Pyare Lal
Sharma Vs. Managing Director, Jammu & Kashmir Industries Ltd. & Ors
[1989] INSC 204 (19
July 1989)
Kuldip
Singh (J) Kuldip Singh (J) Dutt, M.M. (J)
CITATION:
1989 AIR 1854 1989 SCR (3) 428 1989 SCC (3) 448 JT 1989 (3) 133 1989 SCALE
(2)59
ACT:
Jammu
& Kashmir Industries Employees Service Rules & Regulations--R.
16.14---Termination of service--Provision of show cause notice sufficient
safeguard against arbitrary action--Held regulation not arbitrary.
Regulation
16.14--Termination of service--Ground (a) & (b)Three months notice or pay
in lieu thereof. Amended Regulation-grounds (c) & (d) unauthorised absence
and taking part in politics--15 days notice required--No requirement of any
other notice or pay in lieu thereof. Show cause for the period prior to
amendment--Held amended regulation not operative retrospectively and the notice
served on the employee was illegal and the order of termination had to be set
aside. Also held termination on the basis of taking part in politics not
maintainable as no show cause given.
Constitution
of India 1950--Article 311(1) Employees of
the company not civil servants--Cannot claim protection of Art. 311(1) of the
Constitution of India nor the extension of that guarantee on parity-Employees
governed by the provisions of Articles of Association and Regulations of the
Company.
Natural
Justice-Principle--No one can be penalised for the action which was not penal
on the day it was committed.
Delegated
authority, acquires the power of appointing authority-Held M.D. who had been
delegated the powers of the Board of Directors was legally competent to
terminate the services of the employee.
HEAD NOTE:
According
to the Regulation 16.14 of the Jammu & Kashmir Industries Employees Service
Rules & Regulations the services of the permanent employee could be
terminated if the post is abolished or he is declared medically unfit after
giving three month's notice or pay in lieu thereof and in case of temporary
employee one month's notice or pay in 429 lieu thereof.
This
regulation was amended on April 20, 1983 by adding two more grounds namely, if
the employee remains on an unauthorised absence or if he takes part in active
politics, in such cases the services shall be terminated if he fails to explain
his conduct satisfactorily within 15 days from the date of issue of notice and
the management shall be empowered to take a decision without resorting to
further enquiries.
Pyare Lal
Sharma was employed as a Chemical Engineer by the Jammu & Kashmir
Industries Ltd. hereinafter called 'Company'. The Company issued a show cause
notice on 21.4.83 in terms of the added clauses for his unauthorised absence
from duty. As no reply was submitted, the M.D. terminated his services by an
order dated 14.6.1983. Sharma challenged the order of termination by way of a
writ petition before the J & K High Court. Learned Single Judge allowed the
Writ Petition on three grounds namely, violation of Rules of Natural Justice,
that the Board of Directors having appointed Sharma, the M.D. who is subordinate
authority could not terminate his services and that the regulation 16.14 was
arbitrary and violative of Art. 14 of the Constitution of India. The Letters Patent Bench of the
High Court dismissed the appeal of the Company but denied backwages to Sharma.
Aggrieved
by that order both the Company as well as Sharma came up in appeals before this
court. While allowing the appeal of Sharma partially and dismissing the appeal
of the Company, this Court,
HELD:
That Regulation 16.14 was not arbitrary. The provision of show cause notice is
a sufficient safeguard against arbitrary action. Under grounds (a) & (b) of
the Regulations three months notice or pay in lieu thereof is required.
