAL JUDGE DT.4.5.2004 EXT.P8-TRUE COPY OF THE COMMUNICATION SIGNE DBY THE WORKING PRESIDENT OF KELTRON EMPLOYEES UNION DT.15.7.2004 EXT.P9-TRUE COPY OF ENQUIRY REPORT DT.30.7.2004 EXT.P10-TRUE COPY OF THE SHOW CAUSE NOTICE DT.10.8.2004 ISSUED TO THE PETITOINER BY R6 EXT.P11-TRUE COPY OF THE EXTRACT OF THE SHOW CAUSE NOTICE EXT.P12-TRUE COPY OF EXTRACT OF REPLY SUBMMITTED BY VINOD VENUGOPAL DT.18.7.2003 TO R6 EXT.P13-TRUE COPY OF EXTRACT FROM THE MINUTES OF THE ANNUAL GENERAL MEETING OF THE SHAREHOLDERS OF R2 EXT.P14-TRUE COPY OF DELEGATION OF POWER OF THE MANAGING DIRECTOR OF R2 EXT.P15-TRUE COPY OF ORDER DATED 10.9.2004 ISSUED BY R6 TO THE PETITIONERs EXT.P16-TRUE COPY OF NEWS APPEARED IN MATHRUBHUMI DAILY DT.14.9.2004 EXT.P17-TRUE COPY OF DO. IN MALAYALA MANORAMA DAILY DT.14.9.2004 EXT.P18- DO. IN DESHABHIMANI DAILY DT.14.9.2004 EXT.P19-TRUE COPY OF APPEAL PETITION SUBMITTED BY THE PETITIONER DT.7.10.2004 BEFORE THE APPELLATE AUTHORITY EXT.P20-TRUE COPY OF APPEALLATE ORDER PASSED BY R5 EXT.P21-TRUE COPY OF EXTRACT FROM THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS DATED 19.12.2002 RESPONDENTS' EXTS: EXT.R2(A)-PHOTO COPY OF KELTRON CONDUCT, DISCIPLINE & APPEAL RULES 1986 EXT.R2(B)-TRUE COPY OF MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS, KELTRON COMPONENT COMPLEX LTD. DT.15.3.2002 EXT.R2(C)- TRUE COPY OF REPLY DT.30.8.2004 SUBMITTED BY THE PETITIONER TO R2 EXT.R2(D)-TRUE COPY OF OFFICE ORDER DT.6.4.2002 EXT.R2(E)-TRUE COPY OF DO. DATED 29.5.2003 EXT.R2(F)-TRUE COPY OF THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF KELTRON COMPONENT COMPLEX LTD. DT.6.9.2004 EXT.R2(G)-TRUE COPY OF EXTRACT OF THE BILL ISSUED TO THE PETITIONER EXT.R2(H)TRUE COPY OF OFFICE ORDER DT.6.4.2002 EXT.R2(I)-TRUE COPY OF EXTRACT OF MEETING OF THE BOARD OF DIRECTORS OF R2 EXT.R2(J)-TRUE COPY OF LETTER DT.10.7.2003 EXT.R2(K)-TRUE COPY OF PERFORMANCE REPORT SUBMITTED BY THE PETITIONERs EXT.R2(L)-TRUE COPY OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.3.2003 OF R2 EXT.R2(M)-TRUE COPY OF EXTRACT OF THE BILL ISSUED TO THE PETITIONER FROM HOTEL HIGH LAND PARK, TVM. DATED 5.6.2003 EXT.R2(N)-TRUE COPY OF LETTER DT.12.8.2004 ADDRESSSED BY THE PETITIONER TO R2 EXT.R2(O)-TRUE COPY OF LETTER DT.13.8.2004 ADDRESSED BY R2 TO THE PETITIONERs // TRUE COPY // P.S. TO JUDGE T.R. Ramachandran Nair, J. - - - - - - - - - - - - - - - - - - - - - - - - W.P.(C).NO.25375 of 2004-U - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 10th day of April, 2007 JUDGMENT The matter concerns challenge against the disciplinary proceedings initiated against the petitioner resulting in removal from service. Ext.P15 is the order passed by the disciplinary authority and Ext.P20 is the order passed by the appellate authority. 2. The petitioner is a Senior Manager under the second respondent, viz. Keltron Component Complex Limited. He was appointed as Managing Director in charge of the company on 6.4.2002. The second respondent is a subsidiary company of the first respondent, Kerala State Electornics Corporation. The petitioner was divested of the charge of Managing Director on 30.5.2003. Subsequently, he was issued a show cause notice along with a memo of charges marked as Exts.P5(a) and (b) in the writ petition. Various charges have been raised in the memo of charges and the allegations pertain to the actions of the petitioner while holding the charge of Managing Director. Exts.P5(a) and (b) were replied as per Ext.P6 by the WPC 25375/2004 -2- petitioner. Ext.P9 is the report of enquiry submitted by the Enquiry Officer. On the basis of the enquiry report, he was issued a show cause notice Ext.P10. Ext.P10 shows that the report of enquiry was forwarded along with the show cause notice. Thereafter, petitioner submitted a reply to the show cause notice. In the meanwhile, petitioner had approached this court challenging the enquiry proceedings itself on various grounds like victimisation and malafides, etc. On 24.8.2004 this court passed an interim order to the effect that “it is for the petitioner to file his explanation on Ext.P10. Thereafter, it will be open to the first respondent to pass orders in accordance with law but the orders as passed shall be implemented only after obtaining orders from this court.” This interim order was modified on 9.9.2004 making it clear that in case the petitioner is aggrieved by the order passed by the second respondent, it