IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 4-7-2008 CORAM: THE HONOURABLE MR.JUSTICE N.PAUL VASANTHAKUMAR W.P.No.35556 of 2007 & M.P.Nos.1 and 2 of 2007 W.P.No.35557 of 2007 & M.P.Nos.1 and 2 of 2007 W.P.No.35556 of 2007 R.S.Hari Shankar ... Petitioner Vs. 1. The General Manager, United India Insurance, Head Office, No.676, P.B.No.676, Whites Road, Chennai - 600 014. 2. The Divisional Manager, United India Insurance, Divisional Office, II Floor, Raji Buildings, 212, Anna Salai, Chennai - 600 006. ... Respondents PRAYER: Petition filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified mandamus calling for the concerned records relating to the order of the first respondent dated 13.8.2007 bearing ref No.Ref.HO:G.48(CBI):2007 quash the same and consequently direct the respondents not to proceed with the impugned order till the criminal appeal No.156 of 2007 on the file of this court is finally disposed of. W.P.No.35557 of 2007 J. Vasanth Kumar ... Petitioner Vs. General Manager, United India Insurance, Head Office, No.676, P.B.No.676, Whites Road, Chennai - 600 014. ... Respondent https://hcservices.ecourts.gov.in/hcservices/ PRAYER: Petition filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified mandamus calling for the concerned records relating to the order of the respondent dated 13.8.2007 bearing ref No.Ref.HO:G.48(CBI):2007 quash the same and consequently direct the respondents not to proceed with the impugned order till the criminal appeal No.156 of 2007 on the file of this court is finally disposed of. For Petitioners : Mr.N.G.R.Prasad for M/s.Row & Reddy For Respondents : Mr.A.L.Somayaji, Senior Counsel for Mr.V.Perumal COMMON ORDER By consent of both parties, the writ petitions are taken up for final disposal. 2. Prayer in these writ petitions are to quash the show cause notice issued against the petitioners dated 13.8.2007 and for consequential direction to the first respondent not to proceed with the impugned show cause notice till the criminal appeal preferred by them is finally disposed of. 3. Petitioner in W.P.No.35556 of 2007 was appointed as sub- staff in the respondent Company on 18.12.1991 and he was promoted in the year 1998 as record clerk and he is now working in the Divisional Officer, Rajaji Salai, Chennai - 6. 4. Petitioner in W.P.No.35557 of 2007 was appointed as Assistant Administrative Officer in the year 1981 in the respondent Insurance Company and in the year 2000, he was promoted as Senior Divisional Manager and now he is posted as Manager, Personnel and Administration at Kerala. 5. According to the petitioners, after privatisation of Insurance business, there was a stiff competition from the private Insurance Companies as well as from multi nationals and as part of the business strategy, there is a practice of giving gifts to important customers. The accounts manual issued by the Company in the year 1994 states that there is a practice of purchasing and giving gifts to promote business, which was restricted upto Rs.1,000/- subsequently. There is provision for spending amount towards gifts. 6. The petitioners purchased gifts under the head stationary and printing and gave the gifts to important customers to improve https://hcservices.ecourts.gov.in/hcservices/ the business. For raising the bill under the head stationary and encashment of the bills, Criminal Case No.4 of 2002 was filed against the petitioners before the Additional Special Judge for CBI Cases, Chennai. Petitioners were charged for the offence of conspiracy and cheating the company to the tune of Rs.2,07,230/-. The learned Additional Special Judge for CBI Cases, Chennai in his judgment dated 31.1.2007 convicted the petitioner in W.P.No.35556 of 2007 (A1) and petitioner in W.P.No.35557 of 2007 (A2) under the offences under sections 120B read with 420, 468, 468 read with 471 IPC and under Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988. As against the said conviction and sentence, Criminal Appeal No.156 of 2007 was filed before this Court and on 15.2.2007 the said criminal appeal was admitted and suspension of sentence was ordered and petitioners were enlarged on bail. According to the petitioners they have submitted representation to the General Manager, who is the disciplinary authority, and requested not to take any disciplinary action pending criminal appeal. 7. The respondent issued show cause notice on 13.8.2007 relying on the conviction imposed by the criminal court and in terms of Rule 23 of the GI (CDA) Rules, 1975, read with Rule 30(1) of the said rules and directed the petitioners to submit their explanation as to why they shall not be dismissed from service by giving 15 days time to submit their explanation. Petitioners submitted their explanation for the said show cause notice dated 12.9.2007 and 10.9.2007 respectively by stating that the suspension of sentence has been granted by this Court and the main appeal is pending and if dismissal order is passed at this point of time, irreparable damage will be caused to them even before the final order is passed in the criminal appeal. The said show cause notices are challenged by the petitioners by filing these writ petitions on 21.11.2007. 