. B.

A. L, KALRA

THE PJ, lOJECT & EQUIPMENT CORPORATION

OF INDIA LIMITED .

May 1, 1984 •

{0.A. DESAI, 0. CHINNAPPA REDDY AND A. VARADARAJAN, JJ; J<

A Writ Jm; isdictlon of the High {Co>rt nder Arilcie 22~ of the Constl(uilon- P!fblt'c- sector undertakings a_nd oter "inst'rumentalities of the State., C whether amenab1e to the \vrif' jUrisdiCtion.

Ef!ttct of Conces$io1i. iit the Supreme Court by_ the State as _tO th~ maintainability or amenablity to the Writ jurisdiction-Though the normal procedure is to ren1it to the High Court, the,. Supreme Court, in order not to protract tne litigatiOtJ "involving the JivelihoOd of a party

befof~ it can lt_self hear the appear on nzeri ts. ·

C;_ ConstitutiOn Of Ind1a, 1950 Aft. 1_4'-Whether there should be any

-sp?cific _pleading Jn the _Pe.1ition pofnting out whether anyone else was

either stmilarly situated as tire petitioner or disslffiilar/y treated. for ente.rtaining the charge of discrimination and "granting relief .on that - ground. . ';...__, • D.· Legislative Policy. wheth-!r judlcia/ly, reVif}wable by the courts-Const/. tution of India, 1950 Arts. 226, 32 ond 13.

C0nstitutloii of India 1950~/Jistifzction between Par( XIV and Part III- . oi the Conslitution-Whethe'r tlze employeeS of.the Corporatioit entitled to the protecti.on under Part ){_JV of the Constitutioni

P .. Project and Equfpment Corpora, i"an of India _Ltd, Employees• (Coitduct, Discipline and Appeal) Rules, .l975-Rules4, 5 ond 25, Scope of-R"le

4 dOes not specify any miscand_uct .and Rufe- 5 does not_ specify that violation of Rule 4 'is per se misconduct-No disciplinary_ ach'on, there fore , will arise wider Rule 4 of the 1975 Rules.

G.. The Project allli Equipment Corporation of India House Building Advance

(Grant and Recovery) .Rules !111le 10. (J) (ii) and the Profits and Equipments Corporation af India Ltd. conveyance _Advance (Grant an.d Recovery) Rules 8 and 10 (J)-Whether the non-utilisation of the advances within the StiPulared time for the purposes of and no refund .thereof imn.iediatel; Y On theexpirY. Of the periOd, ciJnstitlfte Hmisco1ufuCt"

within the meaning of the exprwion in Rule 4 (iJ. (iii) o} the 1975

. A L. [(ALRA v. J>ROiECT EQPT. CORPN. . . .• 647'

Rules and ifnot whether the domestic enquiry and. the puµishment of ·

A.·. the disniissal of serviCi is warrant"'ed •

. H.

Rttlief for a declaraiion in cases of cqntract for .publ!c etpp/oynient~ whether caJi!iot be :; jJecifically ellfOrced. ·

I.: Domestic. EnqiJiry-Whether the Illquiry Officer. and the Puizishing Authority niust give reasons before /he major punishment is impased..-' Whether non giving of.the reasonsmakes the decision of dismissal arbitrary and against prtncip!es of natural j:1stice.

Th~ i>rojecit and EQuiPIDent CorPoration of India Ltd. -was formed in t 9_71_ as a wholly own.ed subsidiary conip_any of State Trading cOrpo ..

radon, a Q.qvernmcat 'O{ lodia Undc1taking. In .1976 it was separated

 C and since then it functions as a sep, ttrate.Government of India Undertaking.

- The appella'nt who joined th~ .!frvice unller the State Trading Corpo. ration origipally and Jater exercised hi> option to serve -the PrOject and .E.quipment Corporation wilh effect rrom NoVenlb"er 9, 197.6.

The appeliant while-working as Depuly Finance Manager Grade II ap, PHed for andobtained

(a) an advance in the amount of Rs. 16,050 for purchasing a plot of 1aod on April 4, 1979 for which be e, lecuted the ·.requisite agreement as rCquired .by cthe Project & Equipment Corporation of .Jndia Ltd., House.Buildi:ag Advance

(Grent and Recovery) Rul'es, aµd (b) an advance in the amount of_ Rs. 11,000 for purchase of a n-ew mOior cyCle on July 7, 1979 as admissible under ''the P_roject and -Equipment Corporation conveyance Advanc~ (Grant and Reco. very) Rules .. Under these rulesnori-utilisation of the amounts within tho time. limit will impose a liability of the refund. of t'be entife ainountforth"

with. togtherwith penal interest thereon: The appellant failecJ touliiiso the amounts and also to re.fund the same.

Therefore, coercive steps were taken to fecover the en_\ire amQuot of the House Building adv, ioce .from his pay by_ stopping ihe payment of his salary from 16th: N0Vember1 . 1979.

As regards the conveYance advance, the receipts• etc. for purchase made: in 1980 were accepted, • . .

On July 22, 1980 a memorandum was served upon the appellaO.t statirig therein that the competnt authqrity proposeii to Dold an enquiry against him. under Rules 27 of the .Project anJ Equipment Corporation_ of ladia Employees (Conduct, Discipline & -·AppeaH Rules, 1975 in.respect of the aforesaid misutilization or the advances.

The committee of Manage ..

mnl i_a exerc_ise of.the powers _Conferred by subrule (4) of Rule 27 of the :a: l97S- .rules aPpointed one Sri A.S. Na:ngi.l, its Chief Marketi.lg Manager as the Eriquiry Officer to enquite into the two charges against the appellant.

The appellant sqbmitted on June 13, 1980 a detailed statement pointing out that for va.rious reasons therein mentioned so as to. explain why there Was delay -in refunding ihe advance and speCifically pleaded .that in view . of . the fat that 'the first advance was sought to be recovered by WithbOldili_g his sala:ry and adjuting the pay _towards-theadvance an_d charging penal H interest and in the second case byaccepting. the ocument evideaCiog purcha.siJ of scoot.er µo niiscond.uot could be said to have be.en committed

• sUPREME cotlRT REPORts !19$4) 3 S.C.!t ..

by the app; llant and the di!iplinary ·enquiry was, uncalled for. . The enquiry Officer in hi.s report after recaputulating_ all.egations and explan'at.ion simply concluded that the appellant bas contravened Rule IO (I) (c) (i) of the House Building Advance Rlllcs, ad also rules 8 and 10 (I) of the Conveyance Advance Rules and therefore committed miscondtiGt punisbable under Rule 4 (I) (iii) of the 1975 Rules. ·

PUf$oant to the.report of the Enquiry Officer, the Executi.ve Director for and on behalf of th-e Committee of Maaagement of the corporation m1de

an order PEC: P .5

(8) 77 dated February 4, 1981. stating that the Committee __ of managment agrees with .he findings of.th¢_ inquiry officer and .imp()s~S the puaisl:imeat of _removi11from ser_vjcc with effect from the date of. the order.

The appeal preferred to the Appellate Authority wa• rejected as per tho Memorandum dated May 21, 1981 signed by one Anand Krishna. claiming.to aCt for and on behalf of the Bord of Dire.ctors. '

Tho. appellat; therefore approacped the High Court of Delhi under Art. 226 of th~ constitutin questioniag4\he correctness and validity of 'the findings of the inquiry officer and the decision of the Disciplinary Authority as well .as th~ appellate iiuthoriy .. inter. alia <:>n the gro:Und that the. inquiry

D-' was held iu violation o( the princip!Cs of natuial justice and the q.tiasi-. judicial authority failed to. give reasons in support of its order and the action _taken against the appellant- \Vas per se arbitrary and Wola_tive of Arts.14 arid,

16 of the ConstitUtion inasmuch as the_ . .a11egatiOc contb.ined in the _beads of .1charges, even. if. unre-butted1 do ot constitute . a misconduct within the meaningo_f the expression in 197 5 Rules. In order to susiaiO the maintaioa .. : bility of the writ petition, the app.ellant alSo conten_ded that the r"espondent E i.s an instiumentality of the State 11.nd is coalprehended i~ the eXpressioo 'othr 3Uthorit.y' in Art. 21 of the - Con.titution.

The writ p.!titioll cameup. for admission before a Division ~_}nch of the Delhi.· High Court. It WJS ·

dismiSSed in limine observing that 'the Writ petition is oot maiotajn1ble on ... . the facts .preseQtly set ou.t in th" P'tition.

HJncJ tbi-s app°e1l by sP.ecial leave. ·

. Allowing the appeal, the Court .. •

HELD : 1 : 1. Public sectof u:1dertakiiig1 aa<l other instrumetlta Hties of the State.are compFc.h.ended in 'the expressio::i

1otbcr. allthori.ty~' in Article 12 of the CoustitutioQ.

[660A]

1.~ 2.

Once it is conceded that the .respondent-corpor.ation is an iilstrumentafity of the s.tate 'and; is therefore, compreherided in the ex'pression 'other authority' in Art. 12 of thel Constitution, it is indisputable that it is amenable to the wrii: jurisdictio:i uoder Arts. 32 and '226of the CopStitution:· Apart from the concessioo, the tests .collated in th~ deCisioii of the. Coastitution B'nch of., his:Court i.n AJay f!asia etc. v. Khalid Mujlb Sheravardi and Others etc. [1981] 2 S.CR. 79 for determining whether a paticular body is .an "instrumcnta.lity .of the S, tate are fµlly satsfied and therCfore on precedent and conC.:ssioa it is satisfactorily establiShed that ibe respondnt~Corpdration is an instrumentality of the 'State within tho.

