Ivan Dileepkumar v. Managing Director, Kerala Small Industries Development Corporation (SIDCO) and Kerala Small Industries Development Corporation, represented by its Managing Director

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE SMT. JUSTICE P.V.ASHA** **WEDNESDAY, THE 18TH DAY OF DECEMBER 2019 / 27TH AGRAHAYANA, 1941** ## **WP(C).No.38015 OF 2018(B)** ## **PETITIONER:** **IVAN DILEEPKUMAR, AGED 61 YEARS,** **DIVYA BHAVAN, OLD KARAKKAMANDAPAM, NEMOM, THIRUVANANTHAPURAM-695 020.** **BY ADVS.** **SMT.AYSHA YOUSEFF SMT.MOLLY JACOB** ## **RESPONDENTS:** **1 MANAGING DIRECTOR, KERALA SMALL INDUSTRIES DEVELOPMENT CORPORATION, HOUSING BOARD BUILDING, SANTHI NAGAR, THIRUVANANTHAPURAM-695 001.** - **2 KERALA SMALL INDUSTRIES DEVELOPMENT CORPORATION, REPRESENTED BY ITS MANAGING DIRECTOR, HOUSING BOARD BUILDING, SANTHI NAGAR, THIRUVANANTHAPURAM-695001.** **BY ADV. MR.BIJU G., SC, SIDCO** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18.12.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.38015 OF 2018(B)** **2** ## **JUDGMENT** **The petitioner, who was a Senior Manager in the SIDCO is aggrieved by the order regularising the period of suspension as non-duty.** **2. While working as Head, Sales & Project Division, in the grade of Senior Manager under the respondents, petitioner was transferred and posted as Head, Trading Division as per order dated 06.04.2015. while so, he was placed under suspension as per Ext.P5 order dated 09.11.2015, stating as follows:** _**“It is noted that number of development works in various constituencies initiated by various departments are pending in the Trading Division of SIDCO without any action for execution. There are delay of more than 4 months without taking even a single step. You were holding charge of Trading Division in which there is financial irregularities have also been spoted in giving advances to parties from money got for execution of other works. You are placed under suspension with immediate effect. Detailed charge sheets and disciplinary proceedings will follow.”**_ **3. Thereafter on 08.02.2016, 1[st] respondent** **issued Ext.P6 memo of charges alleging the following:** **WP(C).No.38015 OF 2018(B)** **3** _**“ Serious financial irregularities have been found on a detailed study of files in the Trading Division of SIDCO. A major irregularity is giving advances to the parties from the fund got for execution of other works while you were heading the Trading division of the Company. Advances received from prospective dealers have been diverted for giving such advances. Many development works envisaged and initiated by various departments were also kept pending by the Trading division of SIDCO without any action for execution for months together.**_ _**Since financial transaction is involved and considering the gravity of the matter pertaining to illegally giving advance for procuring sand against LC conditions, you were placed under suspension on 09.11.2015. You had issued a letter dated 16.04.2015 to Dhanalaxmi Bank acknowledging their letter informing issuance of LC opened in connection with supply of sand by M/s.Linkland Traders, Ernakulam and directed the Bank to release payment contrary to LC condition through our Account no:027005300000815 to the beneficiary without proper authority. The acts from your part constitutes the following misconducts as per the Staff regulations applicable to your cadre of employee: 110 (ii) Fraud, dishonesty or misappropriation in connection with the Corporation's business or property;**_ _**(iii) Damages or loss due to irresponsible action or damages due to negligence or**_ **WP(C).No.38015 OF 2018(B)** **4** _**carelessness to work in process or to any property of the Corporation;**_ - _**(xii) Wilful habitual negligence of work;**_ - _**(xiv) Wilful slowing down in performance of work.**_ _**(xv) Commission of any act subversive of good behaviour within the Corporation's Offices and establishment or of the discipline of the Corporation;”**_ **He was directed to explain why disciplinary action should not be initiated against him on the aforesaid charges.** **4. Petitioner submits that the allegation in the order of suspension and those in the memo of charges were different and the memo of charges itself was issued after several months of the suspension. Since the enquiry was not completed, he approached this Court in W.P.