8. In W.P.No.35557 of 2007, the Deputy General Manager of the respondent Insurance Company gave a certificate dated 12.9.2007 stating that continuance of the petitioner in the region will benefit the region. The said show cause notice is challenged on the ground that the respondent has pre-determined the issue and proposed the penalty of dismissal from service, when the criminal appeal is pending before this Court. The criminal court has not applied its mind in proper perspective and rule 23 enables the disciplinary authority to impose minor or major penalties and proposing major penalty of dismissal is not proportionate to the gravity of the allegations. 9. The respondents have filed counter affidavit by stating that the Special Judge for CBI Cases, Chennai, in C.C.No.4 of 2004 convicted the petitioners for serious offences including Sections 120B, 420, 468, 471 IPC as well as section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988. Once cheating and https://hcservices.ecourts.gov.in/hcservices/ criminal conspiracy have been proved, and the petitioners are convicted and sentenced to undergo rigorous imprisonment for one year and also to pay a fine of Rs.20,000/- each on three counts, the petitioners have no right to challenge the show cause notice as the respondent is empowered to impose penalties under Rule 30(1) of the rules. After considering the reply to the show cause notice, the disciplinary authority passed the order of dismissal on 11.10.2007. However, the same is not communicated in view of the grant of stay by this Court. Ultimately it is stated in the counter affidavit that the writ petition is premature and the same is to be dismissed. 10. The learned counsel for the petitioners submitted that the sentence imposed against the petitioners are suspended and the criminal appeal has been admitted and the petitioners are having a fair chance of success in the criminal appeal and at this stage the respondents are not entitled to issue the show cause notices calling upon the petitioners to reply as to why they shall not be dismissed. The learned counsel also cited the judgment of the Supreme Court reported in (2008) 2 MLJ 1061 (State of M.P. v. Hazarilal) in support of his contention. The learned counsel further submitted that the respondent has pre-determined his mind, which is reflected in the show cause notices and on that ground the petitioners are entitled to challenge the show cause notice as per the judgment of the Supreme Court reported in (2007) 2 MLJ 295 (Siemens Ltd. v. State of Maharashtra). Ultimately the learned counsel submitted that even if the respondent is empowered to take action, the extreme penalty of dismissal need not be proposed and some lesser punishment can be imposed. 11. The learned Senior counsel for the respondents on the other hand submitted that admittedly the petitioners are convicted for very serious criminal offences viz., cheating, criminal conspiracy, etc., and the conviction imposed against the petitioners are still in operation as no stay is granted with regard to the conviction by this court. Therefore a convicted person for serious offences cannot be retained in the service. The learned Senior Counsel further submitted that under Rule 30(1) special procedure is contemplated for imposing penalties specified in Rule 23 and even show cause notice need not be given by the respondents to impose penalty in terms of rule 30(1). The learned Senior Counsel further submitted that prima facie opinion alone was formed by the respondent while issuing the show cause notice and merely by expressing the word "I am of the view", the petitioners cannot contend that the respondent has pre-determined his mind and it is only a provisional conclusion of prima facie view, which can be changed if sufficient and acceptable explanation is submitted. Therefore, the judgment relied on by the petitioner reported in (2007) 2 MLJ 295 (cited supra) cannot be applied to the facts of these cases. Similarly the judgment relied on by the petitioners' counsel reported in (2008) 2 MLJ 1061 (cited supra) has also no https://hcservices.ecourts.gov.in/hcservices/ application to the facts of the case as the petitioners have committed serious criminal offences holding responsible positions dealing with monetary transactions. The learned counsel also cited the judgments of the Supreme Court reported in (1995) 3 SCC 377 (Deputy Director of Collegiate Education (Admn) v. S.Nagoor Meera), (1997) 11 SCC 383 (Union of India v. V.K.Bhaskar), 2008 (3) CTC 511 (SC) (Union of India v. Vicco Laboratories) and (2006) 10 SCC 509 (Union of India v. State of Bihar) in support of his contention and prayed for dismissal of the writ petitions. 