N.K. Kalliani v. The Managing Director, Kerala Small Industries Development Corporation Ltd., Trivandrum & The Chairman and Executive Director, Small Industries Development Corporation Ltd., Trivandrum

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** ## **WEDNESDAY, THE 16TH DAY OF JULY 2014/25TH ASHADHA, 1936** ## **WP(C).No. 11615 of 2005 (G)** **----------------------------** ## **PETITIONER(S):** **--------------------------** **N.K.KALLIANI, AGED 52 YEARS, W/O. C.P.RAJAN, SENIOR SUPERINTENDENT SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD. MARKETING DIVISION, GANDHI NAGAR, KOCHI-20.** **BY ADVS.SRI.P.V.MOHANAN SMT.P.ROSAMMA JOSEPH SRI.BIJU.P.N.** ## **RESPONDENT(S):** **----------------------------** ## **1. THE MANAGING DIRECTOR, KERALA SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD., TRIVANDRUM.** ## **2. THE CHAIRMAN AND EXECUTIVE DIRECTOR, SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD. TRIVANDRUM.** **R,R1 & R2 BY ADV. SMT.P.K.RADHIKA, SC, SIDCO R,R1 & 2 BY ADV. SRI.P.FAZIL, SC, SIDCO** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16-07-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **W.P.(C).No. 11615/2005** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** - **P1. COPY OF THE PROCEEDINGS DATED 15.3.2002.** - **P2. COPY OF THE PROCEEDINGS DATED 25.7.2002.** **P3. COPY OF THE MEMO OF CHARGES ALONG WITH STATEMENT OF ALLEGATIONS DATED 18.2.2002.** - **P4. COPY OF THE SHOW CAUSE NOTICE DTD.26/27.04.2004.** - **P5. COPY OF THE EXPLANATION DTD.12.5.2004.** - **P6. COPY OF THE PROCEEDINGS DTGD.4.8.2004** - **P7. COPY OF THE APPEAL DATED 6.10.2004.** - **P8. COPY OF THE PROCEEDINGS DTD.11.1.2005.** ## **RESPONDENTS' EXHIBITS:** **NIL.** sdk+ ///True copy/// P.S. to Judge ## ALEXANDER THOMAS, J. ================== W.P.(C).No. 11615 of 2005 ================== Dated this the 16[th] day of July, 2014 J U D G M E N T The facts of the case that are necessary for the disposal of this matter are as follows:- It is averred by the petitioner that she belongs to Scheduled Caste (SC) community and that she had entered the service of the respondent-Kerala Small Industries Development Corporation Ltd. (SIDCO), as Lower Division Clerk, on 22.12.1978. That she was subsequently promoted as Upper Division Clerk in March, 1981 and was further promoted as Junior Superintendent in 1989 and was thereafter promoted to the cadre of Senior Superintendent in July 1997 and that she has been holding the said post since then, until her retirement from service on 31.8.2010. It is indisputable that the respondent-SIDCO is fully owned and financed by the Government of Kerala and is wholly financed and controlled by the State Government. 2. This Writ Petition was instituted on 5.4.2005, as the petitioner was mainly aggrieved by the penalty order imposed on her ordering to recover a sum of amount of Rs.6,823/- from the W.P.C.11615/05 - : 2 :- pay of the petitioner for the alleged loss caused by her to the respondent Corporation. In this regard, the petitioner was placed under suspension from service as per Ext.P1 order dated 15.3.2002. The petitioner was later reinstated in service as per Ext.P2 proceedings dated 25.7.2002, pending detailed enquiry and disciplinary action against her. Memo of charges and statement of allegations were served on the petitioner as per Ext.P3 dated 12.8.2002. The charge against the petitioner as per Ext.P3 memo, reads as follows: “That you, Smt.N.K.Kalliyani, Sr.Supdt. while holding the post of Estate Manager, Industrial Estate, Karakkad committed grave misconduct by not properly supervising and looking after the wealth of the Corporation which has caused loss to the Corporation.” The petitioner submitted reply to Ext.P3 memo of charges. Thereafter, Ext.P4 show cause notice dated 26.4.2004 was issued by the 1[st] respondent to the petitioner holding that the petitioner was responsible for the alleged loss and that the respondent Corporation proposes to recover Rs.4,890/- from the petitioner. The petitioner submitted detailed explanation to Ext.P4 show cause notice. By Ext.P6 proceedings dated 4.8.2004, the respondent Corporation ordered that the sum of Rs.4,890/- plus interest in lump sum will have to be recovered from the petitioner due to the W.P.C.11615/05 - : 3 :- loss incurred by the Corporation and that the period of suspension will be treated as she was on eligible leave. From Exts.P4 and P6 it can be seen that the respondent-Corporation has come to the conclusion that the petitioner was guilty of supervisory lapse, on the basis of an enquiry reports dt.18.3.2002 and dt.11.4.2002 referred to therein. It is also seen from Exts.P4 and P6 that the respondent Corporation came to the conclusion that the amount of loss to be