Malabar Cements Limited v. P. Sooria Narayanan Adithya

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE S.V.BHATTI** **&** **THE HONOURABLE MR.JUSTICE BASANT BALAJI THURSDAY, THE 12[TH] DAY OF JANUARY 2023 / 22ND POUSHA, 1944 WA NO. 1933 OF 2018** ## **WP(C) 15405/2013 OF HIGH COURT OF KERALA** ## **APPELLANT/S:** 1 MALABAR CEMENTS LIMITED WALAYAR PO, PALAKKAD - 678624 REP BY ITS MANAGING DIRECTOR 2 MANAGING DIRECTOR MALABAR CEMENTS LIMITED,WALAYAR.P.O,PALAKKAD678624. BY ADVS. LATHA ANAND M.N.RADHAKRISHNA MENON JOSEPH SEBASTIAN (PARACKAL) ## **RESPONDENT/S:** P. SOORIA NARAYANAN ADITHYA, NETTAIKODATH HOUSE, KALAVATH ROAD, PALARIVATTOM PO. ERNAKULAM - 682025 BY ADVS.ATUL SOHAN SREEJA SOHAN K. K.V.SOHAN/ N SATHEESH THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WA NO. 1933 OF 2018** -2- # **S.V.BHATTI & BASANT BALAJI, JJ.** - - - - - - - - - - - - - - -- - - -- - - - - - - - - - -- - - - - - - - - ## **WA NO. 1933 OF 2018** - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - ## JUDGMENT (Dated this the 12[th] day of January 2023) ## Basant Balaji J., The respondent/petitioner, an employee of Malabar Cements, while working as Personal Secretary(PS) to the Company Secretary, was charged with wilful negligence of duty, acting in a manner intended to bring discredit to the company or management, pursuance of the conduct against the interest of the company and wilful damage to the company, after conducting a disciplinary enquiry by an Advocate was dismissed from service. The dismissal order following the enquiry report was challenged before this court in the writ petition. The learned Single Judge set aside **WA NO. 1933 OF 2018** the findings as tainted by perversity and unreasonableness and, based on no legally acceptable evidence or materials, directed the payment of terminal and monitory benefits during the period he was kept out of service within six months of the date of production of the certified copy of the judgment is assailed in this writ appeal. The parties are referred to in the order as they appear in the Writ Petition before the learned Single Judge. 2. Brief facts necessary for the disposal of this appeal are as follows: The petitioner was working as PS to the Company Secretary as per order dated 31.7.2010. While so, a memo of charges alleging misconduct was served on the petitioner. Since, according to the respondents, the allegations are grave, the petitioner was suspended with immediate effect pending enquiry. From 26.02.2010 to **WA NO. 1933 OF 2018** -4- 28.01.2011, he was discharging his duties and functions as the PS to the Company Secretary. To the memo of charges, the petitioner gave his defence, and disciplinary enquiry proceedings were set in motion. A practising Advocate was appointed the Enquiry Officer to conduct the disciplinary enquiry. The charges levelled against the petitioner are as follows: “i)Wilful negligence of duty; ii) Acting in a manner intended to bring discredit to the company or management; - 1.Pursuance of conduct against the interest of the company - 2.Willful damage to the company.” 3. The whole controversy started in the year 2010 with the issuance of a letter dated 19.11.2010 by one R.Madhusoodanan Nair, who was holding the post of Joint **WA NO. 1933 OF 2018** Secretary, for and on behalf of the Additional Chief Secretary to Government, to furnish certain details, which are as follows: (i) Person/persons responsible for the loss of Rs.697.65 lakhs sustained by the company. (ii) How the amount is proposed to be recovered, (iii) Your concrete suggestion for an uninterrupted supply of fly ash for the smooth working of the company. 4. On 13.12.2010, a note was submitted by the Manager (Finance) to the Managing Director suggesting that an outside agency, both in the discipline of legal and finance, look into the issue and find a solution. 5. On receipt of the letter, an office order was passed on 14.12.2010 by the then Managing Director. The order reads as follows: “(i) The Manager (Finance) i/c is to arrange to conduct a **WA NO. 1933 OF 2018** -6- detailed study of the financial aspects of the issue by an independent competent finance professional. The Manager (materials) i/c is to render necessary assistance in respect of material part, for the successful conduct of the study by the independent finance professional. (ii) Legal officer is to arrange the service of a competent lawyer to look into the legal implications including the fixing up of the responsibility, necessary guidance, and support of the Manager (P&A) i/c may also be availed if required during the course of looking into the legal implications and fixing up the responsibility. It was also directed that the report be obtained within two weeks.” 