Ashok B.S. v. Kerala State Beverages (Manufacturing & Marketing) Corporation Ltd

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE SMT. JUSTICE P.V.ASHA** **FRIDAY, THE 20TH DAY OF JULY 2018 / 29TH ASHADHA, 1940** **WP(C).No. 20268 of 2018** ## **PETITIONER:** **ASHOK.B.S, S/O K. BALAKRISHNAN, AGED 60 YEARS RESIDING AT GAANGEYAM, VENPALAVATTAM ANAYARA POST, THIRUVANANTHAPURAM, PIN CODE NO – 695 029** **BY ADVS.SRI.P.V.VENUGOPAL SRI.P.BIJIMON SRI.JACOB SAMUEL SRI.R.SABU** ## **RESPONDENTS:** |**1.**|**KERALA STATE BEVERAGES (MANUFACTURING & MARKETING)**| |---|---| ||**CORPORATION LTD, BEVCO TOWER, VIKAS BHAVAN PO,**| ||**PALAYAM, THIRUVANANTHAPURAM 33, REPRESENTED BY ITS**| ||**COMPANY SECRETARY, PINCODE – 695 033**| |**2.**|**MANAGING DIRECTOR,**| ||**KERALA STATE BEVERAGES (MANUFACTURING & MARKETING)**| ||**CORPORATION LTD, BEVCO TOWER, VIKAS BHAVAN PO,**| ||**PALAYAM, THIRUVANANTHAPURAM 33,PINCODE – 695 033**| |**3.**|**S. SUNIL KUMAR (PRESENTING OFFICER, GENERAL MANAGER FINANCE**| ||**KERALA STATE BEVERAGES (MANUFACTURING & MARKETING)**| ||**CORPORATION LTD, THIRUVANANTHAPURAM 33,PINCODE – 695 033**| |**4.**|**R. HARIKUMAR (ENQUIRY OFFICER), ADVOCATE**| ||**THIRUVANANTHAPURAM, PINCODE – 695 004**| |**5.**|**ADDITIONAL CHIEF SECRETARY TO GOVERNMENT**| ||**TAXES DEPARTMENT, SECRETARIAT,**| ||**THIRUVANANTHAPURAM, PINCODE – 695 036**| **R1-R3 BY ADV. SRI.NAVEEN.T., SC, KERALA STATE BEV.CO. M. AND M. R5 BY SENIOR GOVERNMENT PLEADER BIJOY CHANDRAN** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20-07-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **RR** **WP(C) NO. 20268 OF 2018 (G)** **APPENDIX** |**PETITIONER'S **|**EXHIBITS:**| |---|---| |**EXHIBIT P1**|**COPY OF ORDER GIVING SANCTION ALLOWING THE PETITIONER TO**| ||**RETIRE ISSUED BY 2ND RESPONDENT DATED 18.11.2015.**| |**EXHIBIT P2**|**COPY OF INTERIM ORDER IN WP(C) 11599/2018 DATED 11.04.2018 FOR**| ||**RELEASING PROVIDENT FUND ACT**| |**EXHIBIT P3**|**COPY OF LETTER ISSUED TO PETITIONER AFTER RETIREMENT BY 2ND**| ||**RESPONDENT BEARING NUMBER KSBC/FM/040/2016-2017 DATED**| ||**16.07.2016 SEEKINGREMARKS**<br> **TO CAUSE DELAY IN REMITTING**| ||**DIFFERENTIAL EXCISE DUTY ON IMFL**| |**EXHIBIT P4**|**COPY OF THE LETTER KSBC/FM/040/2016-2017 DATED 29.07.2016**| ||**ADDRESSED TO ADDITIONAL CHIEF SECRETARIA TO GOVERNMENT TAXES**| ||**DEPARTMENT ISSUED BY 2ND RESPONDENT M.D. KSBC SEEKING A WAIVER**| ||**OR SET OFF REGARDING INTEREST FOR DELAYED PAYMENT**| |**EXHIBIT P5**|**COPY OF THE LETTER KSBC/FM/040/2017-2018 DATED 09.05.2017**| ||**ADDRESSED TO ADDITIONAL CHIEF SECRETARIA TO GOVERNMENT TAXES**| ||**DEPARTMENT ISSUED BY 2ND RESPONDENT M.D. KSBC SEEKING A WAIVER**| ||**OR SET OFF REGARDING INTEREST FOR DELAYED PAYMENT**| |**EXHIBIT P6**|**A COPY OF THE NOTICE BEARING NO KSBC/FM/040/2016-2017 DATED**| ||**25.05.2018 ISSUED BY THE 2ND RESPONDENT REGARDING INITIATION**| ||**OF PROCEEDINGS OF DOMESTIC ENQUIRY**| |**EXHIBIT P7**|**COPY OF A NOTICE CALLING UPON TO ATTEND ENQUIRY POSTED ON**| ||**19.06.2018 ISSUED BY ADV HARIKUMAR IN THE CAPACITY AS ENQUIRY**| ||**OFFICER**| |**EXHIBIT P8**|**A COPY OF LETTER DATED 16.07.2016 ISSUED TO THE PETITIONER BY**| ||**THE 2ND RESPONDENT IN ANSWER TO EXT P3.**| |**RESPONDENTS' **|**EXHIBITS:**| |**EXT.R1(A)**|**TRUE COPY OF THE AUDIT QUERY ISSUED BY THE AUDITY PARTY DATED**| ||**01.07.2016**| |**EXT.R1(B)**|**TRUE COPY OF THE DEMAND NOTICE DATED 25.07.2016 ISSUED BY THE**| ||**EXCISE AUTHORITIES**| |**EXT.R1(C)**|**TRUE COPY OF THE MINUTES OF THE BOARD MEETING HELD ON**| ||**14.07.2016**| |**EXT.R1(D)**|**TRUE COPY OF THE LETTER DATED 14.08.2017 ISSUED BY THE**| ||**GOVERNMENT**| |**EXT.R1(E)**|**TRUE COPY OF THE LETTER DATED 25.01.2018 ISSUED BY THE**| ||**GOVERNMENT**| |**EXT.R1(F)**|**TRUE COPY OF THE “NOTE TO BOARD” AND THE DECISION TAKEN IN THE**| ||**BOARD MEETING HELD ON 28.01.2017**| |**EXT.R1(G)**|**TRUE COPY OF THE REPORT DATED 05.07.2016 OF THE INTERNAL**| |**AUDITOR**|| ||**// TRUE COPY//**| **PA TO JUDGE** **RR** ## **P.V.ASHA, J.** ## **W.P.