IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN FRIDAY, THE 16TH JANUARY 2009 / 26TH POUSHA 1930 WP(C).No. 27747 of 2005(C) ------------------------------------- PETITIONER(S): ----------------------- K.P.KURIAN, S/O.SRI.K.K.PAUL, AGED 56 YEARS, MANAGER GRADE IV, KERALA STATE FINANCIAL ENTERPRISE LIMITED, OFFICE OF THE S.D.T. PALAKKAD, RESIDING AT KATTUKKARAN HOUSE, KURIACHIRA, THRISSUR-6. BY ADV. SRI.M.R.HARIRAJ RESPONDENT(S): ------------------------- 1. KERALA STATE FINANCIAL ENTERPRISE LIMITED, REPRESENTED BY ITS CHAIRMAN, BHADRATHA, THRISSUR. 2. BOARD OF DIRECTORS, KERALA STATE FINANCIAL ENTERPRISE LIMITED, REPRESENTED BY ITS MANAGING DIRECTOR, HEAD OFFICE, BHADRATHA MUSEUM ROAD, TRICHUR-20. 3. MANAGING DIRECTOR, KERALA STATE FINANCIAL EXTERPRISE LIMITED, HEAD OFFICE, BHADRATHA, MUSEUM ROAD, TRICHUR-20. 4. M.K.KARTHIKEYAN, MANAGING DIRECTOR, KSFE LTD., BHADRATHA, TRICHUR. 5. K.S.RAVISHANKAR, ADVOCATE, TRICHUR-3. 6. K.KUNJUNNY NAIR, ADVOCATE, TRICHUR-3. BY SRI.A.M.SHAFFIQUE (SR.) FOR R1 TO R3 SRI.E.K.NANDAKUMAR FOR R1 TO R3 SRI.A.K.JAYASANKAR NAMBIAR FOR R1 TO R3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 27747 of 2005(C) APPENDIX PETITIONER'S EXHIBITS: EXT.P1 - TRUE COPY OF THE CHARGE MEMO WITH REFERENCE NO. 4683 DATED 19.2.1998 AGAINST THE PETITIONER. EXT.P2 - TRUE COPY OF THE REPLY DATED 15.4.1998 FILED BY THE PETITIONER. EXT.P3 - TRUE COPY OF THE LIST OF WITNESSES AND DOCUMENTS FILED BY MANAGEMENT, BEFORE THE ENQUIRY OFFICER, A PRACTICING ADVOCATE. EXT.P4 - TRUE COPY OF THE REPRESENTATION DATED 28.1.1999 SUBMITTED BY THE PETITIONER TO THE ENQUIRY OFFICER. EXT.P5 - TRUE COPY OF THE REPRESENTATION DATED 28.1.1999 SUBMITTED TO THE 3RD RESPONDENT. EXT.P6 - TRUE COPY OF THE REPRESENTATION DATED 28.1.1999 SUBMITTED BY THE PETITIONER. EXT.P7 - TRUE COPY OF THE LETTER DATED 10.2.1999 FROM THE PRESENTING OFFICER TO THE ENQUIRY OFFICER. EXT.P8 - TRUE COPY OF THE NOTICE DATED 9.7.1999 OF THE ENQUIRY OFFICER. EXT.P9 - TRUE COPY OF THE LETTER DATED 14.7.1999 TO THE ENQUIRY OFFICER. EXT.P10 - TRUE COPY OF THE ENQUIRY REPORT DATED 3.2.2000 SERVED BY THE PETITIONER ALONG WITH THE COVERING LETTER DATED 22.2.2000. EXT.P11 - TRUE COY OF THE REPRESENTATION DATED 5.4.2000 SUBMITTED BY THE PETITIONER. EXT.P12 - TRUE COPY OF THE SUSPENSION ORDER NO. 4683 DATED 8.12.1999. EXT.P13 - TRUE COPY OF THE REPRESENTATION DATED 22.12.1999 MADE BY THE PETITIONER. EXT.P14 - TRUE COPY OF THE CHARGE MEMO NO. 4683 DATED 21.1.2000. EXT.P15 - TRUE COPY OF THE LETTER DATED 12.2.2000 SUBMITTED BY THE PETITIONER TO THE 3RD RESPONDENT. EXT.P16 - TRUE COPY OF THE LETTER DATED 21.3.2001 SUBMITTED BY THE PETITIONER TO THE 6TH RESPONDENT. EXT.P17 - TRUE COPY OF THE ENQUIRY PROCEEDINGS DATED 29.1.2001. EXT.P18 - TRUE COPY OF THE ENQUIRY PROCEEDINGS DATED 3.2.2001. EXT.P19 - TRUE COPY OF THE ENQUIRY PROCEEDINGS DATED 5.2.2001. EXT.P20 - TRUE COPY OF THE ENQUIRY PROCEEDINGS DATED 9.3.2001. EXT.P21 - TRUE COPY OF THE JUDGMENT DATED 7.11.2000 IN O.P. 30843/2000 OF THIS HONOURABLE COURT. WP(C).No. 27747 of 2005(C) -2- EXT.P22 - TRUE COPY OF THE REPRESENTATION DATED 23.3.2001 MADE BY THE PETITIONER TO THE 6TH RESPONDENT. EXT.P23 - TRUE COPY OF THE REPRESENTATION DATED 11.5.2001 MADE BY THE PETITIONER. EXT.P24 - TRUE COPY OF THE REPRESENTATION DATED 11.5.2001 MADE BY THE PETITIONER. EXT.P25 - TRUE COPY OF THE REPRESENTATION DATED 14.8.2001 MADE BY THE PETITIONER TO THE 3RD RESPONDENT. EXT.P26 - TRUE COPY OF THE MEMO NO. 4683 DATED 25.9.2001 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER. EXT.P27 - TRUE COPY OF THE DETAILED REPLY TO EXHIBIT P6 ON 15.11.2001 SUBMITTED BY THE PETITIONER TO THE 3RD RESPONDENT. EXT.P28 - TRUE COPY OF THE ORDER NO. 4683 DATED 20.4.2002 ISSUED BY THE 3RD RESPNDENT TO THE PETITIONER. EXT.P29 - TRUE COPY OF THE APPEAL DATED 10.6.2002 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXT.P30 - TRUE COPY OF THE ARGUMENT NOTE SUBMITTED BY THE PETITIONER. EXT.P31 - TRUE COPY OF THE ORDER NO. 4683 DATED 