6. On 14th December 2010, the Manager (Materials) also suggested that a Legal Advisor /Chartered Accountant may be assigned to study the subject and to find a solution to the query made by the Government. Based on the office order dated 14.12.2010, one Mr Venkitaraman, a Chartered Accountant, was engaged to look into the financial matters **WA NO. 1933 OF 2018** relating to the loss of Rs.697.65 lakhs sustained by the company. The Chartered Accountant, after a thorough study of the matter, by letter dated 25.12.2010, opined as follows: “ _It may be noted that the loss of profit has already been quantified by the Cost Auditors/Deputy Accountant General and what remains to be done is finding out the cause and the persons responsible for this. This is best done by a person with judicial background as it involves verification of evidence and documents, appraising such evidence and fixing responsibility on individual/individuals responsible for the lapses. In my view a finance person has no role to play and may be a legal person with judicial background be entrusted with the task of fixing the responsibility for the lapses._ ” 7. The Company’s Legal Officer thereafter engaged one K.S.Menon, Advocate, Palakkad, to give an opinion **WA NO. 1933 OF 2018** -8- for fixing the person/persons responsible for the loss and how to recover the amount. The Advocate, by Ext.P5 report dated 12.01.2011, named four persons who were the officials in charge of the company during the relevant time and entered into a finding that the said officials are jointly responsible for the heavy loss sustained by the company and explanation may be called for from the four persons. On receipt of the report of the Chartered Accountant as well as the Advocate, the then Managing Director sent a letter back to the Additional Chief Secretary to Government detailing the steps taken pursuant to the letter of the Government and fixing the responsibility for the loss on four persons who were holding the charge of the company during the relevant period. On receipt of the said letter from the Managing Director, the Secretary to the **WA NO. 1933 OF 2018** -9- Government issued another letter dated 27.12.2011 to the Managing Director to implement certain actions. Interestingly, the letter was issued by one Mr.K.S.Srinivas, IAS who was holding the post of Special Secretary to Government, on behalf of the Secretary to the Government. The said Mr.K.S.Srinivas, IAS is the first person named as the person responsible for the loss sustained by the Company to the tune of Rs.697.65 lakhs. The second direction in his letter is to take immediate action for filing criminal cases to recover the loss sustained by the Company due to the non-supply of dry fly ash and subsequently invoke of bank guarantee. On 3.4.2012, disciplinary action was initiated, and a Memo of Charges was issued to the petitioner levelling four charges. The main allegation raised in the Memo of Charges is that the **WA NO. 1933 OF 2018** -10- petitioner, responsible for putting up all Government correspondence to the Managing Director in the capacity of P.S. to the Company Secretary, authored the letter implicating two former Managing Directors and two officers. It is seen as an attempt to weaken the case concerning the freezing of Rs.50,00,000/- by M/s.ARK Wood and Metals Pvt. Ltd from Malabar Cements Ltd. Another allegation raised against him is that being the Personal Secretary to the Company Secretary, the petitioner has not appraised the Government directives on the limit for sanctioning investment to the MD, resulting in a Letter of Intent to M/s.Himachal Environmental Engineering Company Ltd. without the Board’s and Government’s approval for the project. So, the gist of the allegation is that the petitioner drafted the letter dated 14.1.2011 sent by the **WA NO. 1933 OF 2018** Managing Director, and he has implicated the four officers. On these grounds, the charges were levelled against him. The Enquiry Officer conducted the enquiry on the charges levelled against him and came to the finding as follows: “ In view of the above findings, the following charges framed against the delinquent employee: ## i Wilful negligence of duty ii.Acting in a manner intended to bring discredit to the Company or Management. iii. Pursuance of a conduct against the interest of the Company. iv. Wilful damage to the Company.” 8. A copy of the report was served on the petitioner, asking him to submit his objection to the enquiry report. The petitioner sent a letter dated 18.03.2013 requesting to **WA NO. 1933 OF 2018** -12- allow him time till submission of the enquiry report by the 'VACB' before the Government. 