*THE HON’BLE MR JUSTICE L.NARASIMHA REDDY WRIT PETITION No. 3447 OF 2007 % 28-08-2008 # D. Komaraiah …Petitioner and $ The Chairman and Managing Director, Singareni Collieries Company Ltd, Kothagudem. …Respondents ! COUNSEL FOR PETITIONER: Sri S. Gopal Rao ^ COUNSEL FOR RESPONDENT: Sri Nandigam Krishna Rao, S.C. < Gist: > Head Note: ? CITATIONS: 1. (2007) 1 SCC 663 2. (2008)2 SCC 41 THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY WRIT PETITION No. 3447 OF 2007 O R D E R: The petitioner joined as Junior Engineer E1-Grade, in the service of the Singareni Collieries, in the year 1975. He was promoted to the post of Assistant Engineer E2-grade, and thereafter, as Superintending Engineer. In the year 1998, the petitioner was in-charge of Arial Rope Way and Sand Gathering Station, in the Kothagudem area of the company. One of the employees working under him was a Tyandal in the category of Mazdoor, by name Mallaiah. He intended to avail the beneﬁt of voluntary retirement in the year 1996, two years before he attained the age of superannuation. However, since it was found that his son cannot be extended the beneﬁt of compassionate appointment, due to his under age, the employee has withdrawn the proposal. On 29.4.1998, the wife of Mallaiah, by name B.Yelamma, submitted an application to the petitioner, stating that her husband died due to ill-health, on 27.2.1998, while in service, and that she may be extended the terminal beneﬁts. A death certiﬁcate issued by the Commissioner of Municipality was also enclosed. The application was forwarded by the petitioner, to the concerned authorities, and ultimately, the General Manager of the unit sanctioned the Monthly Monetary Compensation (MMC) to the said lady, with effect from 1.4.1998. The petitioner was issued a show-cause notice on 22.5.2004, requiring him to explain as to why action shall not be taken against him, on the ground that he did not exhibit proper care and caution, while processing the application submitted by Smt.B.Yellamma. It was also alleged that on account of instructions issued by him to a clerk, the application was examined and the MMC was extended. It was mentioned that the subsequent enquiries revealed that Mallaiah was very much alive. This was followed by a charge sheet, dated 19.10.2004, alleging that the petitioner is guilty of the lapses under Rules 5.1, 5.5 and 4.1 of the Conduct, Discipline and Appeal Rules 1989 (for short “the Rules”). Petitioner submitted his explanation, denying the charges leveled against him. He raised a preliminary objection for the proceedings initiated against him, on the ground that they are barred by Rule 34 (5), inasmuch as they were instituted, four years after the limitation, prescribed thereunder. He further stated that before directing the clerk to process the application, he veriﬁed the matter with the oﬃce of the Municipal Commissioner, Kothagudem, and only on being informed that the certiﬁcate is genuine, he forwarded the same. It was also his case that according to the prescribed procedure, a committee, comprising of about ﬁve senior oﬃcers of the company, has to process the claim for MMC and he has absolutely no role to play in sanction of the benefit. The General Manager (E&M) was appointed as Enquiry Oﬃcer, and he conducted a detailed enquiry into the matter. He submitted a report dated 26.7.2006, holding that the charge referable to Rule 5.1 is not proved and that the petitioner had committed the lapses, referable to rule 5.5 and 4.1. Even while the disciplinary proceedings were in progress, the petitioner attained the age of superannuation on 30.9.2006. He was permitted to retire, without prejudice to the right of the company to continue the disciplinary proceedings. The Chairman & Managing Director and Disciplinary Authority, the respondent herein, issued a show-cause notice dated 15.9.2006, to the petitioner. The petitioner, in turn, submitted his explanation on 3.10.2006. On a consideration of the same, the respondent imposed the punishment of removal of petitioner from service of the company and directing recovery of a sum of Rs.1,66,667/-, paid to Smt. Yellamma under MMC, from out of the gratuity payable to the petitioner. The same is challenged in this writ petition. The petitioner contends that his speciﬁc plea that the proceedings are barred under Rule 34.5 was not at all taken into consideration, either by the enquiry oﬃcer, or by the respondent. He submits that according to the circulars in force, the beneﬁt under MMC is to be sanctioned by a committee, comprising of ﬁve senior oﬃcers, and that the ultimate sanction order was issued in the name of the Genera Manager. According to him, even though the enquiry oﬃcer gave a speciﬁc ﬁnding that the petitioner did not indulge in any fraudulent activities, and though it was not even alleged that the petitioner had derived any monetary beneﬁt, the gratuity payable to him was forfeited. The respondent ﬁled counter aﬃdavit, stating that but for the negligence on the part of the petitioner, MMC would not have been granted to the wife of an employee, who was found to be alive. He submits that the petitioner did not verify whether the employee was alive or dead, and had simply forwarded the application. It is also stated that there was