(C) No.34947 of 2016 when the respondents were directed to complete disciplinary proceedings before 15.03.2017. It was made clear that petitioner would be free to approach the respondents with request for reinstatement. It is stated that petitioner retired from service on 31.05.2017. After** **WP(C).No.38015 OF 2018(B)** **5** **filing contempt case, the respondents issued Ext.P8 order dropping the disciplinary proceedings, seeing that the Regulations governing the service conditions of the employees of SIDCO do not permit it to proceed with disciplinary action subsequent to the retirement. However, in Ext.P8 order the 2[nd] respondent stated that the explanation submitted by the petitioner to the memo of charges were not satisfactory. Even though an enquiry commenced and a report was submitted, the same was not completed because of the non co-operation of the custodian of the files as well as the bank. In the report, it was stated that in order to complete the enquiry, it was necessary to examine the records along with the assessments of Banking Ombudsman. Ext.P8 order refers to another internal enquiry also, conducted by the Administrative Officer before whom a hearing was conducted. It is stated that in that hearing also the Bank did not appear. The 2[nd] respondent stated that enquiry officer found lapses on the part of the petitioner as well as on the part of the Dhanalakshmi** **WP(C).No.38015 OF 2018(B)** **6** **Bank and recommended for a Vigilance enquiry. It is stated that the matter relating to the reinstatement of the petitioner was placed before the 283[rd] Director of Board and it was decided to entrust the matter to the Vigilance Department for a higher level enquiry. In view of the circumstances where loss was sustained by SIDCO and petitioner was unable to prove his innocence, the Board decided not to reinstate petitioner. It was stated that on account of the procedural irregularities committed by the petitioner which resulted in loss of Rs.2 Crores, without the knowledge of the Superior Officers, petitioner cannot be exonerated from the charges and it was not possible to complete the disciplinary proceedings against the petitioner. It is stated that the allegations remained as such. The disciplinary action was dropped/finalised, without exonerating the petitioner from the charges and reserving the right of SIDCO to realise loss caused by it from the petitioner. Petitioner points out that subsequent to Ext.P8 order he requested for regularising the** **WP(C).No.38015 OF 2018(B)** **7** **suspension period by submitting Ext.P9 representation. By Ext.P10 judgment in W.P.(C) No.2066 of 2018, directions were issued to consider his representation. Thereafter, the 1[st] respondent rejected the same as per Ext.P11 order stating that as the enquiry against the petitioner could not be completed because of his retirement, the charges against him would stand and therefore the period of suspension from 09.11.2015 to 31.05.2017 could only be regularised as non-duty. It was stated that petitioner could not prove his innocence and SIDCO had sustained loss of Rs.2 Crores at his instance. Petitioner thereafter submitted Ext.P12 representation before the 1[st] respondent requesting for review of the decision. By Ext.P13 order, the 1[st] respondent again rejected the same.** **5. According to the petitioner the disciplinary proceedings were delayed unnecessarily. He has also got a contention that his transfer as Head of Trading Division as per Ext.P1 was absolutely unnecessary and ill-motivated. Producing Ext.P16 findings of the** **WP(C).No.38015 OF 2018(B)** **8** **Enquiry Officer, petitioner claimed that there are no findings against him in the enquiry conducted. Along with the reply affidavit petitioner has produced Exts.P18 and P19, which are also enquiry reports based on the enquiry conducted at the 1[st] stage. According to Vigilance Report also, there is nothing which finds him guilty and as long as he is not found guilty of any of the charges, respondents cannot deny him service benefits for the period during which he was placed under and it is liable to be treated as duty. Petitioner relies on the provisions contained in Regulations under 112(C) and claims regularisation of the period of suspension as duty, in view of the fact that the disciplinary action was dropped.** **6. Learned counsel for the petitioner relied on the judgments in** _**Bhagirathi Jena v. Board of Directors**_ **[1999 KHC 1097];** _**Dev Prakash Tewari v. U.P.Cooperative Institutional Service Board, Lucknow and Others**_ **[2014 KHC 4407] in support of the contention that in cases where disciplinary proceedings could not be completed and punishment** **WP(C).No.38015 OF 2018(B)** **9** **could not be awarded on account of retirement in the meanwhile, employee is entitled to get the entire emoluments for the suspension period. The judgment in** _**Ajay Kumar Choudhary v. Union of India and another**_ **[(2015) 7 SCC 291] was also relied on pointing out that the retention of the petitioner under suspension for a period of 585 days and thereafter the action of treating the entire period as non-duty was illegal.