Case: M/s. Goa Shipyard Ltd Vs. Babu Thomas

The challenge in this appeal is to the order of 25th November, 2003 passed by the Division Bench of the High Court of Bombay at Goa in Civil Writ Petition No. 414 of 1997 whereby the order of dismissal of the respondent dated 21.1.1997 dismissing him from service passed by the Chairman and Managing Director and also the order of the Appellate Authority (Board) of 27.9.1997 confirming the order of dismissal were set aside. This appeal is preferred by M/s Goa Shipyard Ltd. Few facts may berespondent was appointed by Chairman and Managing Director as Joint Manager (Security) by an order dated 18.1.1991. On 26.8.1991 he was given additional charge as officiating Manager-Personnel and Administration. It is stated that on 14.9.1994 the respondent was caught red handed by C.I.D./Crime Branch of Goa Police while demanding illegal gratification of Rs.20,000/- from one Shri Chennaiah, a cleaning labour contractor employed by the appellant. He was placed under suspension by an order dated 15.9.1994 in contemplation of the disciplinary proceedings. On 15.12.1994, 13 counts of charges were levelled against the respondent namely (i) demanding and collecting illegal gratification, (ii) accepting bribe of illegal gratification for recruitment in Petitioner company, (iii) withholding authorised payments for extorting money or bribe, (iv) financial loss caused to the company by misleading the Management by intentionally furnishing wrong advice; (v) misuse of contract employee; (vi) violation of companys policy on recruitment; (vii) creating of new posts and converting security assistants as Personnel Administration Assistants without sanction of the appropriate authority; (viii) attempt to extort money from contractors; (ix) prejudicing the company and its contractors by influencing a wage agreement; (x)(a) financial irregularities, improprieties and fraud and non accounting of companys funds; (x)(b) wrongful appropriation of money from the imprest account of Shri M.R. Furtado; (x)(c) non-accounting of appropriation of advance drawn by Shri M.R. Furtado; (xi) possession of pornographic materials; (xii) misuse of companys car; and (xiii) unauthorized telephone bills of office and residential4.1.1995 one Shri N.P. Kumar was appointed as an Inquiry Officer. The respondent in the interregnum filed Writ Petition No.137 of 1995 before the High Court of Bombay at Goa challenging the inquiry proceedings on the grounds that relevant documents were not furnished to him, legal assistance was not provided and subsistence allowance was not correctly paid. The High Court by its interim order dated 2.5.1995 granted interim stay of inquiry proceedings. By another order dated 10.7.1995 the High Court vacated the interim stay and allowed the disciplinary authority to proceed in accordance with principles of natural justice and in accordance with law and directed the appellant to furnish copies of all relevant documents to the respondent. The Writ Petition was disposed of on 26.7.1995 directing the appellant to complete the disciplinary proceedings within four months and the respondent was also allowed to be represented by a lawyer of his choice during the disciplinary proceedings. In the interregnum Cmdr. S.K.Mutreja was appointed as an Inquiry Officer in place of Shri N.P. Kumar, who has sinceconduct and discipline of all officers of the appellant were governed by the Goa Shipyard Officers Conduct, Discipline and Appeal Rules, 1979 (CDA Rules for short). On 15.12.1995, an amendment to the CDA Rules proposing substitution of the Schedule to the said Rules, was circulated to the Board of Directors, vide Circular Board Resolution No. 13 of 1995 for approval by circulation. The purpose of the proposed amendment was to redesignate the Disciplinary, Appellate and Reviewing Authorities for imposing minor and major penalties. The said amendment to CDA Rules were approved by circulation, by the Board of Directors. On 29.3.1996 CMD issued a Circular notifying all employees, that the amendment to the CDA Rules were approved and that the amendments came into force with effect from 08.01.1996. The said amendment inter alia substituted the General Manager/Functional Director as Disciplinary Authority in place of Board and CMD as Appellate Authority in place of Board for imposing major penalties in the cases of officers (upto and inclusive of Managers). In regard to grades above Deputy General Manager, CMD was designated as the Disciplinary Authority and the Board was the Appellate as well as Reviewing Authority. We extract below the relevant portion of the Schedule to the CDA Rules before