HINDUSTAN PAPER CORPORATION A v.

PURNENDU CHAKROBARTY AND ORS.

OCTOBER 30, 1996

[B.P. JEEVAN REDDY AND K. VENKATASWAMI, JJ.] B

Service Law :

Hindustan Paper Corporation Conduct, Discipline and Appeal Rules: Rule 23 (vi) (E).

Loss of Lien in the event of unauthorised absence or overstayal of leave for more than specified number of consecutive days-Validity a/- Held: The said provision subject to principles of natural justice-Hence, not arbitrary, unreasonable or violative of Article 14-Constitution of India,

1950, Article 14.

Rules 23(vi)(E) and 25-Principles of natural justice-Requirement of complying with-Before termination of lien under R23 (vi) (E)-Held: was satisfied by calling for explanation of employee concerned-Holding

of enquiry under R25 not necessary as loss of lien under said Rule did not amount to major penalty-Mere show cause sufficient when only loss of E lien was involved.

Rule 23 (vi)(E)-Lien-Termination of-For unauthorised absence for more than prescribed period-Such termination set aside by High Court- Held: Although High Court ought not to have set aside such termination F of lien, in the circumstances of the case, directed to be treated as compulsory retirement from date of order of termination of lien-Employee concerned directed to be given all pensionary and terminal benefits.

The respondent was an employee of the appellant-Corporation.

He entered service as a Fire Fighting Officer and was promoted as G Assistant Manager (Security and Fire-Fighting). The day after he applied for cdsual leave an FIR was lodged against him under Sections 302/201 read with Section 34 of the Indian Penal Code, 1860. He continued to apply for extension of leave but the ppellant Corporation refused to sanction his application and informed him that he was liable to be treated as an unauthorised absentee. The H 159

A appellant-Corporation called for his explanation and finding his explanation to be improper passed an order that under Rule 23(vi)(E) of the Hindustan Paper Corporation Conduct, Discipline and Appeal Rules he had lost lien on his appointment with the Corporation.

The respondent-employee filed a writ petition before the High B Court challenging the aforesaid order. The High Court set aside the order and directed re-instatement of the respondent with 50% back wages. Being aggrieved the appellant-Corporation preferred the present appeal.

During the pendency of the appellant's appeal, this Court C directed the appellant to pay I /5th of the arrears to the respondent.

This direction was complied with. By the time of this decision the respondent was due to retire shortly.

On behalf of the appellant-Corporation it was contended that Rule 23(vi)(E) of the Rules had to be construed by reading into it the D principles of natural justice.

Allowing the appeal, this Court

Held I. In view of the concession by the appellant-Corporation E that Rule 23 (vi) (E) of the Hindustan Paper Corporation Conduct, Discipline and Appeal Rules must be read and given effect to subject to the compliance of the principles of natural justice, it cannot be said that the Rule is arbitrary or unreasonable or ultra vires Article 14 of the Constitution. Be.fore taking action under the said clause, an opportunity should be given to the employee to show cause against F the action proposed and if the cause shown by the employee is good and acceptable, it follows that no action in terms of the said clause will be taken. Understood in this sense, it cannot be said that the said clause is either unreasonable or violative of ArtHcle 16 of the Constitution. (167-B-C] G

2. The requirement of complying with the principles of natural justice before terminating the lien under Rule 23 (vi)(E) of the Rules was satisfied by calling for the explanation of the respondent. Holding of an enquiry under R. 25 of the Rules is not necessary as loss of lien under Rule 23 (vi)(E) does not amount to a major penalty. A mere H issue of show cause notice would suffice where only loss of lien is

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HINDUSTAN PAPERCORPN. t'. PURNENDU CHAKROBARlY [VENKATASWAMl, J.] 161

involved. [167-FG) A

D.K. Yadav v. JMA Industries. Ltd., [1993) 3 SCC 259; Hindustan Steel Ltd. v. Presiding Officer. Labour Court, [1976] 4 SCC 222; L. Robert D.Souza v. Executive Engineer, Southern Railway, [1982] 1 SCC 645 and Delhi Transport Corporation v. D.TC. Mazdoor Congress, [1991] Supp 1 sec 600, referred to.