quantified as against the petitioner is Rs.4890/-, on the basis of another report dated 27.2.2004 said to have been furnished by the Divisional Forest Officer (DFO), Palakkad, quantifying such alleged loss. It is the precise and consistent case of the petitioner that both the above said enquiry reports finding the petitioner guilty of supervisory lapse and the report of the DFO, on the issue of quantification of the loss, have never been furnished to the petitioner at any point of time. The petitioner submitted an appeal initially to the Managing Director and later as per Ext.P7 to the 2[nd] respondent-Chairman of the respondent Corporation. In the appeal, the petitioner has taken up not only the plea that she is not responsible for the alleged loss, but she has also taken up the specific plea about nor-furnishing of the above said enquiry reports W.P.C.11615/05 - : 4 :- ## as well as the report of the DFO. The following grounds are ## specifically urged in Ext.P7 appeal memorandum; ## “Grounds: - a) The Enquiry Officer who had conducted the enquiry into the alleged charges against me had not given sufficient opportunity to the appellant before conducting the enquiry. - b) Copy of the enquiry report on the basis of which the Appellant was made guilty of the alleged charges has not been furnished to me before charge sheeting. - c) The recovery of Rs. 4890/- with interest ordered by the Managing Director in lump from my salary is against the regulation 114 of the Staff Regulation of SIDCO.” Ext.P7 appeal has been rejected by the 2[nd] respondent-appellate authority as per Ext.P8 order dated 11.1.2005. It is aggrieved by Ext.P6 penalty order as confirmed by Ext.P8 appellate order, that the ## petitioner has approached this Court by filing the above said Writ ## Petition (Civil) with the following prayers: - “i) To call for the records leading to Exhibit P4 and Exhibit P6 and set aside the same by issuing a writ of Certiorari or appropriate writ order or direction. - ii) To issue a writ of Mandamus order or direction commanding the respondents to treat the period of suspension of the petitioner as on duty for all purposes including pay and allowances. - iii) To direct the respondents to pay Rs. 6823/- to the petitioner being the amount recovered from the salary. - iv) Any other appropriates (sic) order or direction as this Hon'ble Court may deem fit in the interest of justice. - v) To grant the cost of this writ Petition (Civil).” W.P.C.11615/05 - : 5 :- 3. This Writ Petition was admitted by this Court on 6.4.2005. As early as on 20.6.2008, this Court has passed an order to the following effect: “In case no counter affidavit is filed within one month, it will be taken that the respondents have no objection in allowing the writ petition.” The respondents have never bothered to file counter affidavit in this matter thereafter. This matter has later come up before this Court on 20.11.2008, on which day, this Court ordered to post this Writ Petition before a hearing court dealing with 2005 matters. The matter was listed on 9.3.2012 and was not taken up. It was listed on 10.4.2013 and was posted after summer vacation. It was later listed on 6.9.2013, but was not taken up. On 16.1.2014 this Court allowed the prayer in I.A.No. 570/2014 filed by the petitioner for early hearing and disposal of the Writ Petition. On 23.1.2014, this Court has noted that the petitioner is ready, but that the Standing Counsel for the 2[nd] respondent has sought time on the plea that their file is missing and accordingly, the case was posted after one month in the disposal list. The matter was again listed on 12.2.2014 and was posted on 2.4.2014 in the disposal list. On 2.4.2014 the case as listed, on which day, the same was posted after vacation. Later this matter was posted W.P.C.11615/05 - : 6 :- before this Court on 26.4.2014. This Court made enquiries as to whether the counter affidavit is filed in the matter and it was informed that counter affidavit has not been filed by the respondents. In order to facilitate furnishing of instructions to the learned Standing Counsel by the respondents, the matter was adjourned to 9.7.2014. This Court passed order on 26.6.2014 in this matter, which reads thus: “This is a matter instituted in the year 2005. The main challenge in this case is to set aside the impugned Ext.P6 order by which an amount of Rs. 6823/- (Rupees six thousand eight hundred and twenty three only) has been ordered to be recovered from the salary of the petitioner. These proceedings are under challenge. The prayer is to quash the decision in Ext.P6 and for direction to treat the period of suspension of the petitioner as on duty for all purposes including pay and allowances and for direction to refund the amount of ` 6,823/- so recovered from the petitioner. Though the writ petition was admitted by this court on 06.04.2005, no counter affidavit has been filed by the respondents till date. In fact, as early as on 20.06.2008, this court has specifically ordered that in case of no counter affidavit within one month it will be taken that the respondents have no objection in allowing the writ petition. The matter was taken up for final hearing today. 