Regarding grounds (c) & (d) the regulations provide for 15 days notice to
explain the conduct satisfactorily and there is no requirement of any other
notice or pay in lieu thereof. [437C-D] There is no provision in the Articles
of Association or the regulations of the company giving same protection to the
employees of the company as is given to the civil servants under Art. 311(1) of
the Constitution of India. An employee of the Company cannot,
therefore, claim that he cannot be dismissed or removed by an authority
subordinate to that by which he was appointed. Since on the date of termination
of Sharma's services the M.D. had the powers of the appointing authority he was
legally competent to terminate Sharma's services. [437F-G] 430 Grounds (c)
& (d) in regulation 16.14 exclusively and individually are sufficient to
terminate the services of an employee. Once it is established that an employee
remains on an unauthorised absence from duty the only action which can be taken
is termination of his services. Similar is the case when an employee takes part
in active politics. The finding in the termination order cannot be sustained
because no notice in this respect was given to Sharma but the order of
termination can be supported on the ground of his remaining on unauthorised
absence from duty. [437H; 438A-B] State of Orissa v. Vidyabhushan Mohapatra, [1963] 1 Supp. SCR 648 and Railway Board v. Niranjan
Singh, [1969] 1 SCR 548, relied upon.
It is
a basic principle of natural justice that no one can be penalised on the ground
of a conduct which was not penal on the day it was committed. The date of show
cause notice being April
21, 1983 the unauthorised
absence from duty which has been taken into consideration is from December 20, 1982 to April 20, 1983. Whole of this period being prior to the date of amendment
of regulation 16.14, the same could not be made as a ground for proceeding
under ground (c) of Regulation 16.14. The Notice served on the appellant was
thus illegal and as a consequence the order of termination can not be sustained
and has to be set aside. [438F-G] When the termination order is set aside by
the courts normally the employee becomes entitled to backwages and all other
consequential benefits. In view of the facts and circumstances of this case the
court ordered that only sixty percent of the backwages be paid to Sharma.
Moneys already received by Sharma under orders of either this Court or High
Court shall be adjusted and the balance paid to him. If the money already paid
to Sharma is more than what has been ordered to be paid now then there shall be
no recovery from him. [439A-C]
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 3 1543 155 of 1985.
From
the Judgment and Order dated 26.3. 1985 of the Jammu & Kashmir High Court
in L.P.A. (W) No. 59 of 1984.
For
the Appellant In-Person in Civil Appeal No. 3 154/85 M.N. Tiku, Rakesh Tiku and
Pandey Associates for the Respondents.
431
M.N. Tiku, Rakesh Tiku and Pandey Associates for the Appellants.
For
the Respondent In-Person in Civil Appeal No. 3155/85.
The
Judgment of the Court was delivered by KULDIP SINGH, J. Jammu & Kashmir Industries
Limited (hereinafter called 'company') is a company registered under the Indian
Companies Act, 1956 and is wholly owned and managed by the State of Jammu &
Kashmir. Pyare Lal Sharma was employed by the company as Chemical Engineer. His
services were terminated by the Managing Director of the company on June 14, 1983. Sharma's writ petition was allowed
by a learned Single Judge of the Jammu & Kashmir High Court. On appeal by
the company the Letters Patent Bench upheld the judgment but denied back-wages
to Sharma. This is how these two appeals, one by the.company and the other by
Sharma, are before us.
We may
briefly notice the necessary facts. Pyare Lal Sharma joined the company as
Assistant Chemical Engineer on July 12, 1972.
In 1974 he was sent to England as management trainee but he
returned back without completing the training. Sharma's conflict with the
company started in 1976 when he filed a suit against the company in Jammu &
Kashmir High Court with various reliefs including a direction that he be again
sent to England on company's expense. The suit was
dismissed and further appeal to the Division Bench was also dismissed. He then
filed another suit in the Delhi High Court claiming Rs.50 lakhs as damages from
the company but the same did not proceed on technical grounds. Thereafter, it
seems, Sharma started suspecting mala-fide in every action of the company and
resorted to court proceedings even on slight pretext. He challenged the order
of transfer from Baramulla to the headquarters by way of suit in the Jammu
& Kashmir High Court. Interim stay, initially granted, was vacated by the
High Court. In December, 1979 he applied for leave on medical grounds without
disclosing the ailment. He remained absent from December 7, 1979 to March
7, 1980 without any
sanctioned leave. Disciplinary proceedings were initiated against him on the
charge of unauthorised absence and he was placed under suspension on March 8, 1980. He filed Writ Petition No. 58/80
in the Jammu & Kashmir High Court against suspension. Ultimately Sharma
expressed regrets and he was reinstated into service by an order dated May 15, 1980. In April, 1981 he was transferred
from headquarters to one of 432 the units. He again filed a writ petition in
the Jammu & Kashmir High Court challenging the order of transfer but the
same was dismissed. Thereafter he filed Writ Petition No. 4086 of 1982 in this
Court which was heard by Chinnappa Reddy, J. (Vacation Judge) on 1st of June,
1982. The learned Judge passed the following order:
"Issue
notice returnable on June
15, 1982.