3. Although there was no good reason for the High Court to interfere with the order of the appellant-Corporation, and in view of the fact that the respondent is due to retire shortly, taking the totality of the facts and circumstances of the case and having due regard to the services rendered by the respondent, the ends of justice C would be met if the appellant-Corporation is directed to give all pensionary and terminal benefits to the respondent treating the case of the respondent as compulsory retirement on and from the date of order of termination of lien by the appellant-Corporation. The amount already paid pursuant to the interim direction of this Court is not liable to be refunded by the respondent and not to be adjusted D against the terminal benefits payments, if any. [169-A-C]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 13389. of 1996.

From the Judgment and Order dated 13.11.95 of the Assam High E Court in W.A. No. 466 of 1994.

P.P. Rao, Raj kumar Gupta, H.P. Shanna and Rajesh, for the Appellant.

Sanjay Parikh for the Respondents.

The Judgment of the Court was delivered by

VENKATASWAMI, J. Leave granted.

Heard learned counsel for the parties at length.

The appellant-Corporation on January 5, 1989 passed an order invoking Rule 23 (vi)(E) of the Hindustan Paper Corporation Conduct Discipline and Appeal Rules !hereinafter called "the Rules". That order

was to the effect that the first respondent herein must be deemed to have H

A lost his lien on his appointment with the Corporation/Mill.

The first respondent has successfully challenged the said order of the appellant before the High Court of Guwahati and thus, the appellant is before us.

B The first respondent entered the services of the appellant as a Fire Fighting Officer and was eventually promoted on 28.8.1985 as Assistant Manager (Security and Fire-fighting). On May 26, 1988 the body of one Shanit Rani Chakrabarty, sister--in--law of the first respondent, was found in the house of the first respondent. On 27 .5.1988, the first respondent applied for casual leave. On the next day, an FIR was lodged against the C first respondent and others under Section 302/201 read with section 34

!PC by Karim Ganj Police. On 3.6.1988. the first respondent after the expiry of casual leave sent an application for Earned Leave for I I days giving the reason 'personal affair' and mentioning his leave address as U/ S PWD Dispur. Gauhati. On 6.6.1988 the Senior Manager of the appellant D received a message from the Police to direct the first respondent to report to the police station. On 7.6.1988 the Senior Manager informed the police that the first respondent has se; it an application for Earned Leave. Again the police requested to intimate the whereabouts of the first respondent.

On 14.6.1988 the appellant informed the police that the whereabouts of the first respondent were not known. However, the permanent address of E the first respondent, as available in the official record, was supplied to the police. Thereafter, the appellant sent series of leave applications dated 21.6.88, 14.7.88, 13.8.88, 28.8.88, 13.9.88, 29.9.88, 16.10.88 and 5.11.88 without minding to find out whether previous applications for leave have been sanctioned or not. These leave applications initially did not disclose any reason and subsequently it mentioned 'on medical grounds' without F enclosing any medical certificate and without disclosing his leave address.

The appellant-Corporation again received on 28.11.1988 a communication from the police that the first respondent was wanted as an accused in a murder case. In view of that, the appellant-Corporation by a communication dated 30.11.1988 informed the first respondent that his leave on medical G grounds was not sanctioned as his applications were not supported by medical certificates and that he was liable to be treated as an unauthorised absentee. He was, therefore, called upon to submit his explanation, if any, within 15 days of receipt of the letter. He was also incidentally informed that he was required by the Superintendent of Police. Karim Ganj in connection with the murder. In response to the above communication from H the appellant- Corporation the first respondent submitted his reply baldly

... .