will be open to the petitioner to pursue his statutory remedy before the appellate authority. It was further made clear that any orders thus passed either by the second respondent or the appellate authority will be subject to the result of the writ petition. Aggrieved by the order Ext.P15 whereby he was removed from service, the petitioner filed an appeal before the Chairman which was disposed of by Ext.P20. The penalties imposed on him by Ext.P15 is removal from service and recovery of an amount of Rs.1,25,478/- as compensation for the pecuniary loss caused to the company. This order was confirmed in the appeal and the penalties imposed have been found reasonable. WPC 25375/2004 -3- 4. The petitioner has raised various grounds in the writ petition while challenging the orders. Along with I.A. No.3938/2007, the petitioner has filed an affidavit raising a new ground as additional ground 'H'. The ground taken is that in terms of the decisions of the Hon'ble Supreme Court particularly in E.C.I.L. v. Karunakar, it was mandatory to communicate the report of the enquiry before accepting or taking any action on the report and as that had not been done in the case, the penalty imposed is irregular, illegal and in violation of the principles of natural justice. It is alleged that serious prejudice has been caused to the petitioner by the failure to furnish the report before issuing the show cause notice. 5. The respondents have been given a further opportunity to file a counter affidavit to the above I.A. and they have duly filed a counter affidavit. 6. In the counter affidavit filed in the writ petition, the respondents have sought to justify the action against the petitioner and the orders passed by the disciplinary authority and the appellate authority. Along with the counter affidavit, various orders have been produced to show that the disciplinary action taken by the Managing Director is perfectly legal and the same is in accordance with the relevant rules and as authorised by the Board of Directors. 7. In the counter affidavit filed in I.A. No.3938/2007, it is contended that no prejudice has been caused to the petitioner due to the non-supply of WPC 25375/2004 -4- enquiry report prior to the issuance of Ext.P10 show cause notice. The contentions raised are that a copy of the enquiry report was forwarded to the petitioner along with Ext.P10 on 10.8.2004 directing him to submit a reply within seven days. On 12.8.2004 the petitioner sought two more weeks time to submit the reply (produced as Ext.R2(n). As per Ext.R2(o) reply issued by the second respondent, two more weeks time was given to furnish the reply. It is pointed out that in Ext.R2(n) the petitioner had no complaint that he was not served with a copy of the enquiry report and on that account any prejudice had been caused to him. It is further pointed out that immediately on receipt of the show cause notice the present writ petition was filed in which no contention has been raised that any prejudice has been caused to him on account of the non-supply of the enquiry report. The petitioner submitted his reply marked as Ext.R2(i) in which he has not raised a contention that any prejudice has been caused to him on account of the non-supply of the enquiry report prior to Ext.P10 notice. It is also averred that by way of Ext.R2(i) he has submitted a detailed objection to the findings in the enquiry report. The second respondent further averred that in the appeal filed as Ext.P19 also, the petitioner had not raised any ground that he had been prejudiced in any way on account of the non-supply of the enquiry report prior to Ext.P10. It is also pointed out that even after the writ petition was amended to incorporate challenge against Exts.P15 and P20, no such ground had been originally urged and only by the present I.A. WPC 25375/2004 -5- the petitioner has raised an additional ground. 8. Heard Shri K. Ramakumar, counsel for the petitioner and Shri T.P. Kelu Nambiar, learned Senior Counsel and Shri M. Gopikrishnan Nambiar, counsel for the respondents. Shri Ramakumar raised the following arguments: a) that the non furnishing of the enquiry report before the disciplinary authority decided to accept it and before the issuance of Ext.P10 show cause notice clearly vitiates the entire proceedings culminating in imposition of the penalty and hence Ext.P15 as affirmed in Ext.P20, is liable to be declared as illegal; and b) the penalty has been imposed by the Managing Director who is not competent to impose such a penalty on the petitioner. 