14.11.2002 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER. EXT.P32 - TRUE COPY OF THE JUDGMENT DATED 5.1.2005 IN O.P. 30517/2001 OF THIS HONOURABLE COURT. EXT.P32(a) - TRUE COPY OF THE REVIEW PETITION DATED 12.10.2004 SUBMITTED BY THE PETITIONER TO THE 1ST AND 2ND RESPONDENTS. EXT.P32(b) - TRUE COPY OF THE REPRESENTATION IN MALAYALAM TO THE DATED 16.3.2005 TO THE BOARD OF DIRECTORS. EXT.P33 - TRUE COPY OF THE ORDER NO. 4683 DATED 15.6.2005 ISSUED BY THE 3RD RESPONDENT. EXT.P34 - TRUE COPY OF THE LETTER NO.070/P DATED 25.4.2000 SUBMITTED BY SRI. ISSAC, SENIOR MANAGER. EXT.P35 - TRUE COPY OF THE LETTER NO. 6343/IAD/HO DATED 4.7.2000 ISSUED BY THE INTERNAL AUDIT OFFICER, IAD H.O., TRUCHUR TO MR. ISSAC. EXT.P36 - TRUE COPY OF THE CIRCULAR NO. 46/97 DATED 16.10.1997 ISSUED BY THE 3RD RESPONDENT. EXT.P37 - TRUE COPY OF THE CIRCULAR NO. 29/96 DATED 16.9.1996 ISSUED BY THE RESPONDENT NO.3. EXT.P38 - TRUE COPY OF THE NOTE DATED 1.2.1999 ISSUED BY THE PETITIONER TO MR. K. RAVINDRANATH. // TRUE COPY // PA TO JUDGE rhs S.SIRI JAGAN, J - - - - - - - - - - - - - - - - - - - - - - - W.P(C)No. 27747 of 2005 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 16th day of January, 2009 J U D G M E N T The petitioner was the branch manager of the 1st respondent company at Thrissur and Ernakulam. Disciplinary proceedings were initiated against him in respect of two memos of charges Exts.P1 and P14. An enquiry was conducted in which the petitioner was found guilty of some of the charges. Initially against the order of punishment of dismissal from service, he filed an appeal before the appellate authority, which was dismissed. The petitioner challenged the proceedings before this court by filing O.P. No. 30517 of 2001, in which the appellate order was quashed and the appellate authority was directed to reconsider the appeal on merits. The appellate authority accordingly reconsidered the appeal and passed Ext.P33 order, whereby modifying the punishment of dismissal, the petitioner was allowed to join as Grade IV Manager with no independent charge throughout his remaining service. He was also denied backwages or other benefits for the interregnum period during which he was out of service on account of his dismissal from service. It was further directed to recover from the petitioner an amount of Rs. 2,37,000/- alleged to be loss caused to the 1st respondent on account of the misconducts proved against the petitioner. The petitioner is challenging Ext.P33 seeking the following reliefs: W.P(C)No. 27747 of 2005 - 2 - “(i) Quash Exhibits P1, P14, P28 and P33 by the issuance of a writ of certiorari or any other appropriate writ, order or direction. (ii) Issue a writ of mandamus or any other appropriate writ, order or direction commanding the respondents to reinstate the petitioner to the post of Senior Manager with all consequential benefits with effect from 20.4.2002. (iii) Issue a writ of mandamus or any other appropriate writ, order or direction commanding the respondents to pay back the money already recovered from the petitioner pursuant to Exhibit P32 with interest at the rate of 18% per annum.” 2. The petitioner challenges both the enquiries on several grounds which are: (i) In both enquiries after the management evidence was over, the requests for adjournment filed by the petitioner for adducing evidence were rejected and the enquiry was proceeded with ex-parte, which constitutes violation of principles of natural justice. (ii) In the first enquiry, although the petitioner submitted Ext.P6 application for causing production of documents by the management, the management representative refused to produce the same as evidenced by Ext.P7, on which enquiry officer did not pass any orders. That being so, the enquiry is vitiated by principles of natural justice, in so far as the enquiry officer failed to take action on the petition filed by the petitioner. (iii) All along, in both enquiries, the enquiry officers were biased against the petitioner. 