. . . _,

A. L. KALRA v. PROJECT EQPl'. CORl~.

nieaning or the expression •other authority' under Art. 12 of t_h_e coasti~ A : tution and is amenable t.o the writ juriS; diction.

The writ Petition filed by the appellant in the High Court was thus maintainable.

[660D; E]. ·

2. \Vhen onCe it is conceded that the respondent was amenable to the wr.it jurisdiCtiOo, th~ question _that \vi11 afise is whether th.e rQatter. should be remitted fo the High Court as (he High Court bas rejected tho writ petit_ion. in limfne on the ground that the reSpoi:iderit was nOt amenable to the writ jurisdiction of the High Court.

In ord_er not to protract t_he litigatioll hivOlving livC:lihood of tb_e party approaching -the supreme Court for justice, t_he Court can set down the appeal for final hearing on nlerit_s, which they did in the instant case.

[660F-H]

3:1. It cannot be said that executive actioil which results iIJ dellial

C~"' of equal protection orlaw or equality before law cannot be judicially reviewed n_or can_ be struck dGwa o!l the ground of arbitrariiless as biing· violative

of Art. 14 .. [66JEcFJ

3:2. The scope and ambit of Article 14 have been the subject matter of a catena of' decisions.

It is well settled that Article 1.4 strikes at arbi trariness in execu1ive/administrative _actioff because any action that is arbitrary i.nust necessarily .invo\ve the negation Of 'equality.

One need -not confinO. the ·.denial_ .of equality to a co.mparative evalu..1tion between twci persons to arri've .at a conclusion of discriminatory treatment.

An action per se arbitrary itself denies equal protection of. law.· It is thus too late in ihe day to contend that an executive actjon shown to be arbitrari _is_ not either judicially rcviewable or wi'1hia the teach of Article 14.

[662A, F-G, 663A-B]

. ,· Ajay.Hasa; a etc. Khaiid MujMSheh>avardi and Ors [I9n] 2 s.c.R• ?9 E. p; Royappa v. State of Tamil Nadu and aor. [1974] 2 s.C.R 34S; .D. S. Naka,:a v. Union af India, [1983] l S. C. C. 305 and Maneka Gandhi r. Union af India [1978] 2 S. C. R. 621 followe.d.

4. Wisdom Qf the _legislative-policy may not. be opeo to judicial review btit when the wisdom takes the Concrete form of law, the same must stand the tesfof being in tune with the fundar#ental rights and if it.· t_renches upon any of the_ fundamental rights; it is void as ordained by Art. 13, . Conceding for the preseDt pufpose that legislative action follows a egislative pOlicy and the legislative poli.cy is not judicially reviewable, Qut :whil~ givng coo-• crete shape to the le_giSlative policy in the forrri of a statlile 1 -if the Jaw violates any of te fundamental rights including Art ... 14, the same is void to the . extent 'as provided iq. Ar_t. 13.

I( the law is void. being , in violation . of any of the fuadat1_1entl rights set out in Part JI of the Constitution, it . cannot be shielded on the ground that it enacts a legislative policy. [661P-1;1]

5. Even if .the respondent. Gorporation_ is an intrumentality of the State as comprehended .; n Art. 12, yet the employees of tho Corporation are not governed by Part XIV of the Constitution, Howver it could not bo

SUPRJJME COURT REPORTS [l984j 3 s.c.it .

S<.l; d that ae protection Conferred by Part III on the public servant is com ,

p"aratively !Si lf~t1\,_, tl:t<\11 ibo one .conf.::rred. by Part XlV.

Thei:efore tne distinction soug't1t t..:> bJ dr-a wn be.tween prcitection. of part .XIV of the Constitution find P>rt Ill has no significance.

[663B-C, 66SA]

Mandging Director. Uttar Pradesh Wareh<; Juslng Corpora'1ioh &· Anr. v. n Vinay Narayan Vajpayee; [1980] 2 SC R. 773 at p, 784, relied upon.

c;:

I):

" G

 6:1.' Even.if the facts a)leged i.n two.heads. of charges are accepted as .wholly -proved,. yet that wold not constitute misconduct as prescribed_in Ruic 5 )J.nd no pen.atty can be impoed '!Or such conduct, for tlle reason that while Rule 25 whi_:;:h pr_scri'bcs penalties specifically provides that, any of" ' the penalties therein mentioned can be imposed on an employee for miscon'. duct com1nitted by hi1n.

Rulo 4 d1es not.specify a rnisc.oiiduct. Rule 4 styled as rGeneral' spe¢ifies a norm of bch1viour .btit do.'s not specify that its viOiation Will. co9stitute misconduct. In Rule 5, it i5 no.where stated .{bat anythirig violative of Rule 4 would be per se a miscon.duct in any of

tho sub-cl:iuses of Rule 5 which specifies misconduct.

[6668 D]

6:2. A general expectation of a .certain decent behaviour in -respect of employes keeping in vi9w corporate :culture may be a moral or -ethical expectation. Failure to keep to s.uch high standard of moral; ethica'I or aecorous b::baviour befitting an officer of the compa'ny by itself ca.noot cons ti".'

tilt~ mjsconduct unless the specific conduct f?:lls ia any of the enumerated misconduct in Rule s.

Any atte1npt to telescopJRule 4 into Rule 5 must ..

Qe looked up.on With appp::hcn.sion becaue Rttle 4 .i~ vague and of a general naturr and what is u11becoming of a public servant may vary with individuals and expose cmp!oyees to vagaries. of subjeGtiv.e cvatu1tion. What in a given context v:ould constitute cOnduct unbecoming_ of a Public servant to ho tfeated as. miscondtict would ex-Pose a grey' area not amJnable to objective evaluation. Where misconduct when prOved entails penal consequences.; 'it is obligatory 9n the employer to specify and if necC:ssafy dfiJJe. it with

.pr.cision and ac.curacy so that any ex post factO intcrprctation of some . incident may not. be Camollfttges as n1isconduct.

[665D-G] '

M/s Glaxo Laboratories (I) Ltd. v.

P'residing Of/icer, Labour Court, Meerut & OthJrs; [1984] l_. S.C.C. I, followed.

7:1. Seeking advance arid grl\ntiog the same under r-elevant rilles is at best a lan transaction.

The transaction ma)' itsel{provide for paymens an.d the conseqilenccs. of failure to repay or .to_ abide by the rules.. If the rules for granting . the advance themselves provided the consequence of the breach of conditions, it would be idle io go in. si:arc"h of any other conse'" quence. by initiating any disciplinary aclion in that"behalf unless the 1975 F.ules specifically inCorporate a rule that the bri::ach Of :1fousfl Building Advance Rul; s and the conveyance advance rules, would by themselves constitute a HmiscondUct". Therefore Rule 4 (l) (l)is not only; not attatac ... ted but u1 tbi~ cas_e no attempt_. was mad'e to establish the correction. And

1'- I , .,

• -I

A L. KARLA v. PROJEC'I' JlQPT. CORPN. 651

as far as Rule 4 (1) (iii). is concerned, an advance not refur\ded in tinle

; A where it was recovered by withholding the Salary of a highly placid officer may not disclose a conduct uO.beComing of a public servant.

Tberefore, the first head of charge is an eye-wash, It , does Dot constitute a misconduct if it can be said to be one even_ if it re1nains unrebutted. The inquiry officer h;!s not said one word_ bow the uncontrOverted facts consistute a conduct unbecoming of a public servant, or be failed to ffiainiain absolute integrity.

Regardi'ng the convey<1ce advancer the.Position is the same. The

.:1 .B apr)eBant for no fai:ilt has been plloished sub-silencio. - .. , .

[667F-H, 668A, DE, 669H)

7:'2.

Now if what is alleged as illisconduct do:s not cOnstitute mis conduct not_ by-· ana1ysis or appraisal Of evidence, but"per se under l 97S Rules the respondnt had neither theauthority nor the jurisdiction nor the power to impose any penalty for th~ alleged miscondu:; t.

An administrative C authority \Vho puports to act by its regutition must b-: h_eld bound bY the regulation.

[670H, 671A] ·

8. be dba, service.

In the matt.er-of public emptoyment if th.! tCrmin1tion is_ held. to . a declaratioD can. b~ grante!i that the man continues to be in , [67 tG, 672A] . . .

Sukhdev Sit:glf & Ors. v. Bhagatra1n Sarda~ Singh ... Raghuvananshi & Anr. [1975). -3 S.C.R,.6l9 _@ 655. Western India Automobile A:, sociation v.

Industrial Tribunal, Bombay and Ors. [1949] F .. C.R. 321 at 340. ·

9:1. Jbe dut).- tcr give reasons would permit th:;:: court heahig a peti .. tion 'ror a wflt of certiorar-i to•ex fa.::iC aqccrtaln whether there is any errOr apparent on the record. A spaki~~ order will at its bst be. reasonable ind at its _worst be a_t.least a plausible one.

If reasons for an order are given

. there will be.· Jess scope fOr arbitrary or Partial ex:erci se of power aild the order ex facie . will indicate wbethGr extraneous rn3.tters we're taken into ccmsideration by authoritr passinll. the order.

