IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. CWP(T) No.2817/2008 Reserved on: 30.4.2009 Decided on: 27.7.2009 B.M. Dutt. …Petitioner. Versus Himachal Pradesh Agro Industries Corporation. …Respondent. Coram The Hon’ble Mr. Justice Rajiv Sharma, J. Whether approved for reporting ?1.yes. For the petitioner : Mr. Raman Sethi, Advocate. For the Respondent : Mr. B.M. Chauhan, Advocate. Rajiv Sharma, J. The present petition has been filed seeking multiple reliefs. The respondent-corporation has imposed three penalties upon the petitioner on 18.4.1994, 6.8.1991 and 25.4.1990. The adverse remarks have been recorded in his Annual Confidential Report with effect from 1.4.1989 to 31.3.1990. He has been denied the benefit of FR 22 (c) as well as the maintenance allowance. He has also not been granted any proficiency step up. Mr. Raman Sethi, Advocate has strenuously argued that the imposition of penalties upon the petitioner vide orders dated 18.4.1994, 6.8.1991 and 25.4.1990 is in contravention of the principles of natural 1 Whether the reporters of Local Papers may be allowed to see the judgment? Yes. 2 justice. He then contended that his client was entitled to benefit under FR 22 (c) and the adverse entries in his Annual Confidential Report with effect from 1.4.1989 to 31.3.1990 have been recorded against law. He finally contended that his client was entitled to maintenance allowance and proficiency step up as well. Mr. B.M. Chauhan, Advocate has supported the imposition of penalties upon the petitioner and denial of monetary benefits claimed by the petitioner. I have heard the learned counsel for the parties and have perused the pleadings carefully. A memorandum was issued to the petitioner on 5.3.1992. He replied to the memorandum of charge-sheet on 7.3.1992. Initially, Sh. A.K. Sood was appointed as Inquiry Officer, who was replaced by Sh. B.M. Nanta. He submitted the report to the Disciplinary Authority dated 7.12.1993. The copy of the inquiry report was furnished to the petitioner. The Disciplinary Authority permitted the petitioner to file reply within 15 days vide memorandum dated 22.12.1993 against the inquiry report. The Disciplinary Authority vide office order dated 18.4.1994 imposed the penalty of “Stoppage of Annual Grade Increments” upon the petitioner, which were due to him during 1994 and 1995 with cumulative effect. The petitioner was afforded, as per the contents of office order dated 18.4.1994, personal hearing on 19.3.1994. He was allowed to inspect the official record pertaining to inquiry. The Disciplinary Authority had agreed with the report of the Inquiry Officer dated 7.12.1993. Since the petitioner has been permitted to be heard by the Disciplinary Authority, the contentions raised by him were required to be taken into consideration by the Disciplinary Authority and the same ought to have been reflected in the order. There is only bald statement in the order passed by the 3 Disciplinary Authority that the petitioner was afforded personal hearing. The affording of personal hearing is a basic ingredient of the principle of audi alteram partem. It is not merely a formality. The person is heard by the Disciplinary Authority to bring to his notice the illegalities/irregularities committed by the Inquiry Officer during the course of inquiry and he is also called upon to make his submission on the question of quantum of punishment. The petitioner was furnished with a copy of the inquiry report vide memorandum dated 22.12.1993. The purpose of furnishing the inquiry report to the delinquent is to enable him to point out the deficiencies in the inquiry report, including infraction of mandatory provisions of law under which the inquiry is conducted. Accordingly, the Court is of the considered opinion that there is violation of principles of natural justice and without taking into consideration the version of the petitioner, penalty could not be imposed upon him. The matter is also required to be looked into from another angle. The matter which constituted the subject matter of the disciplinary proceedings initiated against the petitioner vide memorandum dated 5.3.1992 was also subject matter of the inquiry No. ACD-NR-78-Agro Industries-4/92 dated 23.9.1992 against the petitioner. The inquiry initiated by the Vigilance was closed as is evident from the contents of letter dated 27.1.1995. He made a representation to the respondents to take into consideration letter dated 27.1.1995 on 10.2.1995. The same was not decided by the respondent. It was necessary for the respondent- corporation to look into the matter afresh after the closing of inquiry on the same charges by the Vigilance Department. The disciplinary proceedings were also initiated against the petitioner and Sh. R.K. Banta, Production Manager was appointed as the 4 Inquiry Officer as per office