3. The petitioner further submits that the recovery of the alleged loss is unsustainable, in so far as the amount represented loan amounts due from W.P(C)No. 27747 of 2005 - 3 - M/s. Concert Capital Limited which was adequately secured by the security furnished by them and therefore it was for the 1st respondent to proceed against the party and to recover the said amounts. Having failed to do so, the 1st respondent cannot seek to recover the same from the petitioner in so far as the non-recovery of the loan amount is not on account of any misconduct committed by the petitioner. 4. In answer to the to the above contentions a counter affidavit has been filed in which the respondents have denied all the allegations of the petitioner. The counsel for the 1st respondent would contend that the enquiries were conducted validly and properly with adequate opportunity to the petitioner to defend himself and after the management evidence was over he deliberately failed to attend the enquiry on flimsy excuses. According to the counsel for the 1st respondent, the documents requested for by the petitioner by Ext.P6 are documents not relevant to the enquiry at all and that is why the request was not considered. As regards, the recovery of loss is concerned, the contention is that the said company M/s. Concert Capital Limited was wound up and no amount could be recovered from them. At one time, the said amount of Rs. 2,37,000/- available for disbursal to the said company with the 1st respondent, which could have been adjusted against the loan amounts due from the company was allowed by the petitioner to be withdrawn by the said company irregularly, which is one of the misconducts proved against the petitioner. If the petitioner had withheld that amount, that W.P(C)No. 27747 of 2005 - 4 - much amount due from the said company could have been recovered which was lost because of the misconduct committed by the petitioner. Therefore there is no merit in the contention that there was no loss caused to the 1st respondent on account of the misconducts committed by the petitioner, is the contention raised by the 1st respondent. 5. I have heard the rival contentions in detail. 6. Ext.P1 is the first charge sheet issued to the petitioner. Six charges were levelled against him, out of which charge Nos. 1 and 4 in full and Charge No. 6 in part were found to have been proved, by the enquiry officer. The proved charges read as follows: “1. That you, in blatant violation of the provision of the Kerala Chitties Act and the MOP and with ulterior motive, in collusion with one Sri. K.N. Sankaranarayanan and Sri. K.C. Varghese, assigned four tickets, ie. Chittal Nos. 37 to 40, in Chitty No. 36/97 which registered on 21.07.97, to Sri. K.N. Sankaranarayan by collecting the first instalment amount by cheque No.530933 and included these tickets in the 1st auction of the Chitty conducted on 23.7.97. The above subscriber, Sri. K.N.Sankaranarayanan purposely got the cheque dishonoured on finding that none of the four tickets could be prized in the 1st auction conducted on 23.7.97. Besides your above action, being highly irregular, have entailed huge financial commitment and loss to the Company in as much as the Company had to find its own resources to meet prize money payments. 2. xxx xxx xxx xxx xxx 3. xxx xxx xxx xxx xxx 4. You had deferred the payment of agency commission for the above tickets on 23.7.97 when you met the claim for agency commission for the other tickets canvassed by Sri. Varghese for this chitty noting the reason that the cheque for the same is not cleared. This statement shows that you were aware of the fact of bouncing of the cheque for Rs.40,000/-. But subsequently, on settling the agency commission payable for chitty No. 35/97 you paid the agency W.P(C)No. 27747 of 2005 - 5 - commission of ticket numbers 37 to 40 in chitty No. 36/97 also amounting to Rs.6,000/- neglecting your earlier