12. I have considered the rival submissions made by the learned counsel for the petitioners as well as the learned Senior Counsel for the respondents. Admittedly petitioners have been proceeded for the offences under sections 120B read with 420, 468, 468 r/w 471 IPC and section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988, before the Additional Special Judge of CBI Cases, Chennai, and the petitioners were convicted for the said offences. It is also an admitted case of the petitioners as well as respondents that in criminal appeal No.156 of 2007 the suspension of sentence alone was granted in M.P.No.1 of 2007, order dated 15.2.2007 and the conviction was not stayed and the criminal appeal is pending. 13. The offences proved against the petitioners are very serious in nature. The proved offences and punishment imposed on the petitioners are as follows: "1. Offence under Section 120-B r/w 420 IPC - Sentenced to undergo RI for one year and also pay a fine of Rs.20,000/-, in default to undergo SI for three months. 2. Offence under Section 468 IPC - Sentenced to undergo RI for one year and also pay a fine of Rs.20,000/-, in default to undergo SI for three months. 3. Offence under section 468 r/w 471 IPC - Sentenced to undergo RI for one year and also pay a fine of Rs.20,000/-, in default to undergo SI for three months. 4. Offence under section 13(2) r/w 13 (1)(d) of Prevention of Corruption Act, 1988 - Sentenced to undergo RI for one year and also pay a fine of Rs.20,000/-, in default to undergo SI for three months." It is the specific case of the petitioners that pursuant to the impugned show cause notices, petitioners have submitted their explanation on 12.9.2007 and 10.9.2007. Rule 30 of the General Insurance (Conduct, Discipline & Appeal) Rules, 1975, reads as follows: "30. Special procedure in certain cases. https://hcservices.ecourts.gov.in/hcservices/ Notwithstanding anything contained in Rule 25 or 26 or 27, the Competent Authority may impose any of the penalties specified in Rule 23 in any of the following circumstances: i. the employee has been convicted on a criminal charge, or on the strength of fact or conclusions arrived at by a judicial trial; or ii. Where the Competent Authority is satisfied for reasons to be recorded by it in writing that it is not reasonably practicable to hold an inquiry in the manner provided in these Rules; or iii. Where the Competent Authority is satisfied that in the interest of the security of the Corporation/Subsidiary it is not expedient to hold any inquiry in the manner provided in these rules; iv. Where an employee has abandoned his post the Competent Authority may consider the circumstances of the case and pass such orders thereon as it deems fit. Explanation: For the purpose of this rule, an employee shall be deemed to have abandoned his post if he absents himself from duty without leave or overstays his leave for a continuous period of 90 days without any intimation therefor in writing." From the perusal of the above rule, which is admittedly applicable to the petitioners, it is evident that if an employee is convicted of a criminal charge or on the strength of fact or conclusion arrived at in a judicial trial, the competent authority may impose any of the penalties specified in Rule 23. One of the penalty specified in Rule 23 is dismissal from service. Therefore it is open to the respondents to pass dismissal order based on the conviction, even without issuing show cause notice. 14. A perusal of the show cause notice discloses a fact that the respondent only relied upon the judgment of the criminal court and opined that the allegations proved against the petitioners are grave and serious, which warrants imposition of penalty of dismissal from service. The said statement cannot be treated as pre-determination of the issue, because the charges proved against https://hcservices.ecourts.gov.in/hcservices/ the petitioners are grave and serious, dealing with the funds of the respondent company. 