2. The learned counsel for the petitioner has been heard. The learned counsel for the petitioner submits that showing the pendency of this case as a pretext even the retirement benefit of the petitioner by way of DCRG has also been unlawfully withheld. It is ordered the the pendency of this writ petition shall not be a ground for the respondents from disbursing the admissible DCRG amount due to the petitioner. The respondents shall take steps to ensure that at least the undisputed DCRG amount should be disbursed to the petitioner without any further delay.” ## 4. Today when the case was called, the learned counsel for the petitioner informed that the undisputed terminal benefits have W.P.C.11615/05 - : 7 :- been paid in compliance with the above said order dated 26.6.2014, but that counter affidavit has not yet been filed in this matter. But it is unfortunate to note that even today, when the case was called for final hearing, no counter affidavit is filed by the respondents. Therefore, this Court is constrained to consider the matter on merits based on the pleadings and materials on record and without any rebuttal pleadings from the respondents. 5. It is the specific and precise case of the petitioner that the two reports of the enquiry officer have never been furnished to the petitioner, either before the infliction of the impugned penalty or even thereafter. Even the report of the DFO, relied on by the respondents on the matter of quantification of the alleged loss, has not been furnished to the petitioner either before the infliction of the penalty or thereafter. Therefore, the only course of action left left before this Court is to treat the said averments of the petitioner as factually correct. Hence this Court has to proceed on the factual premise that the aforementioned enquiry reports and the report of the DFO have never been furnished to the petitioner before the infliction of the impugned penally order. It is specifically contended on behalf of the petitioner that she has been seriously prejudiced by W.P.C.11615/05 **==> picture [30 x 9] intentionally omitted <==** the non-supply of the above said two reports of the enquiry officer and the report of the DFO, in as much as she could have convinced the disciplinary authority that the findings of guilt rendered in the said report are without any basis and that the charges are not proved and that she is innocent of the charges. That the petitioner was denied this opportunity to rebut the adverse findings in these reports before the disciplinary authority, due to the non-supply of these reports and that she has been seriously prejudiced and that adverse civil consequences have been inflicted on her in violation of natural justice. These contentions of the petitioner regarding nonsupply of the enquiry reports and regarding the causing of serious prejudice to her on account of such non-supply have not been denied and rebutted by pleadings of the respondents. So these pleas of the petitioner are to be taken as correct by this Court. 6. It is by now well established that where the disciplinary authority and enquiry authority are two distinct officials or authorities, and the report of the enquiry officer is relied on by the disciplinary authority for deciding on the question of the guilt of the delinquent, then necessarily the copy of the said enquiry report along with supporting materials should be served on the delinquent W.P.C.11615/05 - : 9 :- before infliction of penalty order. In other words, in order to decide on the guilt of the petitioner based on the report of the enquiry officer, the disciplinary authority has to serve a copy of such enquiry report to the delinquent in order to alert him/her and afford him/her a reasonable opportunity to controvert the contents of the said enquiry report. This is in order to enable the delinquent to have a reasonable opportunity to controvert before the disciplinary authority that the findings of guilt recorded in the enquiry report is not correct or warranted in the facts and circumstances of the case and that the delinquent is not guilty, etc. If such enquiry report is not furnished to the delinquent, then it would amount to flagrant violation of principles of natural justice and fairness. The issue is no longer res integra and is fully