comments in the register regarding the issue. This has led to a pecuniary loss of Rs. 6,000/- to the company which is gross abuse of your official position and amounts to serious misconduct of cheating, dishonesty, fraud, breach of the rules, loss to the Company etc. under the Standing Orders of the Company warranting severe disciplinary action against you. 5. xxx xxx xxx xxx xxx 6. It is also alleged that, you, Sri. K.P. Kurian, Senior Manager, Thrissur Main Branch had refused to comply with the directions from the Regional Office which tantamount to wilful disobedience warranting severe disciplinary action. Vide the Circular No. 4697 dated 16.10.97 you were specifically required to furnish the statement of default collected during each month beginning from September 1997 to Regional Office, Thrissur in the proforma prescribed in the circular. You had in blatant violation of the instruction given, neither provided the date called for to the Regional Manager, Thrissur nor intimated the reason for non compliance of the instruction to R.O. till the A.N. of 26.11.1997. As the details called for were to be collected, consolidated and presented by the Regional Manager in the R.M's conference scheduled to be held in the H.O. on 28.11.1997, the Regional Manager entrusted Sri. K. Krishnankutty Menon, Manager, Regional Office, Thrissur to collect the information from your branch and accordingly he contacted your over phone on 27.11.97 forenoon and requested you to provide the data, on behalf of the Regional Manager, Thrissur. But you had replied to Sri. Krishnankutty Menon in a very irresponsible manner stating that the required information extracted from the Branch may be collected by the R.Ms Office initiative and arrangements since your branch has no hand to spare the carryout the work. It has been also reported that your above defiant and obstinate attitude has affected the tabulation of the required details to be presented in the conference. This sort of wilful disobedience of lawful order of the superiors and flouting the directions of the H.O. and R.O. constitutes gross misconduct as per the standing orders of the Company. Your above acts scuttled the attempts made by the Company for the successful implementation of the intensive drive for the default collection. It also affected the morale of the other staff members and officers of the Company. W.P(C)No. 27747 of 2005 - 6 - xxx xxx xxx xxx xxx 7. Ext.P14 is the second charge memo in which except charge No. 5(i) all the other charges were found to have been proved. The said charge memo reads thus: “You, Shri. K.P. Kurian, were issued with a memo vide reference cited (i) above show cause as to why disciplinary proceedings should not be initiated against you for certain misconducts alleged to have been committed by you while you were working as Senior Manager (Unit Head) of Ernakulam Main Branch. Your explanation to the said show cause notice vide referred cited (2) above was carefully gone through by the undersigned. I find that your arguments in the explanation are frivolous and misrepresentation of facts. Your counter allegations of having shown Vendetta, Victimisation etc. due to your association with the Union in which you are reported to be an office bearer are baseless and devoid of any merit for consideration. Your explanation, in fact, manifests your malafide intention with which the alleged acts of misconduct were carried out and the pre-planned attempt to refuge under the provisions of Chitties Act in respect of substitution and transfer, where as, as a matter of fact, those provisions in the Act will not help to lessen the damages caused to the Company on account of your alleged misconducts. In the circumstances, your explanation is found not satisfactory and the following charges have been levelled against you. 1. That you conspired with Chitty Canvasing Agent Smt. C.K. Shiji (Agency No. 1027-245) and a coterie of 10 persons and registered, with Sub Registry Office, Ernakulam, Chitty No. 62/99 having a sale of Rs.3,00,000/- with 100 months duration and 100 tickets with a monthly subscription of Rs. 3,000/-. You, with ulterior motive allotted all the 99 tickets open for public subscription in the Chitty No the coterie of 10 persons of your choice under a plot hatched to facilitate the coterie to syphon off Company money of the order of lakhs of rupees. 