U.P. State Sugar Corporation Ltd. & Ors vs Kamal Swaroop Tondon

3. Necessary facts giving rise to the appeal are that the respondent herein was serving with the appellant- U.P. State Sugar Corporation Ltd. (Corporation for short) as Resident Engineer at the Head Office of the Corporation at Lucknow. On January 13, 2000, a show cause notice was issued to him stating therein that a work was allotted to M/s Gupta & Co., Dehradoon for construction of residential houses in Saharanpur. The Contractor had given two Fixed Deposit Receipts (FDRs) towards the security for the work to be done. The details of FDRs were given in the notice. It was alleged that the Corporation suffered loss of Rupees one lakh due to lack of precaution, irregularity, gross negligence and carelessness by the respondent. The respondent was, therefore, called upon to submit explanation within three days why disciplinary action should not be taken against him. On January 15, 2000, the respondent submitted his reply denying the allegations and contending that he had not committed any illegality and there was no justification to ask for his explanation. The Corporation was not satisfied with the reply filed by the respondent and decided to hold departmental inquiry against him. On January 31, 2000, therefore, show cause notice was issued to the respondent for the losses caused to the Corporation due to negligence and carelessness on the part of the respondent. It may be noted at this stage that the respondent retired on attaining the age of superannuation (60 years) on the same day, i.e. January 31, 2000. According to the respondent, since he retired from service on January 31, 2000, no proceedings could have been initiated against him and issuance of show cause notice which was received by him after office hours at 6.45 p.m. on January 31, 2000 was illegal as there was no relationship of employer and employee between the Corporation and him. He, therefore, filed a writ petition in the High Court of Allahabad at Lucknow Bench on April 11, 2000. In the petition a prayer was made for quashing charge-sheet and departmental proceedings. During the pendency of the petition, however, two orders came to be passed against the respondent on March 24, 2001 and April 26, 2005. By the first order of March 24, 2001, an amount of Rupees one lakh was ordered to be recovered from the respondent as the Corporation suffered loss of the said amount which was ordered to be adjusted from the gratuity of the respondent. By the second order dated April 26, 2005, an amount of Rs.73,235-50ps which was = portion of the amount of Rs.1,46,471.00ps was directed to be recovered as loss had been caused to the Corporation due to negligence of the respondent. The respondent sought amendment in the petition and challenged the above two orders as well.

4. The High Court, by the impugned order, allowed the writ petition holding that the order dated January 31, 2000 commencing disciplinary inquiry against the writ petitioner was illegal as he had retired on that day. No proceedings, hence, could have been initiated against him. Consequently, orders passed in 2001 and 2005 could not have been made and they were liable to be quashed. The Corporation was directed to pay to the writ petitioner all the benefits of gratuity, leave encashment and other dues payable to him with interest @ 8% p.a. from the date of retirement till the date of actual payment. Being aggrieved by the order passed by the High Court, the Corporation has approached this Court.

9. From the facts noted above, it is amply clear that two orders which were passed against the respondent-employee related to recovery of certain amount from the respondent-employee on the ground that there was carelessness, negligence or omission on his part in the discharge of his duties which resulted in loss to the Corporation. By the order dated March 24, 2001, an amount of Rupees one lakh which was financial loss suffered by the Corporation was ordered to be adjusted against the gratuity of the employee. Likewise, by order dated April 26, 2005, an amount of Rs.73,235.50 p. [= of Rs.1,46,471.00] was ordered to be adjusted against the amount of gratuity and encashment of earned leave which was also the financial loss suffered by the Corporation as a result of negligence of the respondent. It is in the light of the above facts that we have to consider whether such an action could have been taken against the respondent-employee by the appellant-Corporation.

A. MINOR PENALTIES

(i) Censure

(ii) With-holding of annual increment(s), including stoppage of an efficiency bar/assessment stage with or without cumulative effect.

B. MAJOR PANALTIES

(v) removal from service which does not disqualify from future employment,

(vi) dismissal from service which ordinarily disqualifies from future employment.

(emphasis supplied)

109. (1) Whenever the punishing authority is satisfied that good and sufficient reasons exist for adopting such a course it may impose the penalty of

(i) Censure, or

Provided that it shall not be necessary to frame formal charges against the employee concerned but his explanation may be called and considered before imposing such a penalty.

(i) Withholding of increments in the time scale at stages where there is no efficient bar.

(ii)Recovery from pay of the whole or part of any pecuniary loss caused to the Corporation by negligence or breach of orders.

Formal proceedings embodying statement of the offence or fault, the explanation of the person concerned, and the reasons for punishment shall be recorded.

Provided that it shall not be necessary to record such proceedings in cases where an employees increment in the time scale of his pay at any stage other than an efficiency bar is stopped due to his integrity remaining uncertified.

(emphasis supplied)

37. Considering the facts and circumstances in their entirety, in our considered opinion, the High Court was wrong in holding that the proceedings were initiated after the respondent retired and there was no power, authority or jurisdiction with the Corporation to take any action against the writ-petitioner and in setting aside the orders passed against him. In our judgment, proceedings could have been taken for the recovery of financial loss suffered by the Corporation due to negligence and carelessness attributable to the respondent-employee. The impugned action, therefore, cannot be said to be illegal or without jurisdiction and the High Court was not right in quashing the proceedings as also the orders issued by the Corporation. The appeal, therefore, deserves to be allowed by setting aside the order of the High Court.

38. For the foregoing reasons, the appeal is allowed and the order passed by the High Court is set aside. But since the High Court has allowed the petition only on the ground that the proceedings could not have been instituted against the writ-petitioner, it would be appropriate if we remit the matter to the High Court so as to enable it to consider the rival contentions of the parties and take an appropriate decision on merits. We may clarify that we may not be understood to have expressed any opinion one way or the other on the controversy involved in the case and as and when the High Court will take up the writ petition, it will decide the same without being influenced by any observation made in this judgment. On the facts and in the circumstances of the case, the parties will bear their own costs.