order dated 31.5.1985. He filed reply to the same as per Annexure A-11. The Inquiry Officer furnished the report to the Disciplinary Authority dated 15.3.1986. The petitioner was granted 15 days time to file the reply vide office memorandum dated 8.10.1987. He filed short reply to the same on 30.10.1987. Thereafter he filed detailed reply on 4.2.1989. A fresh memo was issued to the petitioner on the same and similar charges by the Managing Director on 28.12.1989. He filed reply to the same on 24.1.1990. Sh. A.S. Mahajan, Divisional Manager was appointed as the Inquiry Officer. He submitted the report on 25.5.1991 to the Disciplinary Authority. The Disciplinary Authority did not agreed with the inquiry report submitted by the Inquiry Officer. The Disciplinary Authority without recording its tentative conclusion why he had differed from the views of the Inquiry Officer imposed the penalty of stoppage of two annual increments which were due on 1.6.1992 and 1.6.1993 having cumulative effect. It is settled law by now that the Disciplinary Authority can always differ from the views of the Inquiry Officer, however, he has to record separate reasons while disagreeing/differing from the views of the Inquiry Officer. Thereafter the reasons have to be conveyed to the delinquent to enable him to make representation. It is only after the representation is made by the delinquent, the Disciplinary Authority can differ/disagree with the views of the Inquiry Officer finally. This proposition is no more res integra in view of the law laid down by their Lordships of the Hon’ble Supreme Court in Punjab National Bank and others Vs. Kunj Behari Misra and another, LLJ 1998 (2) 809. Their Lordships have held that the disciplinary authority should give the delinquent officer an opportunity to represent before it disagrees with inquiring authority and records its findings. Their Lordships have held as under: 5 “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 on any article of charge then before it records its own findings on such charge, it must record its tentative reasons for such disagreement and give to the delinquent officer an opportunity to represent before it records its findings. The report of the inquiry officer containing its findings will have to be conveyed and the delinquent officer will have an opportunity to persuade the disciplinary authority to accept the favourable conclusion of the inquiry officer. The principles of natural justice, as we have already observed, require the authority, which has to take a final decision and can impose a penalty, to give an opportunity to the officer charged of misconduct to file a representation before the disciplinary authority records its findings on the charges framed against the officer.” The Apex Court in Yoginath D. Bagde Vs. State of Maharashtra and another, (1999) 7 SCC 739 has held as under: “Recently, a three Judge Bench of this Court in Punjab National Bank v. Kunj Behari Misra relying upon the earlier decisions of this Court in State of Assam v. Bimal Kumar Pandit, Institute of Chartered Accountants of India v. L.K. Ratna as also the Constitution bench decision in Managing Director, ECIL v. B. Karunakar and the decision in Ram Kishan v. Union of India has held that: (SCC p. para 17) “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 ahs recorded its findings. The principles of natural justice would demand that the authority which proposes 6 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 proposed to differ with such conclusion, 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.” The Court further observed as under: (SCC p. 96, para 18) “When the enquiry is conducted by the enquiry officer, his report is not final or conclusive and the disciplinary proceedings do not stand concluded. The disciplinary authority stand concluded with the decision of the disciplinary authority. It is disciplinary authority which can impose the penalty and not the enquiry officer. Where the disciplinary authority itself holds an enquiry, an opportunity of hearing has to be granted by him. When the disciplinary authority differs with the view of the enquiry 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 enquiry officer, they are deprived of representing to the disciplinary authority before that authority differs with the enquiry 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 7 findings on the charges are recorded and punishment imposed.” The Court further held that the contrary view expressed by this Court in State Bank of India v. S.S. Koshal and State of Rajasthan v. M.C. Saxena was not correct.” Similarly, the High Court of Madras in Devakumar L.M.V V. G.M., Canara Bank and another, 2001 (1) LLJ 358 has held that where disciplinary authority disagrees with the findings of the Inquiring Authority it is bound to