Notice
be also served on the counsel for the State of Jammu & Kashmir Mr. Altar
Ahmad. Mr. Altar Ahmad will take instructions from his clients and assist this
Court to know the precise facts of the case which it is impossible to find from
the petitioner. 1 have suggested to the petitioner that he may engage a counsel
but he does not appear to be inclined to do so. Nor is he willing to be
assisted by the counsel engaged by the court." The writ petition was,
however, dismissed as withdrawn on June 15, 1982. Sharma filed two more writ
petitions being 293 of 1982 and 410 of 1982 in the Jammu & Kashmir High
Court challenging the promotions of some other officers.
Sharma
absented from duty on September
8, 1982. He was asked
to explain his absence. A para out of his reply is as under:
"I
have been submitting charge sheet against you since last one year to
authorities about your corrupt practices, communal character, and illegal
financial advancement you have made but no action has been taken against you
since you utilise political pressure and bribed the chairman." Sharma was
served with a charge-sheet dated September 24, 1982 and he was placed under suspension. Use of derogatory
language in various communications was one of the charges against him. He
submitted his reply to the charge sheet on October 7, 1982. Part of the opening paragraph is
as under:
"You
have become frustrated, lost balance of mind and to cover the various
irregularities committed by you for example ..... You will be prosecuted for levelling
false charge sheet and false charges against me. Coming to the charge sheet
with above reverence I have to say as under." On October 22, 1982 an enquiry officer was appointed to
enquire 433 into the charges against Sharma. He challenged the order of
suspension by way of Civil Writ Petition 661 of 1982 in the Jammu & Kashmir
High Court. The High Court stayed the suspension by its order dated December 20, 1982. The order of suspension having
been stayed by the High Court it was incumbent on Sharma to have joined duty. But
inspite of company's letters asking him to do so he remained absent.
Sharma
filed Writ Petition 471/82, Writ Petition 129/83 and Letters Patent Appeal
24/83 for payment of his salary and allowances for various periods which were
granted by the High Court.
It is
also on record that while in service Sharma unsuccessfully fought assembly
elections on two occasions. He filed his nomination papers for contesting
elections to the Lok Sabha from Baramulla constituency. But the nomination
papers were rejected.
Regulation
16.14 of Jammu & Kashmir Industries Employees Service Rules and Regulations
before amendment was as under:
"The
service of the permanent employee shall be terminated by the company, if (a)
his post is abolished or (b) he is declared on medical grounds to be unfit for
further service after giving three months' notice or pay in lieu thereof. For
similar reasons the service of a temporary employee also be dispensed with
after giving him one month's notice or pay in lieu thereof." The above
quoted regulation 16.14 was amended on April 20, 1983. Amended regulation is as under:
"16.14.
the services of an employee shall be terminated by the Company if:
(a) his
post is abolished, or (b) he is declared on medical grounds to be unfit for
further service, or (c) if he remains on un-authorised absence, or(d) if he
takes part in active politics.
In the
case of (a) and (b) above the services shall be terminated after giving three
months notice to a permanent 434 employee and one month's notice to a temporary
employee or pay in lieu thereof.