(C) No.20268 of 2018-G** ## **Dated this the 20[th] day of July, 2018** ## **JUDGMENT** The petitioner retired from the 1[st] respondent Kerala State Beverages Manufacturing & Marketing Corporation Ltd (hereinafter referred to as the Corporation) on 13.11.2015, while working as Finance Manager. This writ petition is filed challenging Ext.P6 notice and Ext.P7 proceedings. 2. By Ext.P6 notice issued on 25.05.2018, the petitioner was informed that, explanation submitted by him on 22.07.2016 pursuant to Ext.P3 notice issued to him was not satisfactory and therefore, the management has decided to conduct a detailed enquiry in order to ascertain the liability caused and fixing liability as to whether he is liable to make the loss sustained or not. It was also informed that, one Sri.R.Harikumar, Advocate had been appointed as Enquiry Officer. Petitioner was directed to co-operate with the Enquiry Officer for speedy completion of the enquiry. Simultaneously, one Sri.S.Sunil Kumar, the 3[rd] respondent was appointed as Presenting Officer. Ext.P7 is a notice issued by the Enquiry Officer on 04.06.2018 informing the petitioner that enquiry is scheduled to be held on 19.06.2018 and requesting him to participate in the same. 3. Subsequent to the retirement of the petitioner, he received W.P.(C) No.20268/18 **==> picture [14 x 9] intentionally omitted <==** Ext.P3 notice dated 16.07.2016 from the Managing Director informing that the Corporation had to remit differential excise duty of Rs.67.46 crores in April 2015, on the stock in FL-9 and FL-1 retail shops as on 31.03.2015 and on purchase orders in transit as on 31.03.2015. The petitioner was informed that he should have ensured the remittance of the differential excise duty in time and on account of his lapses, the Corporation was compelled to remit interest of Rs.15.18 crores towards the delayed payment. The petitioner thereupon submitted Ext.P8 explanation stating that, the stock details were not received from the Internal Audit Department till he retired from service on 30.11.2015. He stated that in the previous years, whenever there was change in the rate of excise duty, the differential excise duty was given after proper stock verification and calculation, after several months and no interest was demanded by the excise department and Corporation had not to pay any interest on that account. He further stated that, the stock in transit was calculated by the permit department of the Corporation and one Sri.Jayan, Manager was in charge of the permit department during the said period. He further stated that, payment of differential excise duty is a routine work for which no written instruction was required from the Managing Director or the Finance Manager or the Internal Auditor stating that, the EDP W.P.(C) No.20268/18 **==> picture [14 x 9] intentionally omitted <==** Manager, Smt.K.Geetha and Permit Manager Sri.Jayan were all senior officers working in the respective sections for the last several years. He also stated that, he had asked them to make calculations as early as possible and they were duty-bound to do it which is their routine affair. He also stated that, the Corporation has only paid in advance the differential excise duty and there was no occasion for payment of interest. Further, he stated that he had already retired from service and there is a collective responsibility for payment of differential excise duty, for three finance managers as well as internal auditor, EDP Manager and Permit Manager are involved. He also stated that, excise department also should have informed the excise duty which was payable and taken steps for realization of the same in time. He requested to take up the matter with Government for adjusting the interest against the amount due to the Corporation from Government, as a sum of Rs.81 crores was refundable to the Corporation from the Excise Department. Petitioner has produced the correspondence between the Managing Director and Government in respect of the waiver of interest requesting for adjustment of the interest demanded towards the amount due to the Corporation. In Ext.P4 letter, the Managing Director requested the Government to adjust the amount and waive interest of Rs. 15,17,85,860/-. It was followed by Ext.P5 W.P.