HINDUSTANPAPERCORPN. 1'. PURNENDU CHAKROBARTY [VENKATASWAMI, J.] 163

stating that he was suffering from chest pain for quite some time and that A he had consulted specialist outside HPC for personal reasons and due medical certificate will be produced at the time of jointing. He also informed the Corporation that he knew that he was required to appear before the police and that he would report to the police as per rules. It is under these circumstances that the appellant-Corporation passed the order dated 5.l.1989 invoking Rule 23 (vi)(E) the Rules.

The appellant aggrieved by the said order moved the Guwahati High Court by filing Civil Rule No. 288 of 1992 under Article 226 of the Constitution of India. The learned Single Judge as well as the Division Bench, on appeal by the appellant-Corporation, agreeing with the arguments advanced on behalf of the first respondent set aside the order of appellant- C Corporation dated 5. l.1989 and directed re-instatement of first respondent with 50% back wages.

When the Special Leave petition came up for admission this Court while issuing notice passed an order in the following terms: D

"In the light of sub-clause (E) of Clause VI of Rule 23. the val, idity of which is stated not to have so far been pronounced upon by this Court in the context ofa Public Sector Corporation, a notice shall be issued to the respondents."

Before actually going into the validity of the said Rule it would be beneficial to appreciate the facts little more critically, which will be helpful to come to the correct conclusion.

The first respondent is not a workman to avail or invoke the provisions F of the Industrial Disputes Act. 1947. He is governed by the Rules framed by the Corporation in this regard. We have already noted that in view of the pendency of criminal case registered against him, the first respondent without disclosing that fact has been sending applications for leave commencing from 21.6.1988 ending with 5.11.1988. Copies of the application for leave are filed in the paper book along with copies of G medical certificates produced by the first respondent, not before the appellant-Corporation on time, but long subsequently. Initially, as noticed earlier, the applications for leave did not disclose any reason. Later on, in the application for leave dated 13.8.1988, the reason given was 'suffering from heart disease.' Again in the application dated 13.9.1988. the reason H

A given was 'heart disease since long.' The same reason was given in the applications dated 29.9.1988. 16. I 0.1988 and 5.11.1988 It is very relevant to note that according to the medical certificates, copies of which are now produced which are dated 4.5.1988 onwards ending with 21.1.1989 nowhere it was stated that he was suffering from heart disease. Further, nature of the sickness was mentioned in the certificate and in spite of that the same B was not disclosed correctly in the leave applications. It is also clear that those certificates were available and inspite of that not enclosed alongwith the leave applications. From this one has to draw the infernnce that either the medical certificates are not genuine in the sense that they were not obtained then and there or the first respondent deliberately did not enclose them along with the leave applications. Even today no proper explanation C is forthcoming from the first respondent on this aspect. With this background we shall not set out the relevant Rule:-

(a)

Rule 23. PENALTIES.

The following penalties may be imposed on an employee. as hereinafter provided, for misconduct committed by him or for any other good and sufficient reasons.

Minor Penalties

censure :

(b) withholding of increment (s) of pay with or without cumulative effect :

(c)

(d)

withholding of promotion :

recovery from pay or such other amount as may be due to him of the whole or part of any pecuniary loss caused to the corporation by negligence of breach of orders.

Major Penalties

reduction to a lower grade or post, or to a lower stage in a time scale :

removal from service which shall not be a disqualification

HINDUSTAN PAPER CORPN. 1'. PU RN EN DU CHA.KROBARTY [VENKATASWAMI, J.] 165

for future employment: A

g) dismissal:

Explanation: The following shall not amount to a penalty \Vithin the meaning of this rule.

i) withholding of increment of an employee on account of his work being found unsatisfactory or not being of the required standard, or for failure to pass a prescribed test or examination:

ii) stoppage of an employee at the efficiency bar in a time scale, c

on the ground of his unfitness to cross the bar:

(iii) non-promotion, whether in an officiating capacity or otherwise, of an employee to a higher post for which he may be eligible for consideration but for which he is found D unsuitable after consideration of his case:

(iv) reversion to a lower grade or post, of an employee officiating in a higher grade or post, on the ground that he is considered, after trial, to be unsuitable for such higher grade or post, or E on administrative grounds unconnected with his conduct:

v) reversion to his previous grade or post, of an employee appointed on probation to another grade, or post during or at the end of the period of probation in accordance with the terms of his appointment: F

vi)

TERMINATION OF SERVICE

A) of an employee appointed on probation, during or at the end of the period of probation, in accordance witl1 the terms G of his appointment:

B) of an employee appointed in a temporary capacity otherwise than under a contract or agreement. On the expiration of the period for which he was appointed. of earlier in accordance with the terms of his appointment: H

C) of an employee appointed under a contract or agreement.

In accordance with the terms of such contract or agreement:

D) of any employee on reduction of establishment; and

E) Loss of lien on his appointment by an employee:

I. Proceeding on leave without prior sanction and remaining unauthorisedly absent for more than 8 consecutive days.

and/or

2. Over-staying his sanctioned leave beyond the period originally granted or subsequently extended for more than 3 consecutive days."

In the light of the above Rule, in particular Rule 23 (vi)(E) the D appellant-Corporation factually by communication dat,, d 30-11-1988

informed the first respondent that the leave applications have not been supported by medical certificates; that period must be treated as 'unauthorised absent' and if he has got anything to say on that aspect he has to send the reply within 15 days from the date of receipt of that letter.

His reply was that he was suffering from chest pain for quite some time E and the medical certificates will be produced at the time of joining. To say the least that should not be the attitude of an employee. First of all, he was expected to take the leave ordinarily with prior sanction and extend the same after the earlier one was sanctioned by the appropriate authority.

Right from the beginning his applications were not only not in proper form but were not supported by any medical certificates to justify the F claim of the first respondent. At least the first respondent should have replied properly by enclosing the medical certificates or should have come forward with a true case. He did neither. It is in that context that the appellant Corporation invoked the said Rule, namely, Rule 23 (vi)E.

G Mr. P.P. Rao senior counsel appearing for the appellant-Corporation fairly, in our view rightly, conceded that the Rule, namely Rule 23 (vi)E has to be construed by reading into it the principles of natural justice.

Otherwise by reading it literally, it would amount to arbitrary and unreasonable vesting of authority and liable to be struck down. According to the learned counsel, if only the first respondent had properly responded H to the show cause notice the Corporation might not have taken the extreme

HINDU ST AN PAPER CORPN. r. PURNENDU CHAKROBARTY [VENKATASW AMI, J.] 16 7

step of cutting off the lien of the appointment of the first respondent with A the Corporation.

We consider that in view of this concession made by the learned counsel on behalf of the appellant-Corporation that the said Rule must be read and given effect to, subject to the compliance of the principles of nautral justice, it cannot be said that the Rule is arbitrary or unreasonable 8 or ultra vires Article 14 of the Constitution. In other words, before taking action under the said clause, an opp_ortunity should be given to the employee to show cause against the action proposed and if the cause shown by the employee is good and acceptable, it follows that no action in terms of the said clause will be taken. Understood in this sense, it cannot be said that the said clause is either unreasonable or violative of Article 16 of the C Constitution.

Mr. Sanjay Parikh. learned counsel appearing for the first respondent, however, vehemently contended that in view of the recent judgment of this Court in D.K. Yadav v. JMA industries. Ltd., [1993] 3 SCC 259, which has considered number of earlier judgments of this Court including D Hindustan Steel Ltd. v. Presiding officer Labour Court, [1976] 4 SCC 222, L. Robert D 'Souza v. Executive Engineer, Southern Railway, [1982] 1 SCC 645: Delhi TransportCorpn. v. D.T.C. Mazdoor Congress, [1991] Supp 1 SCC 600, the judgment and order of the High Court cannot be assailed. According to the learned counsel, before passing the impugned E order against the first respondent, the appellant-Corporation should have conducted a full fledged inquiry and the fialure to do so vitiates the impugned order. He also invited our attention to the reasonings given by the Division Bench of the High Court.