15. The learned counsel for the petitioners argued that the petitioners have got a very good case on merits in the criminal appeal. I am not expressing any opinion with regard to the above submission as it is for the appellate Court while dealing with the criminal appeal to decide the merits of the case. 16. The judgment cited by the learned counsel for the petitioner reported in (2007) 2 MLJ 295 (cited supra) will not apply to the facts of this case. The conviction for the involvement of criminal offences of grave and serious nature, committed by the petitioners as on today are not in dispute. Mere expression of the word after analysing the criminal court judgment and stating that the respondent is of the view that the allegations proved are grave and serious and warrants imposition of penalty of dismissal from service is only a provisional satisfaction recorded, which may or may not be changed after considering the explanation. Therefore I am of the view that merely by using the said words, it cannot be said that the respondent has pre-determined the issue. 17. The facts in the Judgment of the Supreme Court reported in (2008) 2 MLJ 1061 (cited supra) are distinguishable. There, the person involved was a peon appointed in a middle school. He said to have assaulted another person, for which he was prosecuted and convicted and sentenced to pay a fine of Rs.5,000/-. On the basis of the said facts and allegations of trivial offence, the Supreme Court took a view that for such an offence committed by a peon, punishment of dismissal from service is violative of doctrine of proportionality. Hence the petitioners cannot draw any analogy on the basis of the said judgment since the criminal offences proved against the petitioners are grave and serious in nature. 18. (a) In the decision reported in (1995) 3 SCC 377 (Deputy Director of Collegiate Education (Admn) v. S.Nagoor Meera) the Supreme Court considered the effect of suspension of sentence and in paragraphs 7 and 8 held thus, "7. This clause, it is relevant to notice, speaks of “conduct which has led his conviction on a criminal charge”. It does not speak of sentence or punishment awarded. Merely because the sentence is suspended and/or the accused is released on bail, the conviction does not cease to be operative. Section 389 of the Code of Criminal Procedure, 1973 empowers the appellate court to order that pending the appeal “the execution of the sentence or order appealed against be suspended and, also, if he is in confinement, that he be released on bail, or https://hcservices.ecourts.gov.in/hcservices/ on his own bond”. Section 389(1), it may be noted, speaks of suspending “the execution of the sentence or order”, it does not expressly speak of suspension of conviction. Even so, it may be possible to say that in certain situations, the appellate court may also have the power to suspend the conviction — an aspect dealt with recently in Rama Narang v. Ramesh Narang. At pages 524 and 525, the position under Section 389 is stated thus: (SCC pp.524-525, paras 15 and 16) “Section 389(1) empowers the Appellate Court to order that the execution of the sentence or order appealed against be suspended pending the appeal. What can be suspended under this provision is the execution of the sentence or the execution of the order. Does ‘order’ in Section 389(1) mean order of conviction or an order similar to the one under Section 357 or Section 360 of the Code? Obviously the order referred to in Section 389(1) must be an order capable of execution. An order of conviction by itself is not capable of execution under the Code. It is the order of sentence or an order awarding compensation or imposing fine or release on probation which are capable of execution and which, if not suspended, would be required to be executed by the authorities. * * * In certain situations the order of conviction can be executable, in the sense, it may incur a disqualification as in the instant case. In such a case the power under Section 389(1) of the Code could be invoked. In such situations the attention of the Appellate Court must be specifically invited to the consequence that is likely to fall to enable it to apply its mind to the issue since under Section 389(1) it is under an obligation to support its order ‘for reasons to be recorded by it in writing’. If the attention of the Court is not invited to this specific consequence which is likely to fall upon conviction how can https://hcservices.ecourts.gov.in/hcservices/ it be expected to assign reasons relevant thereto? ... If such a precise request was made to the Court pointing out the consequences likely to fall on the continuance of the conviction order, the Court would have applied its mind to the specific question and if it thought that case was made out for grant of interim stay of the conviction order, with or without conditions attached thereto, it may have granted an order to that effect.” 