[672D-E]

M. p. Industries Ltdc . .v. Union of India and Others [1966] l S. C, R. 466 at .472; Vadachala Mnda/iar v. Stare of Madras, A. I .. R. 1952 M; dras 276; Bhagat Raja v. Union of India and Others; [1967].3 S.C.R. 302@ 320; r"Cferred to.

9:2. l{re, the findings of tho inquiry officer .are merely his ipse dixit.

No. reasons are assigned for reaching the liµdingand while recapitualating _O evidence seif:contradictpry positiOns were adoptedthat.either there was no .. 1 misconduct or ther~ was some misconduct or double punishment" was already iinposed.

Rule 27 {19) c_asts an obligation upon .th' inquiry officer at the conciu!i.ion of the inquiry ti;> prep.ire a rep:ll:t which must inte.r a!ia inClude

the "findings _o.ne:tcb ardcle of cbarg,~ and the rea"sons therCfor.

The report is pfep.:ued in co.1travonPon o( tfle afonrrnen_tiOnod rule. The situaliOn .is further compounded by the fact t'iat tb' discipli.1ary authority which ii none .. a other than Com; nittee of Management of the corporatioa while accepting the feport_ of the-inquiry officer which itself was_ defective.did notassigtt any

.' A

' :

SUPREME COURTS REMRTS (1984] 3 sc.R.

reasons. for aCceptini'the.report of the inquiry officer. Further sub rllle (ii) of R_ulC 35 'provide& amongst othcis-.that the Api>ellate "AUthority' shall consider. whether -the findingS re justified or whether the penalty_ is ex_cesSive or inadequate and pass appropriate Grders within three rnonth1 of th\J date-of appeal. In order toascertain whetPer .the rule is complied whh, theorder of the appella_te authority must show that it took intq consid.:rdtio,1 the findings the quantum of pen3lty a1ld othr rclevJnt coasideiation'>. -There is no material for showing that the appe!Jato authority acted in COD'>OD tnce with its obligation under Rul.e 35. (67 lE-H, 67 3AD-E]

9:3. '"Therefore, the orde"r of removal pas5ed by the_ Disciplinary Authority is illegal and inva.lid tttr the reasons (i) that the :ictio:l is th<,>rougbly arbitrarY and is viola.tive or , Att'. 14; (ii) that the alleged misconduct oes _not Ccnstitute miscoadu:t within the 1975 Rules; (iii) that the inquiry officer him.- elf found tbat pll:!ishment was already jmposed for the alleged miscondq.ct by withholding the salary and the app;, llant could not be e:icposed to double jeopardy; and (iv) th'!-t the finding~ of the inquiryofficer are unSup - ported by reasons and. the order or the Discipliilary Authrity as well a'3 t"he Appellate Authority suffer from the same vice.

[673H: 674A-B]

10:1; Once the order-of removal from service is held'.to be illegal and invalid arid the appellant being In public mpfoyment, the necJsSary dec1a .. ration must follow that he.continues to be _in service uninterr.uptedly. -Ordi-

~ narily, it is _wellscttled that if termirt1tion of service is held. to be bi\d, no

o-ttler punishtnent in th;~ guise of deaial of back. wages can be imposed and th; irefore; i~ mult as a necessary corollary .follow that he will be entiled to all the back wages oo the footing that h h<is Continued to be in Service uniO.teiruptedly, rr ihe appellant had procured -an alternative employment he wo_uld nofbe entitled to wages and salary -ftom the respondent. . But it is eqtially true that an Cmployee depending.On salary for his survival when_ 'heis exposed to -the vagaries of the court litigation cannot hold on to a slender

distnt hope Of jndicial process omlng to his rescue and not try to survive by accePtini; an alternative eniploYmem, a hope Whi6h may tun out to b~ a mifage .. Therefore, the appellant .was perfectly Justified _in procuring all 31ternatlve.employment:in "order to keep his body ancl soul together as also to bear the. expenses of litigatjon to Vindicate his hOaour, integrity and character.

[6748-G] •

10:2." ItoWever, in t'1e instarit case, the _appellallt shold be paid SO% of the back wages for the r_est of the_ Period during -which he remah1ed unemployed. This is so because the cOnduct of the appellant cannot be said to be entirely in consonance with corporate clilture. _As.a.highly placed officer e.was bouJd to strengthen the corporate culture and he should bave acted withill. the spirit of ·-the re&ulations both for house building adv<ince and conveyance advance, Which" are devised to help the employees.

There has been IaPSe in totallY complying-with ihese regulations -by the appeJlant though it neither constitu.tes: misconduct to attr_act a penalty .ndr substantially good enough for initiation of disciplinary inquiry,

-(6 75A-C]

' .

A.+· KALRA v. PROJECT EQPT. CORPN. (Desai, J.) 6.53 .· .· CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2703 of 1981.

A: , From the Judgment and Order dated the 23rd July, 1981 of the Delhi High Courtin C.W. No, 1648 of 1981.

M.K. Ramamurthi, L.C. Goyal and Ms. Sumitra Goyal for the Appellant.

Lal Narain Sinha, M.C. Bhanclare and P.P. Singh for the Respondent.

The Judgment of the Court was delivered by

. DE~AT, J.

Failure to adju.st the antena to the operative channel and dipping the. he:d like the proverbial ostrich in the sand so as not to view the changing kaleidos.cope of the law can alone be said to be responsible for. this trivial matter to be liroright to this Com:t.

Respon<ltit is the Projec.t & Equipment Corporation of India Ltd. ('Corporation' for short) since its formation in 1971 a wholly

own~<l subsidiary company of State Trading Corporation ('STC' for short), a Government of India Undertaking upto 1976 when it was ·. separated and since then it functions as a Government. of India undertaking .. The appellant A.L. Kalra joined as Upper 'Division Clerk in the STC on August 6; 1963.

On November 1, 1969, he came to. be promo.ted as Assistnt and earned a further promotion on M(ly 22, 19.74 as Accountant. On the setting up of the Corporation, the appellant exercising his.option came to be transferred as Accoun- . tarit to the Corporation on November 9, 1976. Under the relevant conditions of transfer,· h.e continued to be governed in the matter of recruitment and promotion by the relevant rules of the STC .. He was promoted in an officiating capawy as Deputy Jlinance Manager Grade II on June 29, 1978 and he was put on probaticin after being promoted as Deputy Finance Manager Grade II on regular basis effective from February 5, I 979.

The appellant applied for and obtained. all' advance iri the amount of Rs. 16,050 for purchasing a plot of land on April 4, 1979 for which he executed. the requisite agreement on April 4, 1979: The rules under which adfance was oblained are styled as 'The Project and Equipment Corporation was India Ltd. House Building Advance (Grant' & Recovery) Rules . ('Rules for House .Building Advance' for short) framed in exercise of the powers conferred upon the Board of Directors by the Articles of Ass0ciation of the Corporation. The appellant also applied for and obtained an advance in the amount of Rs. 11,000/- for purchase of a

654 .·

SUPRE.ME COURT REPORTS [1984l3 S.C.Jl. •

A new motor cycle on July 7, 1979. This advance is governed by wliat

. are styled as the Projects & Equipment Corporation of Indiit Ltd.

Conveyance Advanc~ (Grant & Recovery) Rules ('Conveyance Advance Rules' for short).

In respect of the house building advance. according to the respondent-Corporation, in view of Rule JO (I) (c) (i) the appellant was required to utilise. the amount drawn by him for the purpose for which advance was granted within two months of drawal and submit the documents evidencing the .purchase of plot within the prescribed

tim~ failing whic!f he.was liable to refund .at once the entire amount together with interest to the Corporation. .The agrement dated April 4, 1979 executed by the appellant also obligated him to utilise the advance for the purpose for which.the same was sanctioned and to produce the; sale-deed for verification by the C'orporation failing .which the whole of the advance had to be refunded with interest. Jt was alleged that the appellant neither utilised the advance for the purchase of plot nor refonded the amount despite several reminders and ultimately on November 13, 1979 a memorandum was served. upon him cautioning him that if he failed to refund (be entire amount forthwith, disciplinary proceedings will be initiated against him. As the.appellant failed to comply with the request made in.· the memorandum, his salary from Nove.mber .7, 1979 as a whole.was withheld for adjusting the amount of advance and the interest payable thereon: He was also charged penal foterest for the default committed by him. . ·

In respect of the conveyance advance, which was sanctioned on July 7, 1979, the.appellant is. alleged to have committed a default

0 by not purchasing the motor cycle within a period of one month as required by Rule 10 of ihe Conveyance Advance Rules, and 9n Novembet 13, 1979 he was adviseo refund the amount by Novem" ber 14, 1979 failing which he was t!)reatened with disciplinary action . . It is, however, admitted that the appellant purchased a. scooter in

. April, 1980 and submitted the dbcuments. which. appear to have be.en accepted by the Corporation, The . balance. of advance was also refunded •..

A memorandum dated JuJy 22; 1980. was served upon the appellant stating therein that the competent auth6rity proposes to hold an enquiry against him under Rule 27 of the. Project and Equipment Cotporaticn of India Ltd. Employees' (Conduct, Disci pline & Appeal) Rules, 1975 ('1975 Rules' for short). There were

• -I

. y

A, L. KALRA v. PROJECT EQPT. CORPN. (Desai, J.) 655

two heads of charges in the charge-sheet \)rawn-up against the A appellant 01) which disciplinary enquiry was proposed to.be held, :These two heads of charges read as under.; • .