9. The respondents did not accept the request made by the petitioner. They issued another letter calling for an explanation against the proposed punishment of dismissal from service within seven days of receipt of the letter. Though the petitioner sent two representations requesting time for giving objection/explanation to the punishment imposed, the respondents initiated proceedings for dismissing the petitioner from service. A letter dated 31.5.2013 was sent to the petitioner by the Managing Director. 10. The petitioner approached this court by filing the writ petition with the following reliefs: **WA NO. 1933 OF 2018** -13- “(i) Issue a writ of certiorari or other appropriate writs, orders or directions to call for the records leading upto Exhibit - P10 and Exhibit - P18 and to the same. quash (ii) Declare that the charges leveled against the Petitioner as per Exhibit -- P8 Memo of Charges were not proved in the domestic enquiry. (iii) Issue a writ of mandamus directing the second respondent to reinstate the Petitioner in service and to accommodate him with all service benefits in the same Post from which he was suspended and dismissed. (iv) Such other reliefs that may be deemed fit to be granted by this Hon'ble Court in the facts and circumstances of this case.” 11. The learned Single Judge, after elaborately hearing the counsel for the petitioner as well as the counsel for respondents, by the impugned judgment, held that the impugned proceedings are illegal and _ultra vires_ of the Enquiry Officer in the disciplinary proceedings are tainted with perversity and unreasonableness and based on “no **WA NO. 1933 OF 2018** -14- legally acceptable evidence and materials”. The learned Single Judge held that the Company would issue orders notionally reinstating the petitioner by granting him total back wages for the period he has been kept outside the service, i.e., from the date of suspension till superannuation. It was also directed that since the petitioner superannuated in 2017, all admissible terminal benefits should be granted to the petitioner within two to three months from the expiry of the period mentioned earlier. Challenging the judgment, the respondents have come up with this Writ Appeal. 12. Heard Shri. K Anand for the petitioners and Shri. K V Sohan for the respondent. 13. The main contention raised by the counsel for the **WA NO. 1933 OF 2018** -15- appellants/respondents is that the Enquiry Officer has conducted a detailed enquiry duly following the principles of natural justice and has entered into a finding based on the available materials on record and therefore, this Court, under Article 226 of the Constitution of India, cannot sit in appeal over the findings entered by the Enquiry Officer, reappreciate the indisputable evidence and cannot come to a conclusion that there is no misconduct. The charges raised against the petitioner are proved beyond any doubt. The alleged misconduct is proved by witnesses and reappreciating the entire evidence; this Court cannot come to a different conclusion in the scope of judicial review of disciplinary action. 14. The counsel relied on the judgment of **State of Andhra Pradesh v. Chitra Venkata Rao [(1975) 2 SCC** **WA NO. 1933 OF 2018** **557]** to contend that the High Court does not exercise appellate jurisdiction over the factual findings and that the findings are based on the appreciation of evidence, and it shall not be reopened and questioned. It was held in **Chitra Venkata Rao** (supra) as follows: “The jurisdiction to a writ of certiorari under Article 226 of the Constitution of India is a supervisory jurisdiction. The court exercises not as an appellate court. The findings of a fact reached by an inferior court of Tribunal as a result of the appreciation of evidence are not re-opened or questioned in writ proceedings. An error of law which is apparent on the face of record can be corrected by a writ but not an error of fact, however, grave it may appear to be.” 15. He also relied on the judgment of the Apex Court in . **Union of India v. P Gunasekaran (AIR 2015 SC 545)** He argues that the learned Single Judge has re-appreciated evidence to arrive at a different conclusion than that of the **WA NO. 1933 OF 2018** -17- Enquiry Officer, whereby the findings of the Enquiry Officer based on evidence have been interfered with. 16. On the contrary, the counsel for the respondent/petitioner argues that the learned Single Judge had noted that it is a case in which the factual findings are entered without evidence and amounts to 'Wednesbury' unreasonableness. Therefore, this Court is justified in interfering with the dismissal order as the charges against the petitioner are not proven with cogent evidence. 