inordinate delay, in deleting the name of the employee from the rolls. Sri S. Gopal Rao, learned counsel for the petitioner, submits that objection raised by the petitioner, based on 34.5 of the Rules, was not at all dealt with by the respondent, or the enquiry oﬃcer. He submits that the gravity of the allegation against the petitioner was the alleged fraud or dishonesty, in connection with the property of the company, and though the enquiry oﬃcer held that it was not proved, the respondent passed the impugned order. He contends that there was not even any indication that the petitioner had enriched himself with any amount, and all the same, the amount that was wrongly paid by the company to the wife of another employee, is sought to be recovered from the petitioner. Learned counsel submits that the petitioner alone was targeted, while letting oﬀ the employee and his wife, who enriched themselves, and the General Manager and other authorities, who sanctioned the amount. Sri Nandigam Krishna Rao, learned Standing Counsel for the respondent, submits that the prescribed procedure was followed at every stage, and this court cannot interfere with the quantum of punishment. He submits that being the head of the department, the petitioner failed to verify the genuinety of the claim for payment of amount. He contends that the fraud played on the company was detected at a later point of time, and suitable action has been initiated. The charge framed against the petitioner was not precise in its nature. Virtually, it is a narration of the events that led to sanction of MMC to one B. Yellamma, wife of an employee, by name Mallaiah. The misconduct alleged against the petitioner is contained in paragraphs 2 and 3 of the charge sheet dated 19.10.2004, and the same is reproduced here: “2. You have acted upon the death certificate of Sri B. Mallaiah, ExTyndal, ARW&SGS, which was submitted by his wife Smt.B. Yellamma on 29.4.1998 for terminal beneﬁts without conducting any discrete/fool proof enquiry and without ascertaining other substantiating proofs. You have passed instructions to Sri K. Ramchander, Clerk to process the death terminal beneﬁts and monthly monetary compensation claim in favour of Smt.B. Yellamma w/o.Sri B. Mallaiah. Accordingly, all the death terminal beneﬁts were settled and paid including payment of Monthly Monetary Compensation to Smt. B. Yellamma @ Rs.3000/- p.m. with effect from 01.4.1998 though he is alive. 3. You have acted n a manner prejudicial to the interest and image of the company, which amounts to acts of misconduct in accordance with the Rules 5(1) and 5(5) read with Rule 4.1 of Conduct, Discipline & Appeals Rules, 1989 of the Company, as reproduced hereunder, and is punishable under Rule 27(1) thereof.” Three provisions of the Rules were invoked, with reference to the diﬀerent facets of the same allegation. Petitioner submitted his explanation on 20.11.2004. The ﬁrst and foremost ground raised in his explanation, reads as under: “The cause of action pertaining to the event that took place six years back i.e. in 1998 and as per the Code of Conduct & Discipline 34.5, incorporated vide Minute No.458.40 by the Board, no disciplinary proceedings shall be instituted. 34.5. “No disciplinary proceedings shall be instituted in respect of a cause of action which arose or in respect of an event which took place more than 4 years before such institution.” As per the above, the charge sheet and charges are void and illegal.” On merits, he pleaded that the company itself prescribed procedure to regulate claims for MMC in its Circular No.P.ro/5214/IR/1875, dated 5.9.1997, wherein, a committee with the General Manager as Head of it, is to be constituted for scrutinizing the applications, and that he did not pay any amount. The respondent appointed an enquiry oﬃcer under rule 29.4, apart from a presenting oﬃcer. A detailed enquiry was conducted, wherein three witnesses were examined on behalf of the management and two witnesses, on behalf of the petitioner. One of the witnesses examined on behalf of the management is none other than Mallaiah, claiming whose death, his wife submitted application for MMC. Various documents were also made part of the record. The enquiry oﬃcer recorded his ﬁnding, with reference to the relevant rule that was invoked against the petitioner. He categorically held that the charge under Rule 5.1 of the Rules is not established against the petitioner. After recording such a ﬁnding, he proceeded to observe as under: “However, Sri D. Komaraiah, the then Domestic enquiry (ARW) was negligent in discharging his duties as below: 1. He would have initiated disciplinary action against Sri B. Mallaiah, for remaining absent for such a long period (19 months) without sick, leave or prior information. If disciplinary action would have been taken against the employee at appropriate time, he would have come out from disguise and would not have dared to submit fake death certificate. 2. Sri D. Komaraiah, was in doubt as funeral expenses/ ﬁrewood, etc. were not drawn (as it is a regular feature in the death of any employee of the company) as per his own statement (ages 88/89). In addition to verifying the genuinity of death certiﬁcate in Municipal oﬃce, he would have alerted either General Manager or concerned senior oﬃcers in personnel department. If he would have arranged for preliminary enquiry, the truth would have come out at that time itself. 