** **7. On the other hand, the learned Standing Counsel points out that the petitioner has issued Ext.P4 letter dated 16.04.2015 to the Dhanalakshmi Bank, in reply to Ext.P3 letter of the Bank, which was addressed to the Managing Director; in Ext.P3 letter, the Bank had requested for instruction for payment of LC for Rs.2 Crores, with reference to the purchase order in favour of M/s. Link Land Traders and petitioner had by Ext.P4 letter acknowledged that letter and confirmed the release of the Letter of Credit (LC) amount, without consulting the superior authorities or without confirming the movement of goods stipulated in the agreement/third party bill of** **WP(C).No.38015 OF 2018(B)** **10** **lading which resulted in huge loss to the SIDCO to the tune of Rs.2 Crores.** **8. According to the learned Standing Counsel, there are findings against the petitioner in the enquiry and petitioner could not establish his innocence. It is pointed out that the Enquiry Officer has found that petitioner has issued the instructions to the Bank despite the fact that he did not have any financial powers to deal with the Letter of Credit, especially when the letter was addressed to the Managing Director.** **9. The respondents have filed a statement explaining the proceedings starting from invitation of e-tender on 23.08.2014, the agreement executed with M/s. Link Land Traders, etc, according to which the payment is to be effected by the Bank on production of various documents including Insurance Certificate, Suppliers Commercial Invoice etc. It is stated that the Board of Directors had decided to open Letter of Credit facility and an application was submitted to Dhanalakshmi Bank on 31.03.2015. It** **WP(C).No.38015 OF 2018(B)** **11** **is also stated that five documents stated therein were necessary for releasing the payment as stated in that application. It is stated that the SIDCO had issued by Ext.P2 communication informing the Dhanalakshmi Bank about the documents to be produced for movement of the sand and the Letter of Credit has to be released when the actual movement of goods was ensured. It is stated that the Letter of Credit is subject to the conditions stipulated in clause 2.7 of R.B.I Circular dated 01.07.2015 and Clause 3.3 and 3.4 of Circular dated 01.07.2014, apart from fulfilment of internationally accepted conditions laid down by International Chamber of Commerce. According to them, the petitioner being the Head of the Trading Division, did not have the authority to release any amount to the supplier's account, especially without ensuring the actual movement of the goods. It is stated that petitioner did not have the financial power for the same and therefore by confirming the release of Letter of Credit without assuring the Third Party Bill of Lading, he** **WP(C).No.38015 OF 2018(B)** **12** **has committed serious dereliction of duty, acted dishonestly against SIDCO and M/s.Link Land Traders. According to them, the petitioner was placed under suspension for such serious financial irregularities, fraud, dishonesty and serious lapses. It is stated that disciplinary proceedings could not be completed because of his retirement. It is their further contention that the suspension period can be treated as duty only if the suspension was wholly unjustified and he is fully exonerated from all the charges. It is stated that the orders impugned were issued since the suspension was justified and petitioner was not exonerated. They have also got a contention that in order to impose the punishment and also to prove the charges against the petitioner, it is not necessary to conduct a detailed enquiry, when a memo of charge was already issued and petitioner had submitted his reply; the punishment could have been awarded as the charges could be proved even without any enquiry. It is also stated that Vigilance has registered case** **WP(C).No.38015 OF 2018(B)** **13** **no.VC1/18/SIU-I, which is under investigation.** **10. Heard Smt. Molly Jacob, learned Counsel for the petitioner and Sri. Biju, the learned Standing Counsel.** **11. It is an admitted fact that, Kerala Small Industries Development Corporation Employees Staff Regulations, do not permit continuance of any disciplinary action after the retirement of an employee. By Ext.P8 order, the 2[nd] respondent has dropped the disciplinary proceedings.