Shri A.L. Kalra while functioning as Deputy Finance Manager-Grade ll in the Finance Division of the PEC during April,· 1979 applied and drew an advance of Rs. 16,050 for purchase of a plot ofland a.t Faridabad .. - "t

he did not furnish the relevant docments in the office nor did he refund the amount of advance to the Corporation within two months of the date of drawal of the advance as :required under Rule 10 (I) (c) (i) of PEC House Building Advance (Grant and Recovery) Rules.

Shri Kalra by his .above act exhibited lack of integrity

and conduct unbecoming of a public servant and violated

., U ·

· Rule 4 (!) & {iii) and Rule 5 (5) of the PEC Employees' (Conduct, Discipline & Appeal) Rules and :Roule 10 (I) (c) (i) of PEC House Building Advance (Grant & Recovery Rules and thereby committed misconduct punishable under the PEC employees (Conduct, Discipline and Appeal) Rules, 1975. . .

Article-II

Shri, A.L. Kalra drew a conveyance advance of Rs. 11,000 in July, 1979 for purchasing a motor-cycle, but did not utilise the amount for the abpv~ purpose and did not furnish cash receipt etc. evidencing purchase of the , vehicle within one month as required under Rule-8 of the , PEC Conveyance Advance (Grant & Recovery) Rules. Nor

dLd he refund the amount of advance to the Corporation as required under Rule 10(1) ibid. .

Shri A.L Kalra by his above act exhibitd lack ofinteg-. rity and conduct unbecoming of a Public servant and violated Rule-4 (I) (i) & (iii) and Rule 5 (5) of PEC Employees (Conduct, Discipline & Appeal) Rules and also violated Rule-8 and Rule-10 (is ofthe PEC Conveyance Advanee (Grant & R.ecovery) Rules and thereby committed miscon. duct punishable under. the FEC Employe~;· (Conduct . . . . . . _.' . .

• F

SUPREME COURT REPORfs ·· [1984] 3 s.c.R.

Discipline & Appeal) Rules, 1975."

. The appl!'llant was a.lso asked to submit his defence statement within 10 days from the date .of.the receipt of the memorandum.

The appellant by .his letter dated Febuary 13, 1980 requested for extension.of time to file the defence statement. fr appears , that he sought further extension of.time by thri; e weeks which request was declined by the memorandum dated Feb: 23, 1980.

The Committee of Management in exercise of the powers conferred by sub-rule (4) of Rule .27 of the 1975 Rules appoinletl Shri A.'S .. Nangia, Chief Marketi1ig Manager as the Enquiry Officer • to enquire into the charges against the appellant submitted on June T3, 1980 a detailed statement pollltlng out that the inq"irj' was the outcome of malice for various reasons therein mentioned and also explaining why there was delay in refunding the advances and specifically pleaded that in view of the fact that the first advance was sought to be recovered by withholding his salary and adjusting' the pay towards.advance and charging penal interest and in .the second case by accepting 'he document evidencing purchase of scooter, no misconduct could be said to h11vebeen committed by the appeila.nt and the diseiplinary enquiry was uncalled for.

Various other contentions were also raised in the defence statement. The iuquiry officer conducted the enquiry in respect of the afore-mentioned two charges.

One U.S. Aggarwal, Finance Manager of the Corporation appeared as resenting Officer. The apRellant conducted his own defeJJce ..

In Para 4 bf fris report, the Inquiry officer states that the 'preliminary hearings of the inquiry was held. on 3rd and 9tl1 April, 1980 and then inquiry ws held regularly on various dates from 23rd April 1980 to 22nd May, 1980. The appellant was called upon io submit his statement of defence which he had submitted on June 30, 1~80.

The findings purported to have been recordedby the jf!quiry officer were the subject matter of.a heated debate between t!ft, parties and therefore,· the report. of the. Inquiry Officer may be broadly scanned here. After recapitulating in paras 1 to 4 the various stages through which the enquiry progressed, in para 5, .it is stated that at the 'preliminary hearing on 3rd April, 1980, Shri A.L Kalra, (appellant} pleaded guilty to all the charges mentioned in Annexure I and . also agreed to the stateinent of imputation of his misconduct in support of the article$ of charges framed against him.' In part 5 (3), the inquiry officer discussed \he first he&d of charge in respect of the

A. L. KALFA v. PR01£CT EQP l. CORPN. (Desai, J.)

house building advance. It was found as a fact that the advance was taken for the purchase o( a pl•t and that the appellant had negotiated for a purchase of a plot from Shri J.C. Chugh. who was examined as a management witness and who admitted that he waited for six months fo complete the transaction but after that he disposed . of the plot. Evidence of Shri J.C. Chugh revealed that the deal was , delayed because Haryana Estate officer demanded so111e additional amount and'there was dispute between the appellant, the vendee an•d J.C. Chugh, the vendor as to who should bear the extra burden. In. paragraph 5.1.4 after 1ecapitulating the reminders sent to the appellant to refund the advance, it is observed that it is not clear from the relevant rule as to which is the competent authority to grant extension of tin1e for utilisation of the amount. And then in para~ graph 5.1.5 he recommended that the sanction of the competent authority should be taken before granting any extension. There ends the discussion on the charge in respect of house building advance.

The inquiry officer then proceeded to examine the .second head , of the charge. After recapitulating the fact aout sanction of advance and drawal of the same, it was observed that the appellant drew. the advance on July 9, 1979 and on April 7, 1980 he submitted the documents such as cash receipt in respect of purchase of .a scooter, insurance certificate, receipt of .balance amount deposited , with the cashier, original insurance policy and registration. book evidencing the purchase of scooter. It is then observed that under the relevant rules motor cycle had to be purchased within one month from the date of the drawal'Of the advance or else he should have obtained fresh sanctiOn for the purchase of a scooter instead o~ a motor cycle. hen comes the particular observation which may be exira.cted : ..

"He (appellant) did not obtain any fresh sanction for .purchase of a scooter but simply submitted the papers' for regularisatioµ of the advance and although no specific letter for sanction of the purchase of. a scooter was hued by the Personnel Division yet the fact that lie Was asked to refutid the balance amount taniamomtfs to ag; eeing defacto sanction tor the !'lurchase of the same."

H The inquiry officer then proceeds to dispose of the contention of the. appeUant. that in .other case~ of similar advance and default, ' no ac.tion was taken but he was singled out for a harsh treatment •

.' 658

SUPREME COURT REPORTS [1984]3 s.c.R.

for the reasons alleged by him but with which we are not concerne<l

. at this stage. The inquiry offieer then noticed that the full salary payable every month to the appellant was stopped'by the CorporationJrom November 16, 1979 in addition to .the inquiry under whicll disciplinary action was proposed to be taken'. The inquiry officer concluded his report as under :

• "While deciding the oaie, t.he facf ihat the salary was . stopped from 16th November, 1979 may be kept in view as thi• may, I feel, tantamount to double punishment. Normally even where an employee is suspended certain amount . of subsistence allowance is granted whereas in this case the salary was completely stopped and nothing has been paid since then."

What is referred to as the report of the enquiry which is minu-· tely scanned in the preceeding paragraphs merely seems to be the . record of inquiry and recapitulation of allegations and explanation. what is styled as findings of the inquiry officer are separately filed being Arinexure• M to the petition. This is a bald document of two paragraphs in which. the inquiry officer .records that the appellant has contravened Rule lO (I) (c) (i) of House Building Advance Rules and has thereby committed misconduct punishable urt.der Rule 4 (I) (iii) of 1975 Rules. In paragraph 2, it is stated that the appellant has committed breach of Rule 8 and Rule I 0 (i) of the Conveyance Advance Rules and has thertby committed misconduct punishable under Rule 4 (I) (iii) of 1975 Rules.

By what process this conclusion is reached or what evidence appealed to him. is left to speculation.

The reasons in support .of the conclusion ar~ conspicuous by their absence .. The findings are the ipse dixit of the inquir~ officer.

Pursuant. to this report of the inquiry officer the Executive Director for 'and on 'behalf of the. Committee of Management of the

Corporatin made an Order No. PEC.P ; 5 (8)/77 dated February 4,

1981. The heads of charges ar, e reproduced in paragraph 1. Pa(agraphs 2 and.3 are devoted to. the stages through which the enquiry progressed. In. paragraph 4, the findings unsupported .by easons are reproduced. In paragraph 5, it is stated. that the Committee of Management agrees with the findings of , the inquiry officer and imposes the punishment .removal from service with effect from the date of the order.

The appllant preferred an appeal to the Appellate Authority being the Board of Directors. of the Corporatic; iu (, Jn fbruary 211

• ,

. '

A. L. KALRA v. PROJErr EQP'r. CORPN. (Desdi, J.) •

 1981. One Anand Krishna claiming to act for and on. behalf of the Board of birectors, Appellate Authority issued •memorandum dated May 21, '1981, Annexure P to the petition in which it is stated that the appeal of th.e appellant was cpnsidered by the Appellate Authority and after going through the records of the case, the Appellate Authority has dec.ided tt,. uphold the decision of the authority and to confirm the penalty of removal imposed upon him.