give an opportunity to the delinquent. A Division Bench of High Court of Andhra Pradesh in K.S.S.N. Sarma Vs. State Bank of India and others, 2002 (2) Labour Law Journal 482 has held as under: “At the hearing of the appeal, the only question canvassed by the learned Counsel for the appellant Mr. Srinivas, is that inasmuch as the disciplinary authority differed from the conclusions arrived at by the inquiring authority in respect of charge No. 1 (c), the order of imposition of penalty is unsustainable since no opportunity of representation has been afforded to the charged employee before the conclusion of the disciplinary authority differing from the conclusion arrived at by the inquiring authority. Learned Counsel for the appellant placed reliance on the decision of the Supreme Court in Punjab National Bank and others v. Kunj Behari Misra (1998-II-LLJ-809 (SC) in support of this contention. In the said decision, after an analysis of the general principles and earlier authorities on this aspect of the matter, the Supreme Court declared the law to the effect that whenever the disciplinary authority disagrees with the enquiring authority on any article of charge then before it records its own findings on such charge, it must record its tentative reasons for such disagreement and give to the delinquent officer an 8 opportunity to represent before it records its findings. The report of the Enquiry Officer containing its findings will have to be conveyed to the delinquent officer so as to enable him an opportunity to persuade the disciplinary authority to accept the favourable conclusion of the Enquiry Officer. This principle has been enunciated as an emanation of the principles of natural justice and held to be an integral part of procedural due process. Conformity with the said binding principle of law would invalidate the finding in respect of Charge No.1 (c).” The imposition of penalty upon the petitioner vide memorandum dated 6.8.1991 is bad on the ground of violation of principles of natural justice since the petitioner has not been heard by the Disciplinary Authority before disagreeing with the views of the Inquiry Officer. The petitioner has been vexed twice for the same and similar charges. The disciplinary proceedings cannot be permitted to be launched at the sweet-will or fancy of the Disciplinary Authority. The Disciplinary Authority had earlier initiated the disciplinary proceedings as is evident from letter dated 31.5.1985. In the present case also, the report was received and the petitioner was called upon to file the reply. He filed two replies on 30.10.1987 and 4.2.1989. What happened to those proceedings is not borne out from the record. However, on the same and similar charges, fresh memorandum was issued to the petitioner on 28.12.1989. He filed appeal against the imposition of penalty on 20.6.1992. The same was rejected by the Board of Directors in its meeting held on 6.5.1995. The petitioner had taken as many as five grounds in his appeal dated 20.6.1992. However, these have not been taken into consideration by the Board of Directors while rejecting the appeal in its meeting held on 6.5.1995. It is settled law by now that the 9 Appellate Authority has to take into consideration all the grounds taken in the memorandum of appeal and thereafter reasoned order has to be passed. Their Lordships of the Hon’ble Supreme Court have held in Roop Singh Negi versus Punjab National Bank and others, (2009) 2 Supreme Court Cases 570 that the order passed by the Disciplinary Authority should be speaking one. Their Lordships have held as under: “Furthermore, the order of disciplinary authority as also the appellate authority are not supported by any reason. As the orders passed by them have severe civil consequences, appropriate reasons should have been assigned. If the enquiry officer had relied upon the confession made by the appellant, there was no reason as to why the order of discharge passed by the criminal court on the basis of selfsame evidence should not have been taken into consideration. The materials brought on record pointing out the guilt are required to be proved. A decision must be arrived at on some evidence, which is legally admissible. The provisions of the Evidence Act may not be applicable in a departmental proceeding but the principles of natural justice are. As the report of the enquiry officer was based on merely ipse dixit as also surmises and conjectures, the same could not have been sustained. The inferences drawn by the enquiry officer apparently were not supported by any evidence. Suspicion, as is well known, however high may be, can under no circumstances be held to be a substitute for legal proof. Accordingly, the appellate order dated 6.5.1995 contained in Annexure A-9 (Item No.4) is also quashed and set aside. The petitioner was served