Case: Narinder Mohan Arya Vs. United India Insurance Co. Ltd.

The appellant herein was appointed as an Inspector by the first respondent. He was at the material time posted at Hisar. He issued four insurance cover notes in favour of one M/s Aman Singh Munshi Lal (firm) on 21.10.1976. The payment in respect of all four cover notes was made by one cheque. The three cover notes were issued against goods to be transported through railways and one cover note for the goods to be transported by road. The cover notes were despatched from Hisar to its divisional office at Sirsa which were received on 23.10.1976. On 22.10.1976 bales of cotton despatched by the firm caught fire. The appellant was on leave from 23.10.1976 to 30.10.1976. He was in Chandigarh on 23.10.1976. The said firm raised a claim in respect of the loss of goods suffered by it in the said incident of fire2. However, in respect of the said incident a disciplinary proceeding was initiated against the respondent on or about 11.1.1978 on an allegation of antedating one insurance cover note for Rs. 1 lakh after the said fire broke out on 22.10.1976 which is said to have been issued on 31.10.76. In the departmental proceedings the Enquiry Officer found him guilty of the said charge, whereupon he was removed from service by an order of the Disciplinary Authority dated 24.7.79. No second show cause notice however, was served upon him. He preferred a departmental appeal in terms of Rule 37 of the General Insurance (Conduct, Discipline & Appeal) Rules, 1975 (Rules). The said appeal was dismissed by an order dated 29.9.19803. In the meanwhile, the firm filed a suit against the respondent herein for recovery of the insured sum of Rs. 1,22,795.64. The appellant herein was also impleaded as a party defendant therein. In the said suit, inter alia, the following issues were framed:2. Whether valid contract of insurance was entered into between the plaintiff and defendant No. 1 through deft. No. 2?3. Whether the contract of insurance entered into between the plaintiff firm and defendant no. 1 through cover note No. 09643 dated 21.10.76 is void ab-initio having been obtained in collusion with defendant No. 2 after the destruction of the goods through fire4. On or about 7.10.1980 the trial court decreed the said suit for a sum of Rs. 98,550.16 on a finding that the said cover note was not antedated. For arriving at the said finding, reliance was placed on the opinion of the handwriting expert5. The first respondent herein being aggrieved by and dissatisfied with the said judgment and decree dated 7.10.1980 passed in Suit No. 50/59 of 1978-79 preferred an appeal before the said High Court which was dismissed by an order dated 4.10.1982. The matter was not carried further6. After delivery of the judgment by the civil court the appellant filed a memorial bringing to the notice of the Chairman-cum-Managing Director of the company thereabout, which was dismissed summarily stating:I have considered the Memorial dated 15.11.80 submitted by Shri N.M. Arya against the order No. NRO: PER:80:3287 dated 29th September, 1980 of the Appellate Authority, rejecting his appeal and confirming the penalty of removal from serviceI have also considered the Enquiry Proceedings and the relevant recordsI do not find any reason to interfere with the order of the Appellate Authority and the Competent Authority. The Memorial is rejected7. He filed a writ petition before the High Court of Punjab and Haryana against the said orders which was marked as Civil Writ Petition No. 3232 of 1981. The writ petition filed by the appellant was allowed by the High Court directing the respondent to reinstate him in service with continuity of service and full back wages including the benefit of seniority and promotion. The High Court in support of its judgment relied upon the judgment of the civil court. However, the first respondent filed a Letters Patent Appeal there against before the said High Court which was marked as LPA No. 344 of 1991. By an order dated 16.3.94 the said appeal was dismissed. A Special Leave Petition filed there against by the first respondent was marked as SLP (c) No. 11383/94 and by a judgment and order dated 29.7.94 this Court remitted the matter back to the learned Single Judge of the High Court opining that:From the above facts it becomes evident that the departmental proceedings against the respondent had concluded in his removal from service. That conclusion was passed on the evidence placed before the Enquiry Officer which was evaluated by the Disciplinary Authority as well as the Departmental Appellate Authority. In a collateral suit filed by the consignor for damages for loss of goods by fire the defence was that the cover was antedated. While examining that defence was that the cover was antedated. While examining that defence the civil court came to the conclusion that the same was not proved. That, however, cannot dislodge the decision earlier taken in the departmental inquiry based on the material and evidence placed at the said enquiry. The correctness or otherwise of the conclusion reached by the departmental authorities would depend on the enquiry recorded and the ultimate conclusion reached by the authorities can be shaken only on an evaluation of that record. Even if a suit had been filed for setting aside the removal order, the civil court could not have acted as an appellate authority. Therefore, the finding recorded in the suit cannot dislodge the finding recorded, in the enquiry concluded earlier in point of time. Otherwise the decision of the civil court would appear to be one by an appellate authority against the departmental enquiry on a record that was not before the Disciplinary Authority8. A learned Single Judge of the High Court after remittance of the matter by this Court allowed the said writ petition by an order dated 11.1.2002. However, on a Letters Patent Appeal filed by the respondent No.1 herein, by an order dated 13.3.2002 the Division Bench of the High Court remanded the matter again to the learned Single Judge directing him not to be influenced by the finding of the Civil Court on issue No. 2 and 3 in the suit filed by the said firm. The writ petition filed by the appellant herein was dismissed by an order dated 22.5.2002. The Letters Patent Appeal filed by the appellant herein has been dismissed by the impugned judgment.