17. The allegations against the petitioner are that there was wilful negligence of duty, he has acted in a manner intended to bring discredit to the Company and acted against the interest of the Company, causing wilful damage to the Company. These charges are framed for the reason **WA NO. 1933 OF 2018** that the letter dated 14.1.2011 signed by the Managing Director was sent to the Additional Chief Secretary to Government as a reply to the letter dated 19.11.2010 fixing the responsibility for the loss of 697.65 lakhs by the company on four persons out of which two were Managing Directors. It is, in fact, a creation of the petitioner, and therefore, he acted against the company's interest, lowering the reputation. 18. At this juncture, it is to be noted that the Director had issued an office order on Managing 14.12.2010 directing the Manager (Finance) and legal Officer to conduct a detailed study on the financial and legal implications, also fixing up the responsibility. It is on this Office Order the Chartered Accountant Sri. K.V.Veneketaraman and the Advocate Sri. K S Menon **WA NO. 1933 OF 2018** -19- were requested to submit a report regarding the financial as well as legal aspects of the issue. The Chartered Accountant, in his report, points out that the loss of profit has already been quantified by the Cost Auditor/Deputy Accountant General. What remains is the finding of the cause and persons responsible for it. The said aspect can be done only by a person with a judicial background, which involves verification of evidence and documents appraising such evidence and on fixing responsibility individual/individuals responsible for the lapses. Therefore, he recommended that a person with a judicial background may be entrusted with fixing the responsibility for the losses. On this recommendation, Shri K S Menon, Advocate, also a retired District and Sessions Judge, was requested to submit a report fixing the persons responsible **WA NO. 1933 OF 2018** -20- for the losses sustained by the company during the relevant period. After a detailed verification of the records, the Advocate concluded that the officials in charge of the company during the relevant time were responsible for the losses. He named two Managing Directors and two other higher officials of the Company as the persons accountable for the losses. The names of these officers responsible for the losses are, for the first time, entered by the Advocate in his report. These two reports, thereafter, were before the Managing Director. Based on the reports, the Managing Director sent Ext.P6 letter dated 14.1.2011 to the Additional Chief Secretary incorporating the four names from the report of the Advocate. The Managing Director signed Ext.P6. 19. As per Ext.P1 office order, the duties and **WA NO. 1933 OF 2018** -21- responsibilities of the petitioner are to co-ordinate matters connected with/ relating to Government, including PUC/Government Committees, answers to LA questions, C & AG, RIAB, CMA and public relations and to put up details to the Managing Director for perusal/ approval. The allegations against the petitioner are that he was responsible for all the communications between the Company and the Government. So, the letter dated 14.1.2011 was drafted by the petitioner, exceeding the duties and responsibilities assigned to him as per the office order. Hence, there was wilful negligence of duty and damage to the Company. It is not in dispute that the Managing Director obtained the reports from the Chartered Accountant and the Advocate on the recommendations of the Manager (Finance) and Manager (Materials). The letter **WA NO. 1933 OF 2018** -22- dated 14.1.2011 specifically notes that the assistance of financial and legal experts was sought, and based on the two reports, the losses are fixed on the four persons named in the said letter. The learned Single Judge found that though the petitioner has a case that he had only taken down dictation from the Managing Director and typed the said letter, it is not fully correct. Still, it can be seen that the petitioner drafted the letter based on inputs and materials made available by the Company and independent sources engaged by the company. The petitioner has neither omitted nor added any aspects other than what is stated in the two reports. Based on the Manager (Finance) and the Manager (Materials) recommendations, the Managing Director obtained reports from the Chartered Accountant and the Advocate. The petitioner does not have any role in **WA NO. 1933 OF 2018** the said aspect. So, it cannot be held that there was any misconduct by the petitioner. There was only a reiteration of names from the report to the letter issued to the Government. The allegations against the petitioner are wilful negligence of duty and acting against the Company’s interest. The learned Single Judge held that the act done by the petitioner does not amount to any wilful neglect of duty and that the findings entered in the enquiry proceedings are highly perverse and unreasonable. Therefore, the learned Single Judge went on to hold that the dismissal order of the petitioner is irrational, perverse and amounts to 'Wednesbury' unreasonableness. 