covered in favour of the petitioner in view of the judgment of the Apex Court in the case Managing Director ECIL v. B.Karunakar, reported in AIR 1994 SC 1074 = (1993) 4 SCC 727. It has been held therein that the delinquent employee has the right to receive a copy of the enquiry officer's report before the disciplinary authority arrives at his conclusion with regard to the guilt or innocence of the employee on the charges levelled against him. The said right is a part of the employee's right W.P.C.11615/05 - : 10 :- to defend himself against the charges levelled against him and the right is an integral part of the opportunity of defence against the charges and the failure to furnish copy of the enquiry report is a breach of principle of natural justice and that whatever be the nature of punishment, whenever the enquiry is to be held for imposing punishment, the delinquent employee should have the benefit of the report of the enquiry officer before the disciplinary authority records its findings on the charges levelled against him. The specific contention of the petitioner that she has been seriously prejudiced by such non-supply of adverse reports and that if she had been given those reports before the imposition of penalty, she could have easily convinced the disciplinary authority that the findings of guilt are not tenable, etc., have not been rebutted and denied by pleadings of the respondents in this case. Hence these contentions and averments can only be treated as correct by this Court, in the absence of rebuttal pleadings of the respondents, in spite of ample opportunity to file their counter affidavit. So this Court is constrained to conclude that the petitioner has not been supplied the aforementioned adverse reports before the imposition of the impugned order and that she has been seriously prejudiced W.P.C.11615/05 - : 11 :- on that account. Hence this Court is constrained to hold that the imposition of the impugned Ext.P6 penalty is in breach of principles of natural justice and is therefore ultra vires and is liable to be interdicted in judicial review proceedings. 7. There is yet another aspect of the matter. Though the petitioner had initially preferred an appeal before the Managing Director, she had also preferred a detailed appeal memorandum, as evidenced by Ext.P7, before the 2[nd] respondent-Chairman of the Corporation. Ext.P7 appeal memorandum is seen preferred on 6.10.2004. However, by Ext.P8 proceedings dated 11.1.2005, Ext.P7 appeal is rejected without stating any reason and the said proceedings as per Ext.P8 is a non-speaking order. The Apex Court in the decision in R.P.Bhatt v. Union of India reported in 1986 (2) SCC 651 = AIR 1986 SC 1040, has considered the scope and ambit of the duty of an appellate authority in the matter of consideration of appeals in disciplinary proceedings in service matters. Though the said decision is with reference to the provisions in Rule 27(2) of the Central Civil Service (Classification, Control and Appeal) Rules, 1965, the principles laid down therein are of wholesome nature and are really relevant for the consideration of the question as to W.P.C.11615/05 - : 12 :- whether the appellate authority's decision is based on relevant and proper consideration of the grievances of the delinquent. Paragraphs 4 and 5 of the decision in R.P.Bhatt 's case reported in 1986 (2) SCC 651, read as follows: “4. The word “consider” in Rule 27(2) implies “due application of mind”. It is clear upon the terms of Rule 27(2) that the Appellate Authority is required to consider (1) whether the procedure laid down in the Rules has been complied with; and if not, whether such noncompliance has resulted in violation of any provisions of the Constitution or in failure of justice; (2) whether the findings of the disciplinary authority are warranted by the evidence on record; and (3) whether the penalty imposed is adequate; and thereafter pass orders confirming, enhancing etc. the penalty, or may remit back the case to the authority which imposed the same. Rule 27(2) casts a duty on the Appellate Authority to consider the relevant factors set forth in clauses (a), (b) and (c) thereof. 