and afterAmendment:Grade of OfficerAppointing AuthorityDisciplinary AuthorityAppellate AuthorityReviewing AuthoritySuperintendents to General Manager BoardReduction to a lower stage in the time scale or to lower grade/postOther MajorPenaltiesMDBoardBoardBoardBoardBoardNote: For the purpose of this Schedule, Board means a Committee of Directors appointed by the Board of DirectorsAfter amendment:Grade of OfficerAppointing AuthorityDisciplinary AuthorityAppellate AuthorityReviewing AuthorityAll Officers up to and inclusive of ManagerChairman & Managing DirectorGeneral Manager/Functional DirectorChairman & Managing DirectorBoardNote: for the purpose of this Schedule, Board means a Committee of Directors appointed by the Board ofInquiry Officer completed the inquiry and submitted its report on 19.9.1996 holding that the charges No. (i), (ii), (v), (vi). (vii), (x)(a), (x)(c), (xi), (xii) and (xiii) were proved against the respondent and charges (iii), (iv), (viii) and (ix) were withdrawn by the Management and further holding that charge (x)(b) was not proved. A Show Cause Notice dated 5.10.1996 was issued to the respondent as to why the Inquiry Report and findings should not be accepted. After examining the reply dated 31.10.1996 to the show cause notice the respondent was dismissed from service by an order dated 21.01.1997 passed by the Chairman-cum-Managing Director. The respondents appeal before the Appellate Authority (Board) was rejected by an order dated 27.09.1997. The Appellate Authority, however, held that charges no.(ii), (v), (x)(a), (x)(b), (xi) and (xiii) were not fully or entirely proved and confirmed the dismissal on charges (i), (vi), (vii), (x)(c) andthereby the respondent preferred Writ Petition No. 414 of 1997 before the High Court of Bombay at Goa. Many contentions were raised before the High Court. However, the High Court disposed of the Writ Petition on a preliminary contention. It held that amendment to CDA Rules by Board Resolution circulated on 15.12.1995 and notified on 29.3.1996 did not come into force at all, even though the circular dated 29.3.1996 under which the amendment was notified stated that the amendments will come into force with effect from 8.1.1996. The High Court held that Rule 41 of CDA Rules provided that any amendment will take effect from the date stated therein and therefore, the date of coming into effect should be contained in the amendment itself and not in a circular notifying the amendment. The High Court held that the amendment approved vide board resolution notified on 29.3.1996 did not mention the date from which the amendment would be effective and therefore the amendment did not come into effect. The High Court held that as per the CDA Rules (unamended), the Board was the Disciplinary Authority and therefore the dismissal order by a lower authority namely CMD was without authority. On this ground alone, the order of dismissal passed by the CMD on 21.1.1997 and the Appellate Authoritys order dated 27.9.1997 rejecting the appeal were set aside by the High Court by the impugned order. The said order is challenged in this appeal by special leave.

Court's reasoning:
15. The High Court had allowed the respondents writ petition by upholding the preliminary contention that the CMD did not have the authority and jurisdiction to pass the order of dismissal. It did not consider the several contentions raised by the respondent on merits. In the view that we have taken, the decision of the High Court dated 25.11.2003 on the preliminary contention cannot be sustained. We, therefore, set aside the Order of the High Court dated 25.11.2003 which allowed Writ Petition No. 414 of 1997 on a preliminary ground. Consequently the writ petition shall stand restored to the file of the High Court. The High Court shall now consider the other contentions raised by the respondent-writ petitioner other than the issue answered by this Court.16. This Court on 23.8.2004 stayed the operation of the judgment of the High Court subject to the appellant making payment of the amount equivalent to subsistence allowance from the date of the judgment of the High Court within four weeks. This order was passed keeping in view that the order of dismissal was set aside by the High Court. As we have set aside the order of the High Court, the order of dismissal dated 21.1.1997 confirmed by Appellate Authoritys order dated 27.9.1997 stands restored subject to the final decision of the writ petition. The respondent-writ petitioner shall not be entitled to any subsistence allowance from today till the writ petition is finally disposed of by the High Court in accordance with law.