3. Removal of name from company rolls also was delayed. When the certiﬁcate was submitted in April 1998, name was removed in December 1998. However, there was no mention of any pecuniary loss to the company on this account, though it can be attributed to negligence of the Head of the department. Above negligence on part of charged oﬃcer had directly or indirectly contributed to pecuniary loss to the company. Sri D. Komaraiah had committed offence under Rule-5(5) and 4(1).” From a perusal of this, it becomes clear that the ﬁrst paragraph was totally outside the scope of the charge framed against the petitioner. The second paragraph, if at all anything, proves that the petitioner did entertain a doubt about the genuinety of the claim made by Yellamma, since no funeral expenses were drawn and proceeded further, only after verifying the genuinety of the death certiﬁcate issued by the Municipal Oﬃce. It is just ununderstandable as to what more was expected from the petitioner, once the Municipal Oﬃce has clariﬁed that the certificate issued by them is genuine. It is not out of place to mention, the gist of the case presented by the management, in this regard, in the domestic enquiry. The argument advanced on behalf of the presenting oﬃcer, on this aspect, was that the death certiﬁcate issued 50 days after the occurrence of the death and acted upon by the petitioner. His argument, as noted by the enquiry oﬃcer, proceeded on these lines. “Here, the question is not whether the death certiﬁcate is genuine or not, whether the death is genuine” It was mentioned in the enquiry report itself that, when Yellamma approached the oﬃce of the petitioner when he was not there, the employees themselves were shocked when they came to know about the death, and in fact, have observed two minutes silence. The third paragraph extracted above from enquiry oﬃcers report, is about the delay in removal of the name of Mallaiah from register. It is also outside the scope of the charge. The evidence of Mallaiah, who ﬁgured as MW-3, as summed up, by the enquiry officer, is to the following effect: “Sri B. Mallaiah, Tyndal, ARW/SGS had applied for voluntary retirement, seeking dependent employment to his son. He was informed by Sri D. Komaraiah, C.O. that his son was not eligible for employment as he was underaged and advised MW3 to continue in the job (till superannuation). However, Sri B. Mallaiah, on the advise of one Sri Hussain remained absent and paid Rs.2000/- to him to get death certiﬁcate from Municipality. He was advised by Hussain to leave the town. Later, his wife and Hussain approached Sri D. Komaraiah (C.O) and submitted the death certiﬁcate. At that time, as his son was underaged, his wife applied for Monthly Monetary Compensation which was subsequently sanctioned paid at the rate of Rs.22,000/- per month and Rs.3,000/ per month since last one year or so. He accepted that he had committed above mistake as his family was big and suﬀering from ﬁnancial problems, and he anticipated job to his son (by submitting the death certiﬁcate). When asked, C.O. expressed his willingness to cross-examine the witness. MW-3 negated to a question whether he had seen C.O. with eﬀect from date of submission of the death certificate until the day of witness. Also MW-3 conﬁrmed that the C.O. had never suggested to submit fake certiﬁcate to get job to his dependant. He also informed that Sri Hussain, Electrician who had helped him to get the death certificate belonged to AITUC.” It is not as if that the petitioner is the sanctioning authority. The record produced by the respondent discloses that the role of the petitioner ended, where he forwarded the application. Subsequently, it was dealt with by a committee, comprising of ﬁve senior oﬃcials of the company. The ultimate sanction order was issued by the General Manager. The relevant portion of the Circular dated 5.9.1997 reads as under: “A Committee with General Manager, Head of the Area Personnel Department and Head of the Area F&A Department and Head of the Mine Department concerned will further scrutinize the application with reference to the data available. G.M. of the Area shall forward the application in duplicate (retaining one copy in his office) to the G.M. (pers) Kgm with his remarks.” It is in this background, that the matter needs to be examined. Firstly, it has to be seen whether the ground pleaded by the petitioner, based on Rule 34.5, was dealt with by the respondent, at all. The rule has already been extracted in the previous paragraphs. In clear terms, it bars disciplinary proceedings, in respect of a cause of action, or an event, which occurred more than four years before such institution. In certain cases, the rules carve out an exception in case, an event comes to be noticed at a later point of time. In the absence of such exception also, there would be some scope for extending the period of limitation, if the event could not be noticed, on account of the fraud played by the concerned employee. Though a vague allegation was made against the petitioner, touching on fraud, in categorical terms the enquiry officer held