5. There is no indication in the impugned order that the Director General was satisfied as to whether the procedure laid down in the Rules had been complied with; and if not, whether such noncompliance had resulted in violation of any of the provisions of the Constitution or in failure of justice. We regret to find that the Director General has also not given any finding on the crucial question as to whether the findings of the disciplinary authority were warranted by the evidence on record. It seems that he only applied his mind to the requirement of clause (c) of Rule 27(2) viz. whether the penalty imposed was adequate or justified in the facts and circumstances of the present case. There being non-compliance with the requirements of Rule 27(2) of the Rules, the impugned order passed by the Director General is liable to be set aside.” Therefore, it is the bounden duty of the appellate authority in disciplinary proceedings to consider (1) whether the procedure laid down in the rules or norms has been complied with and whether such non-compliance has resulted in failure of justice (2) whether the findings of the disciplinary authority are warranted by the W.P.C.11615/05 - : 13 :- evidence on record, and (3) whether the penalty imposed is adequate and it is only after consideration of all the relevant and germane matters, that the appellate authority should take a considered decision on the appeal. In the instant case, impugned Ext.P8 appellate order cannot be said to be one passed based on consideration of the relevant aspects of the matter in as much as the said proceedings appear to be non-speaking and without assigning any reasons. Such casual approach should not be taken by the appellate authority while deciding the fate of delinquent employees in departmental disciplinary proceedings. Admittedly, every order of the administrative authority must be guided by reasonableness and fairness. Administrative fairness demands that not only that all relevant aspects of the matter should be taken into account, but also that necessary reasons are given by the authority. Since such legal requirements have not been adhered to by the appellate authority, this Court is also constrained to hold that the appellate order as per Ext.P8 is also not in compliance with the requirements of law. 8. Under these circumstances, as the impugned orders are liable to be interdicted in judicial proceedings, this Court is W.P.C.11615/05 - : 14 :- constrained to set aside the impugned Ext.P6 penalty order and Ext.P8 appellate order and those orders are quashed. The petitioner has already retired from service as early as on 31.8.2010. The respondents had all the time to submit their pleadings, so that even if the order is adverse to them, they could have sought liberty of the court to remit the matter for fresh consideration at the hands of the disciplinary authority or the appellate authority. That course of action is not open to the respondents now. Firstly, they have not even bothered to file any counter affidavit in this matter. More importantly, since the jural relationship of employee and employer as between the petitioner and respondent Corporation is no longer subsisting due to the superannuation of the petitioner on 31.8.2010, the matter pertaining to the impugned Ext.P8 penalty order cannot be remitted back to the disciplinary authority for any fresh consideration, at this point of time. Therefore, this Court is left with no alternative but to interfere with the impugned orders and it is made clear that the respondents will not have any opportunity for reconsideration of the matter, in view of the retirement of the petitioner from service. 9. As the impugned Ext.P6 penalty order is set aside, it is W.P.C.11615/05 - : 15 :- ordered that the period of suspension of the petitioner from service as per Ext.P1 dated 15.3.2002 upto her reinstatement in service as per Ext.P2 dated 25.7.2002, shall be treated as on duty for all purposes including pay and allowances and all other consequential benefits, including terminal benefits. An amount of Rs. 6,823/- has been recovered from the petitioner in enforcement of Ext.P6 penalty order. The respondents shall forthwith refund to the petitioner the aforementioned amount of Rs. 6,823/- to the petitioner. The petitioner's terminal benefits should be re-computed taking into account the quashing of the impugned Ext.P6 penalty order. Earlier by the impugned Ext.P6 order, it was ordered that the petitioner's period of suspension from service will be treated as if she was on eligible leave. Now that the impugned Ext.P6 penalty order has been set aside, the respondents will have to treat the said period as on duty for all purposes like pay and allowances, increments, pay fixation, quantification of terminal benefits, etc. All consequential benefits on this account, should also be worked out and paid to the petitioner. Such consequential benefits including the revised terminal benefits should be sanctioned and disbursed to the petitioner by the respondents within a period of three months from W.P.C.11615/05 - : 16 :- the date of production of a certified copy of this judgment. The Writ Petition (Civil) stands allowed, as indicated as above. There will be no order as to costs. Sd/sdk+ ALEXANDER THOMAS , JUDGE ///True copy/// P.S. to Judge