20. It is to be noted that at the time of issuance of the letter, the MD was one Mr.Sundaramoorthy. He was the best person to be called to prove that the letter was actually **WA NO. 1933 OF 2018** -24- written by delinquent officer and he did not have any role in was that. For reasons unknown, the said Sundaramoorthy not called by the Enquiry Officer nor he was examined. The reasons stated by the learned counsel is that he has left the company and at the time of domestic enquiry proceedings he was not available at the company. Being a crucial witness, the company ought to have summoned him to prove the memo of charges against the delinquent officer. Being the Managing Director, he would have cooperated with the domestic enquiry and thrown much light to the allegations. It is not a case in which he was cited as a witness and he has not cooperated with the enquiry. The company has not cited him as a witness. Therefore, the best was competent witness kept away from the enquiry proceedings. The allegations raised against the delinquent **WA NO. 1933 OF 2018** -25- is that he has written Ext.P6 letter incorporating the names of the persons who have made loss to the company. The witnesses who have been examined by the enquiry officers are very remotely connected with the letter issued to the Additional Chief Secretary to the Government by the Managing Director. So their evidence can only be said to be hearsay evidence. There are no other documentary evidence to prove that the delinquent officer has actually written Ext.P6 and it was just signed by the MD. As stated above, since the competent witness given was not examined the allegation that it was actually written by the delinquent officer does not stand to be proved. 21. In the decisions of the Apex Court cited by the counsel in **Chitra Venkata Rao** (supra), it is held thus:- ## **WA NO. 1933 OF 2018** -26- “The High Court may interfere where the departmental authorities have held the proceedings against the delinquent in a manner inconsistent with the rules natural justice or in violation of the statutory rules prescribing the mode of enquiry where the authorities have disabled themselves from reaching a fair decision by some considerations extraneous to the evidence and the merits of the case or by allowing themselves to be influenced by irrelevant considerations or where the conclusion on the very face of it is so wholly arbitrary and capricious that no reasonable person could ever have arrived at that conclusion.” 22. In **Gunasekaran** (supra) also, the Apex Court ## held as follows: “12. Despite the well-settled position, it is painfully disturbing to note that the High Court has acted as an appellate authority in the disciplinary proceedings, re- appreciating even the evidence before the enquiry officer. The finding on Charge No. 1 was accepted by the disciplinary authority and was also endorsed by the Central Administrative Tribunal. In disciplinary proceedings, the High Court is not and cannot act as a second court of first appeal. The High Court, in exercise of its powers Under Article 226/227 of the Constitution of India, shall not venture into re-appreciation of the evidence. The High Court can only see whether: **WA NO. 1933 OF 2018** -27- ## a. the enquiry is held by a competent authority; b. the enquiry is held according to the procedure prescribed in that behalf; c. there is violation proceedings; of the principles of natural justice in conducting the proceedings. d. the authorities have disabled themselves from reaching a fair conclusion by some considerations extraneous to the evidence and merits of the case; e. the authorities have allowed themselves to be influenced by irrelevant or extraneous considerations; f. the conclusion, on the very face of it, is so wholly arbitrary and capricious that no reasonable person could ever have arrived at such conclusion, g. the disciplinary authority had erroneously failed to admit the admissible and material evidence; h. the disciplinary authority had erroneously admitted inadmissible evidence which influenced the finding; i. the finding of fact is based on no evidence. 13. Under Article 226/227 of the Constitution of India, the High Court shall not: - (i)re-appreciate the evidence; **WA NO. 1933 OF 2018** -28- (ii)interfere with the conclusions in the enquiry, in case the same has been conducted in accordance with law; (iii) go into the adequacy of the evidence; (iv) go into the reliability of the evidence; (v) Interfere, if there be some legal evidence on which findings can be based. (vi)correct the error of fact however grave it may appear to be; (vii) go into the proportionality of punishment unless it shocks its conscience.” 