(C) No.20268/18 **==> picture [14 x 9] intentionally omitted <==** letter dated 09.05.2017 addressed to the Additional Chief Secretary in which the Corporation again requested for waiving of interest. Thereafter, the petitioner received Ext.P6 notice on 25.05.2018 informing the proposal to conduct an enquiry and about the appointment of Enquiry Officer and thereafter the Enquiry Officer by Ext.P5 notice asked him to appear for the enquiry. This writ petition was filed at that stage. According to the petitioner, he is not responsible for making any payment. He also states that, the respondents will not have any authority to take action against him. It is also stated that, he is innocent and not responsible for the delay. 4. Respondents 1 and 2 have filed a counter affidavit stating that inspection was conducted in the Excise Office attached to the Corporation Head Office by the audit party, when it was found that there was a delay of 15 months for remittance of differential excise duty amounted to Rs.67.46 crores on liquor stock as on 31.03.2015. Based on Ext.R1(a) querry, Ext.R1(b) notice dated 25.7.2016 was issued by the excise authority demanding remittance of the sum of Rs.67,46,03,822/-. There was revision of rates of excise duty with effect from 01.04.2015 as per Government order issued on 30.03.2015 enhancing the rates of excise duty and the Corporation was therefore liable to pay excise duty on the liquor stock as on W.P.(C) No.20268/18 :5: 31.03.2015 at revised rates. But differential excise duty was not remitted in time. On account of the non-remittance, interest became payable. The audit party found that the Finance Manager was the person mainly responsible for the payment of duty in time. Thereupon Ext.P3 show cause notice was issued to the petitioner. It is stated that the Corporation had taken up the matter with Government requesting for adjustment of interest which was declined by the Government as per Ext.R1(d), (e) and (f) proceedings. The Corporation, on receipt of the reply submitted by the petitioner to the show cause notice, found that the petitioner had stated that there was collective responsibility in several officers and therefore enquiry was decided to be conducted. It is stated that internal auditor conducted an enquiry to ascertain the reason for not remitting the duty and it was found that there was lapses on the part of the petitioner and thereafter it was decided to conduct a fact finding enquiry for which the enquiry officer was appointed and the petitioner was informed of the same. According to the respondents an enquiry is possible, in order to unearth the actual truth, even after retirement. It is also their case that as per the service rules applicable to the employees of the Corporation, matters relating to service not covered by the said rules will be governed by similar rules in Government service. Therefore it is stated that rule 3(b) of W.P.(C) No.20268/18 **==> picture [14 x 9] intentionally omitted <==** Part III KSR permits institution of departmental proceedings even after retirement of employees in respect of any event which took place within 4 years of such institution. Since the incident occurred within four years of the retirement of the petitioner, the Corporation had every authority to proceed against the petitioner. It is also stated that departmental action was not initiated so far, as it is only a fact finding one initially. 5. I have heard the learned counsel for the petitioner, learned Standing Counsel as well as the learned Government Pleader. 