The salient feature which flies into the face about the findings recorded, by the inquiry officer and the order bythe Disciplinary . Authority as well ase Appellate Authority is that none of them made a reasoned order. or speaking order and their conelusions ace . mere ipse dixit unsupported by any analysis of the evidence or r.; ason

in support of the conclusions. •

The appellant approached the High court of Delhi under. Art. 226 of the Constitution questioning the . correctnegs and validity of the findings of the inquiry officer and the decision of the Disdplinary Authority as well as the Appellate Auth9rity inter a/ia'lon the ground that the enquiry Was held in violation of the. principles'[of natural justie!l and the quasi-jqdicial authority failed to give reasons in support of its order and _the action taken against the -appellant was per se arbitrary and in violation of Art. 14 and Art. 16 . of the Constitution inasmuch as the allegations contained In the heads of charges, even if unreb_utted, do_ not consitute a misconduct within the meaning of the expression iri, l 97 5 Rules. In order to sustain the maintain abilit of the writ petition, the appellant also contended that the respondent is an instrumentality of the _State and is comprehended in the cxpre!lsion 'other authority' in Art. 12 of the Constitution .

. The writ petition came-up for admission _before a Division . Bench. of the Delhi High Court. It was dismissed in Ii mine <¥>serving

that the writ petition is not maintainable on . the facts presently set

o\\t in the petition. Hence this appeal by special leave.

. G

In order to obtain any decision on merits, the appellant will have to clear the roadblock about Jhe maintainability of the writ

•. ptition in the High Court. }tappily this untenable contention was not pursued in this Court. In para: 2 (vi) of the counter-affidayit filed by pne Mahartand Khokher on behalf of the respondents it was

unambiguously stated. that te 'respondent-Corporation is advised not to dispute t)le • piaiptainability of the petitjoner's petition as

SUPREME COUR.T REPORTS

[ 1984} 3 S.C.R.

regards applicability of Art. 12.of the Constitution.' Further in para 5.1 of the same affidavit, it was stated that as regards the assertion of the appellant that the respondent-Corporation is an instrumentality o{ the Central Government and hence withiµ Art. -12. of the Constitution, the respondent Corporation does not dispute the same. This admission was reiterated in para 5.2: Further in the written submisiions dated September 30, 1983 filed on behalf of the respondent, it is conceded that the respondent is a State within the meaning of Art. 12 for the purposes of Par.t III of the Constitu'ion, with this reservation that the employees of the respondent are not members of a civil service of the Union or all India civil service or a civil service . . . of a state or holds the civil posts under the Umon or the State and therefore, would.not be entitled to the protection of Part XIV of.the Constitution. This concession absolves us from the obligation to examine the status and character of the respondent-Corporation to determine. whether it is an instrumentality of the State and therefore,·· comprehended-in the expression 'other authority' in Art. 12 of the Constitution. Once i~ is conceded that the respondent-Corporation

i~ an instrumentality of the State aµd is therefore, comprehended in the expression 'other auth.ority' in Art. 12 o.f t.he Constitution, it is indisputable thitt it is amenable to the writ jurisdiCtion under Arts. 32 and 226 of the Constitution. Apart from the concession, the

tsts collated in the decision of the Cnstitution Bench of this. Court E in Ajay Rasia 'etc. v. Khalid Mujib Sehravardi & Qrs. etc.,(l) for \!eter- ' ·. mining whether a particular body is an instrumentality of the State

are. fully satisfied and therefore on precedent and. concession it is satisfactorily established. that the respondent-Corporation is an

. instrumentality of the State within the meaning of the expression ·

'other authority' under Art. 12 oHhe Constitution and amenable to the writ jurisdiction.· The writ p.etition filed by the appellant in the High Court was thus maintainable.

Once when in this Court it was connceded .that the respondent was aiioenable to the writ jurisdiction of the H\gh Court, the question -arose whether the matter should bt remitted to the High Court as the High Court has. rejected the writ petition . in limine on the. grourld that the respondent wao not amenable to the writ juri§dietion of the High Court. Ultimately, in on:Ier not to protract the litigation involving livelihood of the appellant, the. appeal was set down for final hearing on merits. The res):lonant•Corporation was accordingly directed to file its affidavit as also the documents on which it seeks to rely. The appeal ws thereafter heard on merits.

(1) [1981] 2 SCR 79 •

; .

A. L KA•.RA v. PROJECT EQPT. CORPN. ([/esai, J.) 661

Before we deal with the contentions raised on behalf of the A. appellant, it is necessary to dispose of a contention haing a flavour of a preliminary objectn raised by Mr, Lal Narain Sinha on behalf of the respondent-Corporation. It was urged that in th.e absence of any specific pleading pointing out whether any one else was either Similarly

situated as the appellant or dissimilarly treated the cl).arge of discri- B mination cannot be entertai.ned and no relief can be claimed on the. allegation of contravention of Art. 14 o.r Art. 16 of the Constitution ..

It was submitted that the expression discriminat.ion in; iports the concept of comparison between equals and if the resultant inequality is pointed out in the treatment so meted out the charge of discrimina- .tion can be. entertained and one can say that equal protection of law c has been.denied.· Expanding.the submission, it was urged that the use of theexpression 'equality' in Art. 14 imports duality an.d comparison which is predicated upon more than on~ person 'of situ.ation 'and in the absence of available. materiol for compariso11, the plea of discrimination must fail.

As a corollary, it was urged that ill .the absence of material for 'comparative evaluation not only the charge D • of discrimination cannot be sustained but the execqtive action cannot be struck .down im the ground that the action~!!; per Ile arbitrary. Proceeding' along, it was urged that inaking.faw.is a matter of legislative policy aud the degree of reasonableness jn every such law is equally a matter of policy nd policy . of the legislature is not. judicialljj, reviewable n the specious plea that it is either arbitrary or un- E reasonable.

It ls difficult to accept the. submission that executive action which results in. denial of equal protection of law or equality before 'law ca.uuot !>e judicially reviewed uor can it bestruckdown on the groupd of arbitrariness as being violative of Art. 14.

F Conceding for the present purpos~ that legislative action follows a legislatiye policy and the legislative policy is notjudicially reviewable, but while giving concrete shape to the legislative policy in the form of a statute, if the law violates , any of.the fundamental rights including Art.. 14, the same is void to the extent as.provided in Ar(.

13. If the law is void being in vio1ation of ny <if the fundamental G rights set out in Part III of the Constitution, it cannofbe .shielded on , the ground that it enacts a legisfative policy. Wi, sdom of the leglslit- .. tive policy may not be open to judicial reviewbut when the wisdom takes the'cOncrete form of law, t!)e same mut stand the test Of being in tune with the fundamental rights and if it trenches upon any of the fundamental rights, it is vaid as ordaiped by Art; 13.

' H

662 ' SUrREME, COURT RE~ORTS [1984i :l s.c.v.:'

 _The scope and ambit of Art. 14 have been the subject matter of. a catena of decisions.

One fact of Art. 14 which has been noticed i? E.P. kvyappa, v. State o/T'amil _Nadu .& Anr,.(1) deserves special men

!ton becaus~ that effective1y answers the contention of Mr. Sinha:

.- ; me Constitution Bench speaking through Bhagwati, J. in con'curring Judgment in Royappq's, case observed as under : - . ,

"The basic . principle which,- therefore, informs both Atts. 14 aJ!d 16 is equality and inhibition against discrimination.. ]"ow what is the content and rea9h of this great equalising. principle ? It is .a founding faitJl, to use the words of pedantic or lexicographic.approach.; We cannot cpuntenanCe' any attempt to trnncate its all-emoracing scope_ and meaning, for to do so would be to violate its activist magnitude. Eguality is a dynamic concept with many aspects and _dimensions and it cannot be "cribbed, cabined and copfuied" within traditional and doctrinaire limiis.

From a pcisitivistic point of view, equality' is antithetic to arbitrariness.·. In fact equality and arbitrariness are sworn enemies ; on~ belongs , to /he. ru'le of law in a republic while the other, to the whim ancfcaprice of a:n absolute monarch.

Whe~ an act is arbitrary it is implicit in it that it is unequal l;>oth according to political logic and constitutional law and !s therefore violative of Art. 14, and if it affei!'ts any matt~ relating to public employment, , it is also violativ~ of Art. 16._ Arts. 14 and 16 strike at arbitrariness in State action and ensure fairne~ and equality of treatment."

' . , . . : .

F This view was approved by the Constitution Bench ii) 1jay Hasia case It thus appears well-settled that. Art. 14 strikes at arbitrariness in ·[executive/administrative action _because any action that is arbitrary must, necessarily involve the negation of equali\y, One_ need not confine the denial of equal_ity to a comparative evalaation between two persons to arrive at a conclusion of discriminatory treatent. An G -~ action per se arbitrary itself denie> equal of proteetion by law. The.

Constitution Bi; nch p;; rtinently obsered in Ajay Hasia's case and puJ the matter beyond controversy wh'en it said 'wherever, therefore, there is arbitrariness in _State action whether it be of the legislature or of the executive or ofan "authority" under Article 12, Article 14 immediately springs into action _and strikes down such State action.' . ,

1:1

(I) [1974] 2 SCR 348.

y- '•

. ' .

~.··

A. L. KA~RA v: PRoiECT EQPT. CORPN. (Desai, ],) 663,

This view was further elaborated. and affirmed in D.S .. Nakra v. A!.