2. You, with intend to prevent joining in the Chitty any person other than the above said coterie, chose not to publicise the details of the Chitty through notices and through monthly instalment W.P(C)No. 27747 of 2005 - 7 - intimation cadre contrary to the procedure in vogue. You have thus misused your official proposition as the Head of Ernakulam Main Branch to protect the nefarious interests of the coterie from being thwarted by others who would have been got enrolled as subscribers in the Chitty if the chitty details were made public through notices and through the monthly instalment intimation cards sent out to the customers from the Branch as per the procedure in vogue. 3. You, as part of the above said conspiracy and with pecuniary motives, paid Rs. 44,550/- under the guise of Agents Commission for all the tickets purported to have been canvassed by Smt. C.K. Shaji, whereas, as a matter of fact, the Chitty was floated under the plot hatched by you. You with intend to made it appear that all the tickets were canvassed by the agent, facilitated to affix the Agents' seal in the application in respect of all the tickets. 4. You, again colluded with Smt. C.K.Shaji, Agent No. 1027-245 and another coterie with pecuniary motives and arranged for registration of two more chitties with a sala of Rs. 5 lakhs each having 100 tickets each with monthly subscription of Rs. 5,000/- and duration of 100 months. You with ulterior motive, allotted all the tickets open for public subscription in the Chitties to the coteries of your choice to facilitate the coterie to syphon off Company money which would have caused additional financial loss to the Company to the tune of a few crores had the plot been not thwarted by the Head office through a direction given to you not to proceed with the registration of the Chitty. You also prevented persons other than the coterie joining the chitty by abstaining from publishing the details through notices and monthly intimation cards with intend to protect the nefarious interest of the coteries from being thwarted by others who would have been got enrolled as subscribers in the chitty if the Chitty details were made public. 5. You, with intend to perpetuate your fradulant acts chose the ignore the following well meaning evidences to show that chitty No. 62/99 has been cornered by the coterie. i) The first instalment of all the tickets were remitted in a single stretch by a single person Shri. K.M. George in whose name tickets No. 51 to 60 were allotted.” ii) The absence of proxy to participate in the auction upto a discount of 30% of the chitty sala as has been experience in all the 100 months chitty hence forth started in the Company. W.P(C)No. 27747 of 2005 - 8 - iii) The negligibly low rate of auction discount forgone in the 2nd and 3rd auction of the Chitty contrary to the experience of 100 months chitties in the Company. iv) The default committed in all the tickets other than a meagre 5 numbers. 6. You in utter disregard to the interest of the Company and in collusion with M/s. Concert Capital Ltd., recognised the transfer of two tickets Nos. 26 and 27 in chitty No. 63/97 having a paid up amount of Rs. 1,22,500/- and Rs. 1,15,000/- respectively held by M/s. Concert Capital Ltd. in the name of one Shri. Joy S. Palikkara and another Shri. K.P. Joseph respectively while there was heavy subsisting arrears in the repayment of chitty loan interest and chitty instalments recoverable from M/s. Concert Capital Ltd. which has since been referred for R.R. action. 