The Division Bench of the High Court by confirming the order of F the iearned single Judge appears to have fell into an error in correctly appreciating the scope of Rule 23. According to the learned Judges of the Division Bench, the loss of lien is a major penalty and therefore, atrracts Rule 25 which provides that no major penalty can be imposed without holding an inquiry under the Rules. This view of the Division Bench led G them to pass the following observations:

"Admittedly, no inquiry has been held and the alternative submission of substantial compliance of the Rules as already discussed above, has been held to be illusory. It cannot therefore be said in absence of any inquiry whatsoever that H

the deliquent writ petitioner deliberately abstained from duty on a feigned or pretended ground of illnes.s. It was a matter of inquiry."·

We have extracted Rule 23 in full. The explanation to the Rule specifically states that certain items enumerated thereunder shall not be B treated as a penalty at all within the meaning of Rule 23. For our case the relevant sub clause is (vi)E which says that proceedings on leave without prior sanction and remaining unauthorisedly absent for more than 8 consecutive days: and/or over-staying his sanctioned leave beyond the period originally granted or subsequently extended for more than 8 consecutive days would result in loss of lien of the appointment of the C employee. In this case we have seen that the first respondent had proceeded on leave without prior sanction and remained unautho1risedly absent for more than 6 months consecutively which obliged the appellant-Corporation to issue communication to the first respondent calling upon him to explain.

Unfortunately, the first respondent, for reasons best known to him, has D not availed himself of the opportunity as seen earlier but replied in a halfhearted way which resulted in the impugned order. Therefore, under the circumstances, it cannot be said that the principles of natural justice have not been complied with or the circumstances require any enquiry as contemplated under Rule 25. In the case cited by the learned counsel for the first respondent, this Court has held "that the law must, therefore, be E now taken to be well-settled that procedure prescribed for depriving a person of livelihood must meet the challenge of Article 14 and such law would be liable to be tested on the anvil of Article 14 and the procedure prescribed by a statute on statutory rule or rules or orders affecting the civil rights or result in civil consequences would have to answer the requirement of Article 14. So it must be right, just and fair and not F arbitrary, fanciful or oppressive. There can be no distinction between a quasi-judicial function and an administrative function for the purpose of principles of natural justice. The aim of both administrative inquiry as well as the quasi judicial inquiry as to arrive at a just decision and ifa rule of natural justice is calculated to secure justice to put it negatively, to G prevent miscarriage of justice, it is difficult to see why it should be applicable only to quasi-judicial inquiry and not to administrative inquiry.

It must logically apply to both."

On a consideration of the entire facts, we are of the view that the test laid down by this Court, as extracted above has been satisfied by the H appellant-Corporation and therefore when viewed from the point of Rule

HINDUSTANPAPERCORPN.1•. PURNENDU CHAKROBARlY [VENKATASWAMI, J.] 169

23 (vi)E, there was no good reason for the High Court to interfere with A the impugned order of the appellant-Corporation dated 5. l.1989.

While ordering notice, this Court has directed the appellant to pay I/ 5th of the arrears to the first respondent within 3 months. It is stated that order has been complied with. It is also brought to our notice that the first respondent is due to retire shortly within few months. Taking the totality B of the facts and circumstances of the case and having due regard to the services rendered by the first respondent, the ends of justice would be met if the appellant-Corporation is directed to give all pensionary and terminal benefits to the first respondent treating the case of the first respondent as compulsory retirement on and from 5.1.1989. We direct accordingly. The amount already paid pursuant to the interim direction of this Court is not C liable to be refunded by the first respondent and not to be adjusted against the terminal benefits payments, if any.

The appeal is accordingly disposed of. However, there will be no order as to costs.

v.s.s.

Appeal disposed of.