Union of India.(1)-in Maneka Ganifhi v. Union vf IndiiJ(') it was observed that Art. 14 strikes at arbitrariness in State action and ensure fair-. ness and equality of treatment. It is Mius too late in the day to contend that an executive action shown to be arbitrary is not either judicially reviewable or within tlle reach of Art, 14. The contention as"formulated by Mr. Sinha must accordingly be negatived.

B .-

It must be conceded in fairness to Mr. Siriha that he_ is right in submitting tj:iat even if the respondent-Corporation is an instrumen~ ta!ity" of the S\ate as comp_rehended in Art. 12, yet the employees of the Corporatiou are not governed by Part XIV of the Constitution . . Could it however be said that tt: protection conferred' by Pari III on C ,

public servent• is comparatively less ffective than tbe one conferred by Part XIV? This aspect was examined by this.Court in Managing

Direetor; Uttar Pradesh. Wareousi!'g Corporation & Anr. v. Vinay Narayan Va; payee(!)where 0 .. Chinnappa Reddy, J. in a concurring _judgment has spoken so eloquently about ii that it deserves quota-

~: D

"!find it very hard indeed to discover any distinction,' on principle, between_ a person directly under the employment of the Government and a person under the employment of an agency crr instrumentality of the Government or a Corporation; set up under a st'!ltute or incorporated but wholty owned by the Government. It is self evident and trite to s~Y that the function of the Sta_te has long since ceased to be confined to the preservation of the public peace the exaction of taxes and.the defence of.its frontiers. It now the funC!ion of the State to secure 'social, econo)llic and political justice', to preserve 'liberty of thonght," expression, belief, faith and worship', and to ensure 'equality .of status and Of opportunity'. That is the proclamation of the people in the preamble to the Constitution. The desire to attain these objectives has necesarily resulted in intense Governmental activity in manifold ways.

Legislative and exe9l!iivity have re_aclled very .. far and have touched very . many aspects of a citizen's life.

The Government, directly or through the Corporations, set up by .it or owned by it, .now owris . or manages, a large mimber of industries and institutions. It is the. biggest builder in the country.· Mam-

(1) [198311 sec 30;

(2) [1978] 2 SCR 621 ·

(~ [1980] ,2 SCR 773 at p, 784

H .

. 664.

SUPREME COURT REPORTS [1984) 3 s.cJt.

moth and . minor irrigatici~ projects, heavy and light engineeri.ng projects, projects of various kirids. are undertaken by the Government; TheGovernment is also the biggest trader . in the country. The State and themuLitudionous agencies and Corporations set up bY it are the pi; jncipal purchasers of the produce and the products of our country and they control a vast and cpmplex machinery of distribution. The . Government, its agencies ani:! instrumentalities, Corporations, set up by the Government uder statutes and Corporations incorporated. under the Companies Act but owned by the Government have thus becollie the biggest employers in . the cou'ntry. There is no:-good reason wpy, if Govern··· ment.is bound to observe the equality cl; mses of the constitution in the lljatter of employ merit a'nd in its dealings with

the employees, the Corporations. set' up or owne<l by the . .

Government should not be.equally boundand why, instead, such Corporations, could become citadels of patronage and arbifi; ary action. Jn a country like ours which teems with population, where the State, its agencies, its instrumentalities nd its . .Corporations are th.e biggest employers and. where millions seek employment .and security, to confirm the applicability of the equality clauses of. the constitution, in relation to matters,. of employment; strictly to direct employment {lnder the Government is perhaps to mock at the Constitution and the people. Some element of public employment is all that is necessary to take the employee beyond the reach of the rule which denies him access Jo a Court to enforce a contract of em$Joyment and denies him the protection of Arts.14 and 16 Qf the Constitution. After

all employment in the public sector has grown to vast dimensions and employees in the public sector often disc.barge as onerous duiies as civil servants and. participate in activi ties vital to our country's economy. In growing realization of the importance of' employment in the public sector, Parliament and the Legislatures of .the States have declared persons in the service oT local authorities, .Govefriment companies and statutory corporations aspublic servants an.d extended to. them by express enactment the protection U.Sll• ally extendd to civil servants from suits a.nd prosecution.

It is, therefore, but right that the independence and integtity of those employed in th~ public sector slfould be secured as much as the independence and integity of civil servants." ,

. ;

.... '

.. '

A. t. KALRA v. PRolEct EQPT. CORPN." (Desai, J.)

There fore the dis; inction sought to be drawn between. protection .of

A . part XIV of the Constiution and Part III has no signiticance .

. And now to the facts. The gravamen of the two heads of .• charges is that _the appellant is guilty of misconduct as preScribed in

Rule 4 (I) (i) and (iii).

It reads as under :

"4 (I) Every employee sall at all times :

(i) .maintain absolute integrity ;

(ii) ~-

(iii) do nothing which is unbecoming of a public , servant:" Rule 5 prescribs various misconducts for which.action can be taken against au employee governed by the rules.

Rule 4 bears the heasJing 'General'. Rule 5 bears in the heading . 'misconduct'. The draftsmen of the 1975 Rules 1'1ade a clear distinction about. what Would constitute misconduct. A general expectation of a certain decent behaviour in respect of employees keeping in view Corporation culture may be a moral or etical expectation.

Failure to keep to 'such high standard of moral, eJhical or decrous behaviour befitting an officer of the company by itself cannoi constitute miscond1!ct unrss the specific conduct falls in any of the o; numerated miscon-. duct in Rule 5.

Any attempt to telescope Rule 4 into Rule. 5 must be lookeil upon with apprehension because Rule 4 is vague and of a general nature and what is unbecoming of a public. servant may vary •

with individuals and expose employees to vagaries of subjective . evaluation. What in a given context would constitute conduct unbecoming. of a public servant to be treated as misconduct . would expose a grey area not amenable to objective evaluation.

Where misconduct when proved entnils penal 'consequences, it is obligat:Jry on the employer to specify and if necessary define it with precision and accuracy so that any ex post faeto. interpretation ofome incident inay rrot be camouflages as misconduct. It is not necessary to dilate on this point in view ofa i; ceat decision of this Court in M/s Glaxo • Lobouratories '(l) Ltd. v. Presiding Officer; Lobour Court, Meerut . & Others (1) where.this Court held that 'everything which is required . to be prescribed has .to be prescribed with precision and ob argument can be entertained that some_thing not prescribed can yet be. taken

(I) [1984) I S.C.C. I •

E •'

• SllPREME COURT REPORlS iJ 984) 3 s.c.Ji.

into account as varying what is prescribed. 1n short it canbOt be left to the vaga, ies. of management to say ex post fucto that some'acts

of omission or 'commission nowhere found to be enumerated inthe . relevant standing Of is ntietheless a misconduct not strictly falling wiihin the _enumerated misconduct" in ihe relevant standing order but ,, yet a miscondµct for the purpose of imposing a penalty.' Rule 4 styled as 'General' specifies a norm of behaviour but does not specify . that its violation will constitute misconduct. In Rule(>, it is nowhere stated that anything violative of Rule 4 .would be per as a misconduct in the sub-clauses or' Rule 5 which specifies misconduct. It would therefore appear that even if the facts alleged in two heads of charges are accepted as wholly proved, yet that would not constitute misconduct. as pres.cribed in Rule 5 and no penalty can be imposed .for such conduct. It may as well be-mentioned that Rule 25 which prescribes penalities specifically provides thai any of the penalities therein mentioned can be imposed on an emyloyee for misconduct committed by him. Rule 4 does notspecify a misconduc.t.

Mr. Ramamu¥hi, learned counsel for the appellant further 'contended that the very. initiation of the disciplinary enquiry and

.imposition of ptlnishment. of removal from service is thoroughly arbitrary and discloses a vindictive attitude on the part of tl\e respondent Corporation. It was urged that the two heads of charges per se do not constitute any misC'onduct and. they can be styled as. trumf)ed-up 'which even jf held approved wouid not render the .apellant

liable for any pumshment. Thetwo, heads of charges have .been eJ; ttacted herein before. Charge No. 1 refers to the dra"Cal of a House Building Advance and failure to -comply with the requisite rules . p, rescribed for House Building Advance. According• to the finding

recorded by the inquiry officer, the failure of ihe appellant to refund the amount of advance to the respondent-Corporation .within two . months of the date of the diawal Would be violative of Rule 10 (1)

(c) (i) df th~ House Building Advance. Rules and it would constitute misconduct within the meaning of the expressioi1 in Rule4(1 \ (ii1)of 1975 Rules.· Rule 10 0) provides that' the advance-shall. be drawn in instalments as prescr.ibed in vaiious sub, clauses .. The relevant sab-clause in this case is sub-cl.- (C} "".l; iic!t provides that "when

a:dance is required partly for purchase of fand and partly for c9nstructing a single storeyed new house thereon.; (i) not more than 20% of the sanctioned advance on execution by th_e applicant employees an agreement in the required form for repayment of the advance. · The amount will be payable to the applicant only for purchasing a

' .