6. It is not disputed that the petitioner has retired from service on 30.11.2015. The 1[st] respondent Corporation is not a pensionable establishment. Rule 8 of the Service rules of employees of the Corporation provides as follows: _8. Matters relating to services not covered by the Rules._ _1. In respect of matters not covered in these Rules, similar rules in government services shall be followed._ _2. The Board of Directors shall be competent to issue administrative instructions for the smooth functioning of the Corporation._ 7. Therefore it is stated that rule 3 of Part III Kerala Service Rules are the rules applicable to Government servants. Therefore respondents can proceed in accordance with rule 3 when there is no specific provision which provides either for proceeding against the W.P.(C) No.20268/18 **==> picture [14 x 9] intentionally omitted <==** persons who retired from service or making the establishment pensionable. If Part III KSR is to be applied in terms of rule 8 of the service rules of the employees of the Corporation, the Corporation should have been a pensionable establishment. Part III of KSR deals with pension. Rule 1 of chapter I provides that pensions of all employees to whom these service rules are applied are regulated by the rules in Part III of KSR. Rule 3 begins saying that the Government reserve to themselves the right of withholding or withdrawing a pension or any part of it, whether permanently or for a specified period and the right of ordering recovery from a pension of the whole or part of any pecuniary loss caused to the Government, if in a departmental or judicial proceeding, the pensioner is found guilty of grave misconduct or negligence during the period of his service including service, rendered upon re-employment after retirement. 8. In this case there is nothing to be withheld or withdrawn since the employees of the Corporation are not getting pension. According to the learned counsel for the Corporation pension under rule 3 would mean any terminal benefit and therefore they are entitled to proceed under rule 3 especially when clause (b) provides for institution of proceedings for incidents which occurred within a period of four years. 9. In order to apply clause (b) of Rule 3 of Part III KSR, first of W.P.(C) No.20268/18 **==> picture [14 x 9] intentionally omitted <==** all Part III of KSR should be applicable. It is also pertinent to note that Under note 2 to rule 3, the word 'pension' used in that rule does not include death cum retirement gratuity, though the rule provides for recovery of liability from DCRG. In this case the employees of the Corporation are not given DCRG. What is admissible to them is gratuity which is governed by Payment of Gratuity Act. Hence there is no provision which permits the respondents either to take any action under rule 3 or to recover any amount towards liability from the pension or any retirement benefit. As long as there is no separate rule by which the employer-employee relationship is allowed to continue even after retirement, the respondent Corporation has no authority to proceed against the petitioner or even insist his appearance. 10. Even though the learned standing counsel submitted that only a fact finding enquiry is held and the memo of charge is not issued and therefore the petitioner has to be directed to cooperate with the same, I am of the view that the respondents cannot have any authority to insist his presence in any matter when they have severed relationship with him on his retirement. In the judgment in _**Prakash Chandran vs. Kerala Gramin Bank : ILR 2018 (2) KER 1089**_ I have already held that an employer cannot withhold any benefit due to a retired employee after his retirement unless there are specific rules W.P.(C) No.20268/18 :9: provided for the same. The writ petition is accordingly allowed and it is declared that the petitioner is not liable to appear on the basis of the notices issued as per Exts.P6 or P7. However it is made clear that this will not prevent the respondent Corporation from proceeding against the petitioner under any enactment, if it is permissible, in accordance with law. The writ petition is disposed of accordingly. Sd/- **P.V.ASHA JUDGE** RR/rkc