9. In support of the argument that non-furnishing of the enquiry report itself vitiates the entire proceedings, learned counsel for the petitioner relied upon the decisions of the Honourable Supreme Court in Union of India v. Mohd. Ramzan Khan (AIR 1991 SC 471) and Managing Director, ECIL, Hyderabad v. B. Karunakar (AIR 1994SC 1074) and the decision of a Division Bench of this court in Writ Appeal No.1779/2005 and connected cases. In contra, learned counsel for the respondents relied upon the decisions of the Honourable Supreme Court in Managing Director, ECIL, Hyderabad v. B. Karunakar (AIR 1994SC 1074 = (1993) 4 SCC 727)), Canara Bank and others v. Debasis Das and others WPC 25375/2004 -6- ((2003) 4 SCC 557), Divisional Manager, Plantation Division, Andaman & Nicobar Islands v. Munnu Barrick and others ((2005) 2 SCC 237), Canara Bank v. V.K. Awasthy ((2005) 6 SCC 321) and Syndicate Bank and others v. Venkatesh Gururao Kurati ((2006) 3 SCC 150) to contend for the position that the non-furnishing of the report has not prejudiced the petitioner and at any rate, no prejudice has been shown to have been established and merely because of the non-furnishing of the report, the proceedings are not vitiated. 10. Therefore, it has to be examined whether the non-furnishing of the report prior to the issuance of the show cause notice proposing the penalty itself vitiates the penalty imposed and whether in the absence of any prejudice seen to have been caused to him, the proceedings are valid or not. It has also to be examined whether failure of the petitioner to raise it in the reply to the show cause notice and also in the appeal filed before the appellate authority will estop him from raising the said ground in these proceedings. 11. The Honourable Supreme Court in AIR 1991 SC 471, held that “while the delinquent is not entitled to report when the inquiry is conducted by the disciplinary authority, he is entitled to copy of report when inquiry is conducted by the Inquiry Officer.” A Constitution Bench of the Honourable Supreme Court in AIR 1994 SC 1074 ((1993) 4 SCC 727) considered the question afresh in view of the conflict between the above WPC 25375/2004 -7- decision in AIR 1991 SC 471 and AIR 1988 SC 1338. After considering the various aspects in the light of Article 311 of the Constitution of India and in the light of the well accepted principles of natural justice, their Lordships of the Supreme Court held in paragraph 7 (iv) and (v) in the following terms: “ (iv) In the view that we have taken, viz. that the right to make representation to the disciplinary authority against the findings recorded in the inquiry report is an integral part of the opportunity of defence against the charges and is a breach of principles of natural justice to deny the said right, it is only appropriate that the law laid down i Mohd. Ramzan Khan's case (AIR 1991 SC 471) (supra) should apply to employees in all establishments whether Government or non-Government, public or private. This will be the case whether there are rules governing the disciplinary proceeding or not and whether they expressly prohibit the furnishing of the copy of the report or are silent on the subject. Whatever the nature of punishment, further, whenever the rules require an inquiry to be held, for inflicting the punishment in question, the delinquent employee should have the benefit of the report of the Inquiry Officer before the disciplinary authority records its findings on the charges levelled against him. Hence, question (iv) is answered accordingly.” (v) The next question to be answered is what is the effect on the order of punishment when the report of the Inquiry Officer is not furnished to the employee and what relief should be granted to him in such cases. The answer to this question has to be relative to the punishment awarded. When the employee is dismissed or removed from service and the inquiry is set aside because the report is not furnished to him, in some cases the non furnishing of the report may have prejudiced him gravely while in other cases it may have made no difference to the ultimate punishment awarded to him. Hence, to direct reinstatement of the employee with back wages in all cases is to reduce the rules