A. ii,, KALRA v. PROiECT EQPT. CORPN. (Desai, !.)

developed plot of land on which construction can commence Imme diately and saJe deed in respect thereof be produced .for the inspection

of CPM/RM within,.tw.o months of th, e date QI) which 2Q% of the advance ii draw~ or within such further time as the. CPM/RM may allow in this behalf failing wh.ich the employee shall be liajile to refund_ at -once the entire amount to. the Corporation together with interest thereon." A bare reading of the relevant role wjllshow that it ptovides for obtaining. advance which fa thfs case was taken for purchasing a plot. The inquiry officer accepts the evidence of Mr: Chugh that the appellant had 'negotiated with him for purhase of a plot but some dispute arose about some addition.a!' expenditure aµd . the negotiations protracted over a period of six months, Now para

I sub-cl. (CJ confers on CPM/RM power to extend the rime for finalising' the deal or call upon the employee to refund the entire. amount and he is liable to pay interest thereon. This is the only consequence .

o( taking advance and failure to keep to the . time-schedule. The" relevant rule is a selt contained provision providing for 'the condicion foi grant of advance, time table for repayment and consequence of failure to hep to the time schedule .. The House -Building Advance was drawn on April•4, 1979 .. On November 13; 1979 the appellant was asked to refund the entire amount. Immediately ori November '16, 1979, an order was made withholding the entire .salary of the_

appellant. Even the Inquiry officer ivas constrained to observe that the appeilant was exposed to dqltble jeopardy inasmuch as his salary ·

as a whole waswithhHd and he was bing removed from service. It is also pertinent t~ not\' that the inquiry officer is not clear when he

S)lid 'that once. the power to extend the time lo repay the advance is conferred anJ Nnal interesi is charged, is any rule.violated.'' This is

not an attempt .to ieappreciate evidence in the casC' but the entire thing is being analyseq to point out that the action apart from being arbitrary is motivated and unjust. ·

If the rule• for g!anting the advance themselves provided the

-~- consequence of the breach of conditions, it would be idle lo go in search of any other.consequence by initiating any disciplinary action in that behalf unless the 1975 Rules specifically. idcorporate'a rule . that the breach of Hqjise Building Advance Rules would by itself .constitute a misconduct. Tl:i'at is not the case h<re as will be presently pointed out. - '

.. F

Seeking advance and granting the same under rele:vant .rules is . H. at best a loan transaction. The transaction 'may il$elf provide for

.A .. •

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• SUl'REME COURT REPORTS . tI984j 3 S.C.R .

repayment and. the consequence of failure to repay or 'to abide by the rules. . That 'has beerr done. in this case. Any attept to gq, in search of.a possible Other consequence of breath of contract itself appears to be arbitrary and even motivated. However, the more serious infirmity in framing this head of charge is that according to the inquirJ. oflker this .failure to refund the advance within the time

frame' in which it \vas sanctioned , constitutes violation of Rule 4 (!) (iii\.

Let. us turn to the chrge-sheet drawn-up againstthe appellant. Under thlirst head of charge it was stated that the appellant 'was guilty of misconduc't as prescribed i~ Rule 4 (l) (i) and (iii).

Rule4 (i),(i) provides that every employee sl)all at all times maintain absolute integrity. How did the que.siion of integrity arise passes com pre- .hens\ on. The appellant appliec\ for. Hous.e Building Adv.cane. Inquiry Officer says that the appellant had negotiated with Mr.

Chugh.for purchase of a plot. There is not even negative evidence 'or evi.dence which may permit .an inference that the honse building ~

Vance was utilised for a purpose cit her than for ',)'hlch it was granted.

Therefore Rule 4 (l) (i) is not only attta.cted hut no attempt was made efore us tci sustain it: Aud. as far as Rule 4 (I) (ii.i) is con: cerned; v.ie fail to see' how an advance not refunded in time where it was recovered by withholding the' salary of a highly placed officer. discloses a conduct. unbecoming of a public servant. Therefore, the first bead or'cnarg., is an eye-wash. It does not constitute a, miscon• ductif it can be said to be one even if it remains unrebutted. The inquiry officer has not said. one word how 'the

0 uncontroverted facts constitute a coildµe, t unbecom, ing of a public servant, or he failed to

maintairl.' absolute integrity . ·.

..... \.

A. L. KALRA v. PROJECT EQPN. CORPN. (Desai, J.)

advance, the whole of the advance together with the interest accrued thereon would become refundable. As the appellant did not keep io the time-schedule, memos dated. August 20, September 24, November 12 and November 13, 1979 were served upon him calling upon him to either furnish the req'uisite documents or to refund the advance latest by November 14, 19.79. The inquiry officer in t9is connection,

recpitulated the facts in paragraphs 5'2, 5·2·1, and 5·2·2,. Then he proceeded to record a finding that the appellant 'iin April, 7, 1980

submitted the docume'nts namelycash receipt in respect of purchase of a scooter, insurance certificate, receipt showing deposit of the balance of advance with cashier, original insurance policy and registration book for purchase of the scoote~. The report does not show the date of purchase which could have been ascertained with certainty from the insurance certificate as well as the cash receipt.

After recapitulating these undisputed facts, he stated that the fact . that 'he (appellant) was asked to refund the .balance amount tantamount to agreeing de facto sanction for the purchase of the same .

(scooter)'. In the. last paragraph, he has stated that a stoppage of the salary effective from November 16, 1979. in the opinion of the inquiry officer taniamounts to imposition of double punishments and this is compounded by not,. paying even a subsistance allowance. We scanned the report minutely with the able assistance of the learned . counsel for the respondent subjecting it to microscopic analysis to asceriain whether the inquiry officer recorded any fin.ding in respect of this charge adverse fo the appellant. We found none.

On the • contrary, a comprehensive reading of the report .clearly indicates that the inquiry officer, was satisfied that the delay in submitting the documents and purchasing a scootet instead of a motor cycle should not have been visited with such. drastic punishment of.stoppage of salary altogether and yet compelling the appellant to render service without qui¢ pro quo. Curiously, however, in a separate document recorded a! finding, the inquiry officer has held that the . appellant contravened Rule 10 ll) of the Conveyance .Advance Rules which . woulr! constitute misconduct within.the meaning of the expression in ·

Rule 4 (I) (iii) of the 197:.0Rules. The report and the findings are wholly irrecondlable and left us guessing about the approach of the inquiry officer, his' conclusion and bis finding> This aspect considerably troubled us because we would presently point out thai the .disciplinary Authorfty as well as the appellate authority have declined a peep into the working of their minds by making a reasoned or a speakng order. The appellant app, ears to us to.have been.coqvicted sub sileru; io, .

'A

SUPREME COURT REPORT5 (19841 s.C.~.

'fhe first questlon we. tilust pose to ourselves is whether taking the findings of facts as recorded by the inquiry officer a11d actepiing for the present purpose that they are not. open to '(i judicial review, do tliey constitute misconduct so as to invite penalty.? According to the inquiry officer, failure either to produce the documents or to refund the ai&unt within a period of one n;10nth . from the drawal of the conveyance ai:tvance constitutes cc; mtravention of Rule 10 (l)of the Conveyance Advance Rules. Rule 10 .reads as under : ·

"10. (1). Where an employee after taking adyance is nnahle to purchase the vehicle for any reasop, he sha:ll refund with• in one month bf drawal of advance the full amount with interest thereon to the Corpotatio~. If he fails to do so, he shall be liable to disciplinary • actionfor misconduct in addi- . . tion to liability for payment ofadditl\1nal interest in accordance withSub Rule (2).

(2) Where an amount of advance is retained by an em_ployee beyond one month or where the employee fails to produce evidence of purchase, insurance policy of registration book, the normal rate of i!)terest nnder Rule 5 will be charged for the first month and for the period in excess of one .month iil addition to the normal .rate of interest, addi- tional interest at a rate equivalent to difference between the borrowing rate of the . Corporation and the normal rat~

chargeabl~ under Rule 5 wiH be charged. The additional rate of interest will be compound interest and it will be merged with the principal at monthly. inte!vals for the purpose of calculating interest for subsequent periods."

. . , I

In this connection, our attention was drawn to Circular dated .

December 11, 1979 issued by the respondent-Corpotation which provides that henceforth a penal iMeest will be lcvicd/cliarged 'on' the total drawn. amonnt under the Conveyance Advance Rules in cash vochers or receipts are .not produced. to the Personnel Division within the prescribed peri9d, or in case !!Te amount drawn is refumled '"without utilisation.; It thus transpires that drawal of the advance, if not utilised within the prescribedperiod or if not refuded within the saqie time, will expose the drawer to a liability to penal interest. And. in this case, it has been so charged.

Now if what is alleged as misconduct does not constitute miscon- . duct po~ bj analysis er appraisal 9f evidence, but per s~ under )975

A: L. KALRA v. PROJECT EQPN_. GORPN. (Desai, J.) • 671

Rules the respondent had neither the authority" nor: the jurisdiction no,. the power to impose any penalty for the alleged misconduct. An administrative, authority who purports to act by its regulation mµst be held bound by the regulation. 'Even if tliese. regulations have no force of law the employment under these corporatiDns is public employment, and' threfore an emplee would get a >Status which would enable him to obtain a declaration for continuance in service, if he was dismissed or discharged coqtrary to the regulations.' [Sukhdev Singh & Ors. v. Bhagatram SarJar Singh Raghuvanshi and

Anr.(1)]

If thus it is satisfactorily established that the employment under such Corporation like the respondeqt which is .an instrumentality of the State, is public employment, it is difficult to entertain the submission of Mr. Sinha which did prevail for some time in the days gorieby that contract of public service'cannot be specifically enforced.