with a memorandum on 29.1.1990. He filed reply to the same on 11.4.1990. The Disciplinary Authority on 25.4.1990 imposed the penalty of stoppage of annual grade increment 10 (due on 1.6.1990) and further ordered recovery of Rs. 27,420.13 in lump sum from the petitioner. It is apparent from the order dated 25.4.1990 that no regular inquiry was held against the petitioner as per memorandum dated 29.1.1990. The Disciplinary Authority, however, in its own wisdom had decided not to hold a regular inquiry. It was not permissible under the law. Once the memorandum had been issued and the petitioner had filed the reply, regular inquiry ought to have been conducted in accordance with law. Why the Disciplinary Authority has come to this conclusion of dropping the inquiry suddenly is not borne out from the record at all. The petitioner has suffered severe civil consequences whereby one increment was stopped and he was directed to pay a sum of Rs. 27,420.13. He had preferred an appeal against the imposition of this penalty on 25.4.1990. The appeal was preferred on 10.5.1990. The Appellate Authority has rejected the appeal on 13.7.1990 and the same was conveyed to the petitioner 9.11.1990. No reasons have been assigned why the appeal preferred by the petitioner has been rejected. The petitioner had raised as many as four detailed grounds in his appeal dated 25.4.1990, as noticed above. The appellate order should have been self-contained. The order dated 9.11.1990 is liable to be set aside. The corporation had recorded adverse entries in the Annual Confidential Report of the petitioner for the period 1.4.1989 to 31.3.1990. The basis for recording of adverse remarks in the Annual Confidential Report of the petitioner is the imposition of the penalty upon the petitioner vide order dated 25.4.1990. Since the same has been quashed by this Court, as noticed above, the adverse entries recorded in the Annual Confidential Report of the petitioner are hereby expunged. The petitioner has also claimed benefit under FR 22 (C) with effect from 28.11.1981. His case was rejected by the management on the basis 11 of the opinion rendered by the Finance Department dated 10.3.1986. The basis for rejection of the case of the petitioner for denying him the benefit under FR 22 (c) was that since the petitioner was holding the post of Assistant Branch Manager which stood upgraded on 28.11.1981 and on up-gradation, the lower post ceased to exist. The petitioner had clarified this position by way of representation to the respondent-corporation. He had categorically pointed out in his representation that the post of Assistant Branch Manager never ceased to exist and it was existing in the pay scale of Rs. 825-1580 as per the Recruitment and Promotion Rules framed by the respondent-corporation. In case the post has never ceased to exist, the very basis of denying the petitioner benefit of FR 22 (c) must fall. The petitioner is held entitled to benefit under FR 22 (c) with effect from 28.11.1981. The petitioner has sought maintenance allowance with effect from 14.7.1981 on the basis of the decision taken by the Board of Directors on 23.7.1975. He has served a notice upon the respondent on 19.1.1983, which was replied by the corporation on 17.3.1983. Thereafter he had made a representation on 5.9.1985. This claim was stale. In case he was aggrieved in any manner by the action of the respondents whereby he was denied the maintenance allowance, he should have raked up the issue at the earliest. Accordingly, the petitioner is not held to maintenance allowance. The petitioner has been denied the proficiency step up with effect from 1.6.1990. The only reason assigned in the reply for denying the benefit to the petitioner is the imposition of various penalties against him from time to time. In nutshell, the reply of the respondent-corporation is that the petitioner’s career always remained under cloud. Since the penalties against the petitioner have been set aside by this Court, as 12 noticed above, and the adverse remarks have also been directed to be expunged, the case of the petitioner is required to be considered for the purpose of grant of proficiency step up with effect from 1.6.1990. Accordingly, in view of the observations made hereinabove, the petition is allowed. Annexures A-22 dated 25.4.1990, A-7 dated 21.8.1990, A-25 dated 9.11.1990, A-17 dated 6.8.1991, A-4 dated 18.4.1994 and A-9 dated 6.5.1995 are quashed and set aside. The respondents are directed to grant the petitioner benefit under FR 22 (c) with effect from 28.11.1981. The respondents are further directed to consider the case for the grant proficiency step up in view of the observations made hereinabove with effect from 1.6.1990. The needful be done within a period of four weeks from today. No costs. 27.7. 2009 (Rajiv Sharma ), J. *awasthi*