of justice to a mechanical ritual. The theory of reasonable opportunity and the principles of natural justice have been evolved to uphold the rule of law and to assist the individual to vindicate his just rights. They are not incantations to be invoked nor rites WPC 25375/2004 -8- to be performed on all and sundry occasions. Whether in fact, prejudice has been caused to the employee or not on account of the denial to him of the report, has to be considered on the facts and circumstances of each case. Where, therefore, even after the furnishing of the report, no different consequence would have followed, it would be a perversion of justice to permit the employee to resume duty and to get all the consequential benefits. It amounts to rewarding the dishonest and the guilty and thus to stretching the concept of justice to illogical and exasperating limits. It amounts to an “unnatural expansion of natural justice” which in itself is antithetical to justice. Hence, in all cases where the Inquiry Officer's report is not furnished to the delinquent employee in the disciplinary proceedings, the courts and Tribunals should cause the copy of the report to be furnished to the aggrieved employee if he has not already secured it before coming to the Court/Tribunal, and give the employee an opportunity to show how his or her case was prejudiced because of the non-supply of the report. If after hearing the parties, the Court/Tribunal comes to the conclusion hat the non-supply of the report would have made no difference to the ultimate findings and the punishment given, the Court/Tribunal should not interfere with the order of punishment. The Court/Tribunal should not mechanically set aside the order of punishment on the ground that the report was not furnished as is regrettably being done at present. The courts should avoid resorting to short-cuts. Since it is the Courts/Tribunals which will apply their judicial mind to the question and give their reasons for setting aside or not setting aside the order of punishment, (and not any internal appellate or revisional authority), there would be neither a breach of the principles of natural justice nor a denial of the reasonable opportunity. It is only if the Courts/Tribunals find that the furnishing of the report would have made a difference to the result in the case that it should set aside the order of punishment. Where after following the above procedure, the courts/Tribunals set aside the order of punishment, the proper relief that should be granted is to direct reinstatement of the employee with liberty to the authority/management to proceed with the inquiry, by placing the employee under suspension and continuing the inquiry from the stage of furnishing him with the report. The question whether the employee would be entitled to the back wages and other benefits from the date of his dismissal to the date of his reinstatement if ultimately ordered should WPC 25375/2004 -9- invariably be left to be decided by the authority concerned according to law, after the culmination of the proceedings and depending on the final outcome. If the employee succeeds in the fresh inquiry and is directed to be reinstated, the authority should be at liberty to decide according to law how it will treat the period from the date of dismissal till the reinstatement and to what benefits, if any and the extent of the benefits, he will be entitled. The reinstatement made as a result of the setting aside of the inquiry for failure to furnish the report should be treated as a reinstatement for the purpose of holding the fresh inquiry from the stage of furnishing the report and no more, where such fresh inquiry is held. That will also be the correct position in law.” Their Lordships have declared that the question has to be tested on the theory of prejudice which has been caused to the employee. It was held that the court/tribunal should not mechanically set aside the order of punishment on the ground that the report was not furnished. The court should avoid resorting to shortcuts. 