that it is not proved. It may not be beyond the competence of the enquiry oﬃcer to deal with the contention based on Rule 34.5. He did not choose to consider that plea. Be that as it may, it was obligatory on the part of the respondent, to consider the specific plea raised by the petitioner, which is based on a provision of law. The impugned order is totally silent, on this aspect. It is to be presumed that the respondent has no answer for the plea. Admittedly, the incident has taken place in the year 1998 and the charge sheet was issued in the year 2004. No attempt whatsoever, was made, to explain as to how Rule 34.5 does not apply to the facts of the case. Hence, the impugned order is liable to be set aside, on this short ground. Secondly, the respondent did not pay much attention to the fact that the most serious component of the charge namely, fraud, was held not proved, and he proceeded to punish the petitioner for the alleged violation of Rules 5.5 and 4.1, as regards which, the allegation against the petitioner was vague, uncertain and abstract. Further, the question of recovery of the amount from the petitioner would have arisen, if only it was established that either he has misappropriated that amount, or has sanctioned it, in violation of the Rules. Not even a semblance of such allegation is made. When the petitioner is neither recipient of the amount, nor the sanctioning authority, it is just ununderstandable as to on what basis, the liability was fastened upon him. The enquiring authority itself did not fasten any monetary liability, against the petitioner. Inasmuch as the petitioner retired even during the pendency of the proceedings, the order of removal was not much of consequence. Even under the provisions of the Payment of Gratuity Act, it is only the amounts that have been found misappropriated by the employee, that can be detected, and not the amount arrived at, on the basis of the assumptions. Learned counsel for the petitioner places reliance upon the judgment of the Supreme Court in JASWANT SINGH GILL v. BHARAT COKING COAL LTD [1]. It was held that Section 4 of the Payment of Gratuity Act would prevail over the Rules framed by an employer. The ratio of the said judgment squarely applies to the facts of this case. Learned counsel for the respondents relied upon the judgment of Supreme Court in U.P. STATE SUGAR CORPORATION LTD. V. KAMAL SWAROOP TONDON [2], to state that proceedings can be initiated or continued, even after the employee had attained the age of superannuation, and depending on the facts, recovery can be aﬀected from gratuity. The dispute in this case is not as to the permissibility of initiation of proceedings, or continuation thereof, after the retirement of the employee. It was already pointed out that the very initiation of proceedings was bared by Rule 34.5. The other decisions relied upon by the learned counsel for the respondent are on general principles, as regards which there is no quarrel. An important and curious aspect of the matter is that the company did not choose to take any action against the employee Mallaiah or his wife Yellamma, who were instrumental in making the claim, or Mr.Hussain, who was said to have hatched the entire plan. Mallaiah himself appeared before the vigilance and departmental enquiry and admitted his guilt. Any sensible person or agency would have taken steps; a) to recover the amount, fraudulently received by such employees; and b) to ﬁle a complaint for the offence of cheating. No such steps were taken. The clerk who initially handled the application, and about half a dozen oﬃcers from the sections of Establishment, Accounts, Medical Department and the ultimate authority, who sanctioned the amount i.e. the General Manager, were not even touched. The Vigilance Cell of the company exhibited its enthusiasm to the extent it recorded the statement and unearthed the fraud, but remained docile about the consequential steps. It did not even suggest that a complaint be submitted to the police, against the persons involved. A matter, which has such serious dimensions, was virtually given a quietus, by initiating steps against the petitioner. The General Manager who sanctioned the amount, and other authorities, who assisted him in evolving the things, have either been totally let oﬀ, or were permitted to retire honourably. The petitioner, who is neither appointing authority, nor the disciplinary authority, was targeted. The legal and factual pleas taken by him were blinked at. The whole episode demonstrates that a blatant fraud played on the company by two of its employees; viz. Mallaiah and Hussain; were given a decent burial, by making the petitioner a scapegoat. The vigilance cell created by the company was selective, and for obvious reasons. Any sensible administration would have chosen to start the action, by proceeding against the person, who received the amount, and the one, who sanctioned it. In their wisdom the company has devised a diﬀerent mechanism. For the foregoing reasons, the writ petition is allowed, and the impugned order is set aside. There shall be no order as to costs. ___________________________ L. NARASIMHA REDDY, J DT: 28th August 2008 Note: L.R. copies to be marked. (B/o) PAN [1] (2007) 1 SCC 663 [2] (2008)2 SCC 41