Mr .. . Sinha in this connection relied upon Sec. 14 of the Specific Relief Act, 1963 and urged thai where the origin of employment is in a contract the breach of it cannot be remedied by dirtcting specific performance of a contract . of personal service. He also drew our attention to Western India Automobile Association .v. Industrial Tribunal, Bombay and Ors.(') Where a Constitution Bench of this Court has observed as under ;

"It is true that this Tribunal can do what no Court can, namely, "!dd to or alter the terms or conditions of the contract of service. Express power to do so is given by the regulation, while there are no words conferring a power to reinstate or revive a contract lawfully determined."

Reference was also made to Dr. S.B. Dutt v. University of Delhi(•) , , wherein it was held that an arbitrator appointed by the parties and

functioning under the Arbitratio11. Act, i940 cannot by bis award enforce a contract of personal service in i:.ontravention of the prov!- . sions of the Specific Relief Act and this discloses an error apparent • on the face of the award. But neither Sec, 14 nor the aforementioned two decisions. can rerider .any assistance to the respondent because it 'is well-sttled that in the matter of public employment if the termina-

(1) (1975] 3 S.CR 619 at 6S~.'

(2) [1949] F.C.'I\. 32\ at 34()

(f) [1959].S.C, R. 123~ ..

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SUPREME COURT REPORTS

(1984) 3 S.C.R •.

A •tion is held to be bad; in_ view of the latest decisions in Sukhdev

Singh and Ut(/; lr Pradesh Warehousing Corporation's cases a declaration can be granted that the man continues to be in service.

Mr. R, lmamurthi on behalf' of the appellant further contended 'that' the order of removal' from service is void as it is passed iµ violation 0(1he principles of natural justice and at any rate an order imposing penalty by a quasi'judicial tribunal must be supported by . reasons in support of its conclusions. Jt was urged that duty to give reasons would permit the court hearing a petition for a wri!'of certiorari to ex facie ascertain whether thete is any error apparent on the record) n was conceded that for the present submission adequacy or sufficincy of reasons 1s nqt questioned.

What is contended is that the inquiry officer has merely recorded his ipse dixif and no reasons are assigned in support of the findings.

The mental process is conspicuosly silent. A speaking order wiil at its best be reasonable and at its worst be at least a plausible one (M.P. Industries Ltd. v ..

Union of India &Others).(') What"prevents the authority authorised to.impose penalty from giving reasons? If reasons for an order are given, there will be less scopefor arbitrary or partial exercise of poiver ancl the orders ex faci~ will indicate. whether extraneous circumstances were taken into consideration by authority passing the order. This view in Vedachala Muda/iar v. Sta.te of Madras(') was approved by this Court in Bhagat Raja v. Union of India and Others.(•) As pointed out earlier, the findings of the inquiry officer are merely his ipse dixit.

No reasons are assigned for reaching the finding anda'{hile recapitulating evidence. self-contradictory position were adopted that either there was fio misconduct or there was some misconduct or double punishment was already imposed. Rule 27 (19) cast_s an obligation upon the inquiry officer ait the conclusion of the inquiry to prepare a -rep0rt which must inter alia include the findings on each.article of charge and the reasons therefor. The report is prepared in contravention of the aforementione.d rule.

G 1 The situation is further compounded by the fact that the discip , linary authority which is none other than Committee of Management of the Corporation; while accepting the report of the inquiry officer which itself was defective did not assign any reasons for accepting the report of the inquiry officer.

After reproducing the findings of the

.ff (I) [1966} l SCR 466 at 472. ·

(2) AIR 1952 M.ldras 276. (3] [1967] 3 SCR 302 at 3~0, •

A,.L. KALRA v. PROJECT EQPN. CORPN. (Desai, J:}

inquiry officer; it is stated that the Oimmittee of Management agrees with th.e same. Ii is even difficult to make out how the ommittee Of

Management agteed with the 9bservatio'ns of the inquiry officer because at .one stage while recapitulating the evide.nce the inquiry

officer unmistakably observed that appellant was subjected to1doilbJe punishment and at olher place, it was observed that granting extension of time and acG!lptance of documents and balance advance would tantamount to xtending the time which would make the affair look Wholly innocuous. This shows utter non-application of mind of the biseipliiiary Authority and the order .is vitiated .

. A detailed appeal wa~ submitted by the appellant to the Board of Directors runn.ing itito about 8 . pages .. The only order while di11missing the appeal brougl\t.to. our notice is communication by_ a gentleman Anand Krishna whose authority and designation are not

stated, but who purported to act on"behalf of the Board of Directors, that the appellate authority, after going through the records of the "case, !\as decided to uphold the decision of the disciplinary authority .andto confirm the penalty ofremoyal fmm service H:\1posed upon the appellant. Rule ~5 of 1975 Rules deals with app.eals, Sub-rule (ii) of:Rule 35 provides amongst others, tj:iat the Appellate Authority shall consider whe!her the findings are justified oi whether the penlllty is_exces$ive oi inadequate and. pass appropriate orders within three m11nths of the' date of appeal. In order to ascertain whether the rule <jg complied with;' the order of th(}: appellate authority must show thitt it took into consider-ation . the. findings the quantum of penalty

and other relevantconsiderations. There is no material for showing th!iM'he" allate authority / acted in consonance with its obligation u.nderRule 35: However; in para 5.14 to 17 ofthecounter-iiffidavit, it was statetf.thaf 'full inquiryreport with annexute can be shown to

the C!JUrt at the time of hearing, if desired.' If the respondentws anxious to sustain its action, it was obJ.igatory upon it to disclose the fu!Hnquiry report. Nothing was shown !o us ?or any attempt to show the proceedings of the appellate authority to disabuse out m.ind ' ' . thaf the appellate authority was guilty of utter non-application of

mind and discharged its duty under Rule 35 .. No attempt was made - . t<i urge that the three authorities had ever assigned reasons in support of their conclusions. Far this additional reason also, the initial order of the Disciplinary Auihority as well as the Appellate Authority are . lial!ki to quashed and set aside.

To sum uv the order of removal passed by. Disciplinary Author\!Y is iUega~ an.d , invalid for tl; le rea?ons : (i) thai the action is thoroughly aj:bitrary and is vi<Jlatlve of Art. l 4, (ii) th11t the :alle$ed

673 \ '

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(1984) 3 S.C .• R.

Y-•.

misconduct does not constitute misconduct within the 1975 Rules; A

(iii) that the inql1iry officer himself found that punishment was already imposed for the alleged misconduct by withholding the salary and the appellant cou.ld riot he exposed to 'double jeopardy ; and (iv) that the findings of the inquiry officer are unsµpported by reasons and the

order of the Disciplinary Authority as well as th~ Appellate Authority suffer .from the same vice. . Therefore, the. order of removal from service as well as the appellate order are quashed and sei !1Side.

 The last question then is to what relief the appellant is entitld ? Once the order of removal from service is hekl to be illegal and invalid, and the appe)lant being in public employment, the necessary dy:claration must follow that he continues tobe in service.uninterruptedly. This aspect does not present any difficult" and. the declaration is hereby granted.

When removal from service is held to be illegal and invalid, the next question is.whether~ _the .victim of such action Is entitled to backwages. Ordinatily, it is well-settled that if termination of service is held to be bad, no other punishment iil the guise of denial of back wages can be imposed and therefore, it must as a necessarycorollary . follow that he will _be entitled to .all the back wges on the footing that

he has continued to be in service uninterruptedly. Bnt it was pointed . ont iri this case that the appellant was employed as Factory Manager by M/s KDR Woollen Mills, A-90, Wazirpur Industrial Area, Delhi from where he resigned with effect from August 8, 1983, It was also submitted that he was drawing a salary of Rs. 2500 per, month.

Now if the appellant had procured an alternative employment, he \yould not be entitled to wages and salary from the respondent.

B.ut it is equally true that an employee depending on salary for his survi- • val when he is exposed to the vagaries of the court litigation cannot hold on to a slender distant hope of judici;; l .process coming to his rescue and not try to survive by accepting an alternative employment, a hope which may turn out to be a mirage; Therefore, the appellant was perfectly justified in procuring an alternative employment in order to keep his, body arid soul together as also to bear the expenses • of litigation to vindicate his honour, integrity and character.

The submission of the respndent that the appellant had accepted . employmentwiih M/s _KOR Woollen Mills may be accepted in .view of the evidence tendered in the case. Therefore, the appellant would not be entitled to salary for the period. h~ was employed with M/s KOR . : W oolfon Mills.

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' A .. L. KALRA v. PROJECT EQPT. COR'PN. (Desai, J.) 675

Even for the rest of the period, the conduct of the appellant .

A cannot be sid to be'entirely in consonance with corporate culture.

As a highly placed officer he was bound to strengthen the corporate culture and he should have acted within the spirit of the. regulations both for house building advance and conveyance advance, which are devised fo help the employees. There . has been lapse in . totally complying with these regulations by the appellant though it rieiter B [constitutes misconduct to attract a penalty nor substantially good

enotlilh for initiation of disciplinary inquiry. Accordingly, having. regard to all the aspetcs of the case, the 11ppellant should be paid 50 % of the back wages for the period since his removal from service upto his reinstatelllent excluding the period for which he had procured]' an alternative employment. The respondent shall also pay the costs C of the appella9t quantified at Rs. 3000.

S.R.

Appeal al/owed,.