Court's reasoning:
The Judgment and order of the learned Single Judge suffers from several infirmities. He had observed that the disadvantages of an employer as such acts are committed in secrecy and in conspiracy with the person affected by the accident. No such finding has been arrived at even in the disciplinary proceedings nor any charge was made out as against the appellant in that behalf. He had no occasion to have his say thereupon. Indisputably, the writ court will bear in mind the distinction between some evidence or no evidence but the question which was required to be posed and necessary should have been as to whether some evidence adduced would lead to the conclusion as regard the guilt of the delinquent officer or not. The evidence adduced on behalf of the management must have nexus with the charges. The Enquiry Officer cannot base his findings on mere hypothesis. Mere ipso dixit on his part cannot be a substitute of evidenceThe findings of the learned Single Judge to the effect that it is established with the conscience (sic) of the Court reasonably formulated by an Enquiry Officer then in the eventuality may not be fully correct inasmuch as the Court while exercising its power of judicial review should also apply its mind as to whether sufficient material had been brought on record to sustain the findings. The conscience of a court may not have much role to play. It is unfortunate that the learned Single Judge did not at all deliberate on the contentions raised by the appellant. Discussion on the materials available on record for the purpose of applying the legal principles was imperative. The Division Bench of the High Court also committed the same errorThe matter may be considered from another angle. The order of the disciplinary authority, in view of the statutory provisions, merged with the order of the appellate authority as also that of the Chairman-cum-Managing Director as the appellate proceedings are in continuation of the original proceedings and, thus, the doctrine of merger shall apply.26. In our opinion the learned Single Judge and consequently the Division Bench of the High Court did not pose unto themselves the correct question. The matter can be viewed from two angles. Despite limited jurisdiction a civil court, it was entitled to interfere in a case where the report of the Enquiry Officer is based on no evidence27. We may notice that this Court in Ramendra Kishore Biswas V. State of Tripura & Ors. [1999 (1) SCC 472] was clearly of the opinion that a civil suit challenging the legality of a disciplinary proceeding and consequent order of punishment is maintainable. Even this Court in its order dated 29.7.1994 said so29. It is also of some interest to note that the first respondent itself, in the civil suit filed by the firm relied upon a copy of the report of the Enquiry Officer. The first respondent, therefore, itself invited comments as regard the existence of sufficiency of evidence/acceptability thereof and, thus, it may not now be open to them to contend that the report of the Enquiry Officer was sacrosanct30. We have referred to the fact of the matter in some details as also the scope of judicial review only for the purpose of pointing out that neither the learned Single Judge nor the Division Bench of the High court considered the question on merit at all. They referred to certain principles of law but failed to explain as to how they apply in the instant case in the light of the contentions raised before it. Other contentions raised in the writ petition also were not considered by the High Court43. We may not be understood to have laid down a law that in all such circumstances the decision of the civil court or the criminal court would be binding on the disciplinary authorities as this Court in a large number of decisions points point that the same would depend upon other factors as well. See e.g. Krishnakali Tea Estate V. Akhil Bharatiya Chah Mazdoor Sangh & Anr. [2004 (8) SCC 200] and Manager, Reserve Bank of India Bangalore V. S. Mani & Ors. [2005 (5) SCC 100] . Each case is therefore, required to be considered on its own facts44. It is equally well settled that the power of judicial review would not be refused to be exercised by the High Court, although despite it would be lawful to do so. In Manager, Reserve Bank of India Bangalore (supra) this Court observed:The findings of the learned Tribunal, as noticed hereinbefore, are wholly perverse. It apparently posed unto itself wrong questions. It placed onus of proof wrongly upon the appellant. Its decision is based upon irrelevant factors not germane for the purpose of arriving at a correct finding of fact. It has also failed to take into consideration the relevant factors. A case for judicial review, thus, was made out45. In that case also, in view of the admissions made by the Management witness, it was found that tribunals findings were based on no evidence and, thus, irrationalThe Judgment and order of the learned Single Judge suffers from several infirmities. He had observed that the disadvantages of an employer as such acts are committed in secrecy and in conspiracy with the person affected by the accident. No such finding has been arrived at even in the disciplinary proceedings nor any charge was made out as against the appellant in that behalf. He had no occasion to have his say thereupon. Indisputably, the writ court will bear in mind the distinction between some evidence or no evidence but the question which was required to be posed and necessary should have been as to whether some evidence adduced would lead to the conclusion as regard the guilt of the delinquent officer or not. The evidence adduced on behalf of the management must have nexus with the charges. The Enquiry Officer cannot base his findings on mere hypothesis. Mere ipso dixit on his part cannot be a substitute of evidenceThe findings of the learned Single Judge to the effect that it is established with the conscience (sic) of the Court reasonably formulated by an Enquiry Officer then in the eventuality may not be fully correct inasmuch as the Court while exercising its power of judicial review should also apply its mind as to whether sufficient material had been brought on record to sustain the findings. The conscience of a court may not have much role to play. It is unfortunate that the learned Single Judge did not at all deliberate on the contentions raised by the appellant. Discussion on the materials available on record for the purpose of applying the legal principles was imperative. The Division Bench of the High Court also committed the same errorThe matter may be considered from another angle. The order of the disciplinary authority, in view of the statutory provisions, merged with the order of the appellate authority as also that of theg Director as the appellate proceedings are in continuation of the original proceedings and, thus, the doctrine of merger shall apply49. A revisional jurisdiction as is well known involves exercise of appellate jurisdiction. [See Shankar Ramchandra Abhyankar V. Krishnaji Dattatraya Bapat, AIR 1970 SC 1 and Nalakath Sainuddin v. Koorikadan Sulaiman, (2002) 6 SCC 1]Mr. Bali, learned counsel appearing on behalf of the appellant raised a contention that the disciplinary proceedings was vitiated as the authorities acted mala fide and with a biased attitude. We do not find any substance therein.