** **12. The claim raised by the petitioner is with respect to Ext.P5 order of suspension under Regulation 111(b) of the Staff Regulations. An employee may be placed under suspension at any time, when disciplinary proceedings against him is contemplated or is pending; when a case against him in respect of any criminal offence is under investigation or trial; when final orders are pending in disciplinary proceedings, in case it is found necessary. Clause 112(c) provides that if the suspension is held to be wholly unjustified and the** **WP(C).No.38015 OF 2018(B)** **14** **employee is fully exonerated the period of suspension shall be treated as duty and the employee shall be entitled to the difference between the amounts received by him under clause (a) above and the emoluments he would have received but for suspension. If a penalty is imposed on him, it shall not have the effect of compelling him to refund the subsistence allowance received by him. Clause (d) provides that when an employee, who has been suspended is reinstated in service or would have been reinstated but for his retirement while under suspension, the authority competent to order the reinstatement shall consider and make a specific order regarding the pay and allowances to be paid to the employee for the period of his absence from duty or for the period of suspension ending with the date of his retirement, as the case may be; and whether or not the said period shall be treated as the period spent on duty for all or for limited purposes. In order to treat the suspension period as duty, it is necessary that the suspension is found** **WP(C).No.38015 OF 2018(B)** **15** **to be wholly unjustified and the employee is also exonerated from the charges.** **13. As pointed out by the learned Standing Counsel the Division Bench of this Court has in the judgment in** _**Messiah Das v. State of Kerala**_ **[1978 KHC 38] held that even in a case where an officer is exonerated on completion of disciplinary enquiry, he would not be entitled to a declaration that his suspension was wholly unjustifiable. While considering the provisions contained in Rule 56 of Part I of Kerala Service Rules, which is in** _**pari materia**_ **with Regulation 112(c) of the Staff Regulations, the Division Bench found that the justifiability or otherwise of the suspension order should be considered and determined by the competent authority acting under that rule, with respect to the facts and circumstances under which the order of suspension was issued; i.e., taking note of the facts and circumstances, which were available at the time of his suspension. In this case, the disciplinary proceedings are dropped, in view of the disability of** **WP(C).No.38015 OF 2018(B)** ## **16** **the employer to proceed with the same on the retirement of the petitioner. It is seen that the enquiry conducted by different enquiry officers were not concluded. The contention of the respondents that the petitioner is guilty of the charges since he has not proved his innocence, cannot be accepted, as it is for the employer/disciplinary authority to prove the charges. There is no provision to treat delinquent employee as guilty, till his innocence is proved.** **14. As far as the claim regarding the regularisation of the suspension period is concerned, I am of the view that it is not a case where the suspension can be treated as wholly unjustified just because the disciplinary proceedings were dropped due to the technical disabilities of employer consequent to the retirement of petitioner. It is seen that petitioner was placed under suspension for a long period from 09.11.2015 to 31.05.2017. In the judgment of the Supreme Court in** _**Ajoy Kumar's**_ **case, it was held that** **WP(C).No.38015 OF 2018(B)** **17** **the currency of a suspension order should not extend beyond three months if within this period the charge-sheet is not served on the employee and if the charge-sheet is served, a reasoned order must be passed for extension of suspension. In this case, it is seen that the petitioner was placed under suspension on 09.11.2015; Memo of charge was issued on 08.02.2016. The petitioner has got a contention that the issue regarding the Letter of Credit is not mentioned in the order of suspension. However, the order of suspension refers to certain financial irregularities though there is no specific reference to the Letter of Credit. At any rate, memo of charge was issued and an enquiry was commenced and conducted in which the petitioner has participated. Going by Ext.P16(a) findings supported by the Enquiry Officer, it cannot be said that there is a conclusion regarding the guilt or innocence of the petitioner. The enquiry was not concluded during his service career because of the non co-operation of the Bank. To a certain extent the Enquiry Officer** **WP(C).No.38015 OF 2018(B)** **18** **has exonerated the petitioner stating that it was the default on the part of the Bank. In Ext.P18(a) enquiry report, which is seen submitted even before Ext.P16(a), it is stated that the petitioner's letter was to release the Letter of Credit as per the conditions. However, it is stated that the petitioner did not seek permission of Managing Director as it involves a sum of Rs.2 crores. It is also stated that even though the Managing Director has written in another file not to submit files pertaining to business activities, financial powers may not come within the purview of that direction.