12. In the light of the dictum laid down in AIR 1994 SC 1074 it has to be accepted that mere non-furnishing of the report itself will not vitiate the penalty imposed which is confirmed by the order passed by the appellate authority herein. Learned counsel for the petitioner further relied upon the Bench decision in Writ Appeal No.1779/2005 and connected cases. In that case, this court found that it was a case of harassment and victimisation, and hence the charge sheet and the enquiry report were quashed. The third aspect considered was about the non-furnishing of the enquiry report. There, the question was examined in paragraphs 35 and 37 in the light of the dictum laid down in AIR 1994 SC 1074. Paragraph 37 of the judgment WPC 25375/2004 -10- shows that their Lordships were of the view therein regarding certain findings of the report that “the Enquiry Officer on the other hand was finding fault with the petitioner for not obtaining the order in writing by the Managing Director before participating in the tender. As already noticed earlier the enquiry Officer did not make any attempt to ascertain whether the Managing Director had in fact given authorisation to the petitioner and from Ext.P17 affidavit filed, by the then Managing Director that he had authorised the petitioner to submit the tender. We are now informed that the appellants have taken a decision to realise 75% of the loss sustained by the appellants on account of the tender to KLDB from the former Managing Director which makes it clear that the act of the petitioner was not at all unauthorised.” It was further held that “though it would not be necessary for the disciplinary authority to discuss in detail about the enquiry conducted by the Enquiry Officer it was necessary for the disciplinary authority to consider the enquiry report before it was accepted. Petitioner was not given an opportunity to show that the enquiry report was wrong. Records produced did not show that the disciplinary authority had in fact considered the enquiry report before accepting the same.” The above findings show that issue considered therein was different from the facts of this case. This court was pleased to consider the matter on the merits itself and the proceedings were set aside not on the ground of non-furnishing of the report alone but on the merits of the charges and a direction was issued WPC 25375/2004 -11- to the enquiry officer to reopen the enquiry and allow the petitioner therein to participate in the same after giving him the assistance of a defence assistant. Apparently, the facts of the said case are different from the facts of this case. 13. This is a case where, to the show cause notice the petitioner duly submitted a reply wherein no contentions have been raised that non- furnishing of the report along with the show cause notice has prejudiced him in taking his defence against the acceptance of the report by the disciplinary authority before proposing the penalty. Going by the reply to the show cause notice petitioner has answered various findings contained in the report. It is pertinent to note that the petitioner had not raised any contention that non-supply of the report has prejudiced him in furnishing the reply. In the memorandum of appeal filed against the order Ext.P15 (Ext.P19) also, he has not raised any ground that he had been prejudiced in any way because of the non-furnishing of the enquiry report prior to the show cause notice issued. Thus, it is a case where only in the affidavit filed along with I.A. No.3938/2007 alone the petitioner has chosen to raise this as an additional ground. Therefore, the question is whether in such circumstances, the proceedings are liable to be quashed merely on the ground of non-furnishing of the report. 14. In the decision reported in State of U.P. Harendra Arora and another ((2001) 6 SCC 392) the question was examined whether even WPC 25375/2004 -12- though in the statutory rules considered therein there was a provision for furnishing a copy of the report, whether the said omission could be fatal to the order imposing penalty. After considering the decision of the Supreme Court in AIR 1994 SC 1074, it was held in paragraph 12 in the following terms: “12. Thus, from the case of ECIL it would be plain that in cases covered by the constitutional mandate i.e. Article 311(2), non- furnishing of enquiry report would not be fatal to the order of punishment unless prejudice is shown. If for infraction of a constitutional provision an order would not be invalid unless prejudice is shown, we fail to understand how requirement in the statutory rules of furnishing copy of the enquiry report would stand on a higher footing by laying down that question of prejudice is not material