8. We need not, however, concern ourselves any more with the power of the appellate court under the Code of Criminal Procedure for the reason that what is relevant for clause (a) of the second proviso to Article 311(2) is the “conduct which has led to his conviction on a criminal charge” and there can be no question of suspending the conduct. We are, therefore, of the opinion that taking proceedings for and passing orders of dismissal, removal or reduction in rank of a government servant who has been convicted by a criminal court is not barred merely because the sentence or order is suspended by the appellate court or on the ground that the said government servant- accused has been released on bail pending the appeal." (Emphasis Supplied) (b) In the decision reported in (1997) 11 SCC 383 (Union of India v. V.K.Bhaskar) in paragraph 7 and 8 held as follows: "7. ...... The order of dismissal has to be read as a whole. If it is thus read, it would be found that in the first paragraph of the order the authority has referred to the fact of the respondent having been convicted on a criminal charge under Section 5(1)(c) read with Section 5(2) of the Prevention of Corruption Act, 1947 and Sections 409, 477-A and 120-B IPC and his having been awarded the penalty of rigorous imprisonment for one year and a fine of Rs.500 by the Special Judge, Jalandhar, on 17-5-1985. In the second paragraph of the said order the disciplinary authority has stated: “It is considered that the conduct of Shri Vinod Kumar Bhaskar which has led to his conviction is such as to render https://hcservices.ecourts.gov.in/hcservices/ his further retention in the public service undesirable/the gravity of the charge is such as to warrant the imposition of a major penalty for misappropriation of a sum of Rs.300 (approx.) along with other accused Man Singh, Jawala Das and Kewal Chander Kumar.” 8. The said statement in the order of dismissal indicates that the disciplinary authority has applied its mind and after considering the conduct of the respondent which has led to his conviction on a criminal charge, has arrived at the conclusion that the said conduct was such as to render the further retention of the respondent in the public service undesirable. It cannot, therefore, be said that the order of dismissal was passed without the disciplinary authority applying its mind to the nature of the conduct of the respondent which led to his conviction on a criminal charge and which has rendered him undesirable to be retained in service." (Emphasis supplied) (c) In the decision reported in (2006) 10 SCC 509 (Union of India v. State of Bihar) in paragraph 4 it is held that taking action against the person on the basis of the criminal court conviction are matters governed by service rules and the service rules must be allowed to operate in such cases. "4. We have perused the order passed by the High Court dated 13-3-2000. The High Court while exercising its criminal jurisdiction could either have convicted the accused or acquitted him of the charge levelled against him, and could pass any other order which it is authorised to pass in exercise of its criminal jurisdiction. However, in exercise of such jurisdiction it could not have issued a direction that the conviction of the respondent will not affect his service career, because the High Court in exercising its criminal jurisdiction has no authority to prevent the legal consequences which follow the conviction of a government servant. Those are matters governed by the Service Rules, and the Service Rules must be allowed to operate in https://hcservices.ecourts.gov.in/hcservices/ such cases. We, therefore, find that the direction contained in the last part of the order of the High Court dated 13-3-2000 was an order passed without jurisdiction and, therefore, must be treated as invalid and non est. We, therefore, allow this appeal and declare that the direction made by the High Court in Crl. Revision No. 6 of 2000 by order dated 13-3-2000 to the effect that the order of conviction will not affect the service career, including payment of retiral benefits to Respondent 2 shall be ignored by the authority concerned as being without jurisdiction, invalid and non est. The appeal is allowed." (d) In 2008 (3) CTC 511 (SC) (Union of India v. Vicco Laboratories) the Supreme Court considered the scope of interference in show cause notices. In para 30 it is held thus, "30. Normally, the Writ Court should not interfere at the stage of issuance of show cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the concerned authorities and to satisfy the concerned authorities about the absence of case for proceeding against the person against whom the show cause notices have been issued. Abstinence from interference at the stage of issuance of show cause notice in order to relegate the parties to the proceedings before the concerned authorities is the normal rule. However, the said rule is not without exceptions. Where a Show Cause notice is issued either without jurisdiction or in an abuse of process of law, certainly in that case, the Writ Court would not hesitate to interfere even at the stage of issuance