** **15. In the above circumstances, I am of the view that the suspension cannot be said to be wholly unjustified. At the same time treating the entire period of suspension from 09.11.2015 till his retirement on 31.05.2017 as non-duty, would definitely be unjustified. But there is no provision seen in the regulations, which provides for the regularisation of suspension period in a case where the enquiry could not be completed on account of** **WP(C).No.38015 OF 2018(B)** **19** **retirement. In a case where reinstatement would have been possible, but for the retirement, it provides that the respondents have to consider and pass specific orders regarding the pay and allowances for the period of his absence.** **16. In this context it is relevant to note that the service in SIDCO is not pensionable. If the period during suspension is treated as duty, the entitlement of petitioner would be for full pay and allowances and gratuity with reference to the said period also. Under Regulation 112, an employee placed under suspension is eligible for subsistence allowance at the rate applicable to an employee on half pay leave, along with dearness allowance and compensatory allowance for the first year of suspension. On expiry of first year, he is entitled to three fourth of the leave salary along with allowances. Therefore petitioner would have already received 50% of pay and allowances for 1[st] year and ¾ for the remaining period. The further claim of** **WP(C).No.38015 OF 2018(B)** **20** **petitioner can only be for the balance half of the leave salary for the 1[st] year and one fourth for the 2[nd] year. The period of 585 days would not be counted for his gratuity, when it is treated as nonduty.** **In the circumstances of the case, I deem it appropriate to direct the respondents that the period of suspension from 09.11.2015 to 31.05.2017 shall be treated as duty for the purpose of gratuity. The respondents shall issue orders accordingly and make the payment within a period of one month from the date of receipt of a copy of the judgment.** **Accordingly, this writ petition is disposed of.** **Sd/-** **P.V.ASHA JUDGE** **SCS/WW** **WP(C).No.38015 OF 2018(B)** **21** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 PHOTOCOPY OF THE PROCEEDINGS NO.MDS/ESTT/ 2015-16 DATED 6.4.2015 ISSUED BY 1ST RESPONDENT.** **EXHIBIT P2 PHOTOCOPY OF THE LETTER OF UNDERTAKING GIVEN TO DHANALAKSHMI BANK DATED 6.4.2015 BY HEAD (E&I). EXHIBIT P3 PHOTOCOPY OF THE LETTER DATED 13.4.2015 ADDRESSED TO THE MANAGING DIRECTOR BY DHANALAKSHMI BANK. EXHIBIT P4 PHOTOCOPY OF THE LETTER DATED 16.4.2015 GIVEN TO DHANALAKSHMI BANK BY PETITION. EXHIBIT P5 PHOTOCOPY OF THE PROCEEDINGS NO.MDS/GEN/ 15-16/47 DATED 9.11.2015 ISSUED BY 1ST RESPONDENT. EXHIBIT P6 PHOTOCOPY OF THE CHARGE SHEET DATED 8.2.16 ISSUED TO THE PETITIONER. EXHIBIT P7 PHOTOCOPY OF THE JUDGMENT DATED 18.11.2016 IN WPC.NO.34947/2016. EXHIBIT P8 PHOTOCOPY OF THE PROCEEDINGS NO.VG/ 24782/15 DATED 4.7.2017 ISSUED BY 1ST RESPONDENT. EXHIBIT P9 PHOTOCOPY OF THE REPRESENTATION DATED 20.9.2017 SUBMITTED BY PETITIONER TO 1ST RESPONDENT. EXHIBIT P10 PHOTOCOPY OF THE JUDGMENT DATED 4.4.2018 IN WPC.2066/18. EXHIBIT P11 PHOTOCOPY OF THE ORDER DATED 8.6.2018 PASSED BY 1ST RESPONDENT TREATING THE PERIOD OF SUSPENSION OF PETITIONER FROM 9.11.2015 TO 31.5.2017 AS NON DUTY. EXHIBIT P12 PHOTOCOPY OF THE REPRESENTATION DATED 25.6.2018 SUBMITTED BY PETITIONER BEFORE THE 1ST RESPONDENT REQUESTING TO REVIEW EXT.P11 ORDER.** **WP(C).No.38015 OF 2018(B)** **22** **EXHIBIT P13 PHOTOCOPY OF THE ORDER DATED 1.8.2018 PASSED BY 1ST RESPONDENT REJECTING EXT.P12. EXHIBIT P14 PHOTOCOPY OF THE APPLICATION DATED 8.8.2018 SUBMITTED BY THE PETITIONER UNDER RIGHT TO INFORMATION ACT BEFORE PUBLIC INFORMATION OFFICER. EXHIBIT P15 PHOTOCOPY OF THE LETTER OF PUBLIC INFORMATION OFFICER DATED 21.8.2018 ISSUED O THE PETITIONER. EXHIBIT P16 PHOTOCOPY OF THE LETTER OF PUBLIC INFORMATION OFFICER DATED 21.8.2018 ISSUED TO PETITIONER. EXHIBIT P16(A) PHOTOCOPY OF THE FILE CONTAINING THE NOTING OF ENQUIRY OFFICER. EXHIBIT P17 PHOTOCOPY OF THE MEDICAL CERTIFICATE DATED 26.9.2018 ISSUED BY THE CARDIOLOGIST DR.JAYAPAL V. EXHIBIT P18 PHOTOCOPY OF THE LETTER DATED 21.10.2016 OF PUBLIC INFORMATION OFFICER, SIDCO ISSUED TO PETITIONER. EXHIBIT P18(A) PHOTOCOPY OF THE REPORT OF ENQUIRY SUBMITTED BY THE ENQUIRY OFFICER APPOITED VIDE PROCEEDINGS NO.VIG/24782/15 DATED 07.05.2016.** **RESPONDENTS' ANNEXURES:** **ANNEXURE R1(A) TRUE COPY OF THE DECISION OF THE BOARD OF DIRECTORS. ANNEXURE R1(B) TRUE COPY OF THE LETTER DATED 29.08.2017 ISSUED BY ADDITIONAL CHIEF SECRETARY.**