23. So, this Court, under Article 226 of the Constitution of India, can have a judicial review of disciplinary proceedings if the proceedings against the delinquent are without any evidence or the authorities have disabled them from reaching a fair decision by some considerations extraneous to the evidence and the merits of the case, where the conclusions are wholly arbitrary and capricious. The facts of the two cases mentioned above are ## **WA NO. 1933 OF 2018** -29- different from the facts of this case because, in the present case, there is no evidence to prove the charges levelled against the petitioner. Therefore, the dictum laid down by the Apex Court in those decisions has no application to the facts of this case. 24. The second allegation raised against the petitioner is that he has not appraised the Managing Director about the Government directions governing the field on the limit of the sanctioning investment that the Managing Director of the company can take without the Board of Directors of the company and the approval of the State Government for the project. 25. It can be seen from Ext.P8 that the cost of the RABH project was consequent to the decision of the **WA NO. 1933 OF 2018** Capital Sub-committee of the Board held on 27.7.2010, which led to the issuance of Letter of Intent without the approval of the Board or the Government. Ext.P51 is the Letter of Intent. In the said Letter of Intent, the 3rd reference shown is the negotiation held before the members of the Capital Sub-committee of the Board on 27.7.2010. Ext.P33 Government Order dated 30.4.2010 governs the field in relation to the limitation on the power of income and expenditure. It regulates the expenditure which can be incurred by any PSU (Public Sector Undertaking). It clarifies that the profit-making PSU can invest 20% of the net worth for their capital in addition to the approval of the Board and the administrative department in the Government. The genuineness of the minutes of the Subcommittee is not disputed. The Letter of Indent marked as **WA NO. 1933 OF 2018** -31- Ext.P51 is issued based on the decision of the Capital Subcommittee as per Ext.P48. The allegation raised against the petitioner is that he, being the Personal Secretary, has not appraised the Managing Director about the existence of Ext.P33(G.O.) before entering the decision by the Subcommittee, which includes the Managing Director. The learned Single Judge has categorically found that the nonsecuring of the approval of the company’s Board of Directors or that of the State Government before Ext.P48 and P51 cannot be alleged as misconduct on the part of the petitioner, who was only working as a personal secretary. 26. Another crucial aspect is that the main allegation raised against the petitioner is that he has authored a letter dated 14.1.2011 sent to the Government. However, the then Managing Director signed it. When a document is alleged **WA NO. 1933 OF 2018** to be written by the petitioner and signed by the then Managing Director, the most competent person to depose before the enquiry officer regarding the genuineness of the letter is the person who has signed the letter. For reasons unknown to the then Managing Director, who had signed the letter addressed to Chief Secretary, was not examined before the Enquiry Officer. He was the most competent witness to prove the charges against the petitioner. This is also one instance in which the learned Single Judge weighed setting aside the dismissal order because there is no evidence to connect the petitioner to the allegations against him. We have called for the entire records right from framing the charges and perused the same. We have gone through the judgment of the learned Single Judge and the decisions cited before us. The net result is that the **WA NO. 1933 OF 2018** learned Single Judge was perfectly justified in allowing the Writ Petition, setting aside the dismissal order, and granting back with terminal benefits since the wages petitioner/respondent has already superannuated in 2017, as a case of one in which there is no evidence to prove the charges levelled against the delinquent. We find no grounds to interfere with the learned Single Judge’s judgment; therefore, the Writ Appeal fails and is dismissed. ## **SD/-** **S.V.BHATTI, JUDGE** **SD/-** **BASANT BALAJI, JUDGE** _dl/_ **WA NO. 1933 OF 2018** -34- ## **APPENDIX OF WA 1933/2018** RESPONDENT ANNEXURES Annexure-R1.A1 A ROUGH CALCULATION STATEMENT WITH RESPECT TO THE DUES ENTITLED Annexure-R1.A2 THE LAST DRAWN SALARY SLIP OF THE PETITIONER/RESPONDENT PETITIONER ANNEXURES Annexure A1 TRUE COPY OF THE ENQUIRY REPORT ALONG WITH THE COVERING LETTER DATED 26.04.2011