7. You misused your official position as the Head of Ernakulam Main Branch with pecuniary motives to the advantage of the above said M/s. Concert Capital Ltd. by facilitating them to take away a sum of Rs, 2,37,000/- from the dominion of the Company. The said sum could have been appropriated towards the overdue loan accounts of M/s. Concert Capital Ltd. which has since been referred for R.R. Action had the transfer been disallowed by you. 8. You have, by recognizing the above said transfer of chitties, violated Section 32 of Kerala Chitties Act according to which transfer of chitties under Secion 31 of the Act shall be recognised by the Foreman unless the transfer was effected with a view to defeat the provisions of any law. In this case, you chose to ignore the fact that the transfer was effected with intend to take away the money from the dominion of the Company and to scuttle the right of the Company to appropriate the amount towards the overdue loan accounts of the transferor himself causing pecuniary loss to the Company and protecting the ill-conceived motive of M/s. Concert Capital Ltd. 9. You have railed to accomplish your implied functions, as the Head of a Unit, of safeguarding the money, materials and interest of the Company and of its customers. You also chose to abstain from observing the transparency as in vogue in the Company with intend to protect your ill-conceived plan being scuttled. You, in fact, have degraded yourself to the position of an agent for pilfering the money and materials of the Company to your favourites for pecuniary gains. You are hereby called upon to explain why appropriate disciplinary W.P(C)No. 27747 of 2005 - 9 - actions should not be taken against you for the above said misconducts, within 7 days of receipt of this memo, failing which it will be presumed that you have no explanation to offer and actions will be taken on that presumption.” 8. The petitioner's first contention is that the adjournment requests of the petitioner in both enquiries were arbitrarily denied by the enquiry officer. Ext.P9 is the request for adjournment of the 1st enquiry posted on 23.7.1999. In that, by Ext.P9 dated 14.7.1999, the petitioner requested for adjournment of the enquiry posted on 23.7.1999, on the ground that on 24.7.1999 the petitioner has to attend the regional conference of Managers at Aluva, for which he had to collect several statements and details and therefore he is not in a position to attend the enquiry on 23.7.1999. However, without considering the request, the enquiry officer proceeded with the enquiry and completed the same ex-parte. According to the petitioner, this amounts to serious violation of principles of natural justice in so far as the petitioner was prevented from defending himself in the enquiry by adducing evidence. Although, the arguments of the petitioner sounds attractive, I note that in the petitioner's representation on the enquiry report, namely Ext.P11, the petitioner had not raised such a contention at all. It is only later in the appeal before the appellate authority that the petitioner raised this contention first. Therefore clearly this is an after-thought and it is not because of any prejudice caused to the petitioner that he had raised this contention, but only to find out a defence to defeat the enquiry. Further it is clear that the petitioner did not do W.P(C)No. 27747 of 2005 - 10 - any thing after requesting for adjournment of the enquiry was turned down, although, the enquiry was completed and the report submitted long thereafter. In fact, the enquiry report was forwarded to the petitioner under cover of letter dated 23.3.2000. For the period from 23.7.1999 till 23.3.2000, the petitioner did not bother even to enquire as to what happened in the enquiry. During the said period of 8 months, the petitioner could have requested the enquiry officer to re-open the proceedings to enable him to adduce evidence in defence. On the other hand he did not even bother to