In the
case of (c) and (d) above the services of an employee shall be terminated if he
fails to explain his conduct satisfactorily within 15 days from the date of
issue of notice. The management shall be empowered to take a decision without
resorting to further enquiries.
By
order of the Board of Directors." The company issued a show cause notice
dated April 21, 1983 in terms of clause (c) of amended
regulation 16. 14.
The
notice was in the following terms:
"In
compliance to the orders of the Hon'ble High Court Your suspension was stayed
till further orders vide Order No. JKI/319/82 dated 21.12.82 issued vide
endorsement No. Adm.(P) 80-65/4866 dated 21.12.82. From that date also you have
continuously remained absent unauthorisedly from your duties. You are,
therefore, served this notice to show cause within a period of 15 days as to
why your services should not be terminated under rules of the
Corporation." No reply to the show cause notice was submitted by Sharma.
By an order dated June
14, 1983 the Managing
Director of the company terminated his service,. The termination order is
reproduced as under:
"Shri
Pyare Lal Sharma Chemical Engineer, Jammu and Kashmir Industries Limited has
remained on unauthorised absence continuously from 21.12.82 (since the date of
his suspension was stayed as per orders from the Hon'ble High Court). Shri
Sharma was served with a notice under Jammu & Kashmir Industries Limited
Employees Service Rules to show cause within a period of 15 days as to why his
services should not be terminated. This notice was served to him under
registered post but the same was received back in this office and later on
delivered to him in person on 7.5.83 as per his request. Shri Sharma has failed
to explain his position.
It has
now also been established that Shri Sharma was 435 taking part in active
politics during the period of his un-authorised absence and has filed
nomination papers for contesting election from 1-Baramulla Parliamentary
Constituency. Now that his unauthorised absence as well as his taking part in
the active politics has been established, and in exercise of the powers vested
in the management under Jammu & Kashmir Industries Employees Services
Regulations the services of said Shri Pyare Lal Sharma Chemical Engineer J
& K Industries Limited are hereby terminated." Sharma challenged the
order of termination by way of Writ Petition No. 70 of 1984 before the Jammu
& Kashmir High Court. Learned Single Judge by his judgment dated October
16, 1984 allowed the writ petition on three grounds.
The
learned Judge found the impugned order violative of Rules of Natural Justice as
no opportunity to show cause was afforded to Sharma in respect of the ground of
taking part in active politics. It was also held that the Board of Directors
having appointed Sharma, The Managing Director who is subordinate authority
could not terminate his services.
Finally,
the learned Judge held regulation 16.14 to be arbitrary and as such violative
of Article 14 of the Constitution of India.
The
Letters Patent Bench of the High Court dismissed the appeal of the company but
denied back-wages to Sharma. The Bench held that Sharma's services could not be
terminated by an authority subordinate to the authority which appointed him.
The Bench also found that either three months notice or salary in lieu thereof
under regulation 16.14 was mandatory.
The
Division Bench did not agree with the other reasons given by the learned Single
Judge in support of his judgment.
Mr. Pyare
Lal Sharma appeared in person and argued his case. He has been of no assistant
to us. During the course of arguments we suggested to Mr. Sharma to engage a
counsel which de declined. We also repeatedly offered to him to have the services
of a counsel engaged by the Court but he did not agree and insisted on arguing
the case himself.
From
the pleadings of the parties, documents on the record, the judgment of the
learned Single Judge and of the Letters Patent Bench 436 and from Sharma's
arguments the following points arise for our consideration:
1.
Whether Regulation 16.14 is arbitrary and as such ultra vires Article 14 of the
Constitution of India.
2.
Whether three months' notice or pay in lieu of the notice period was required
to be given under Regulation 16.14.
3. The
termination order having been passed by the Managing Director who was an
authority subordinate to the Board of Directors which appointed Sharma, the
order was bad on that ground.
4.
Whether the impugned order is violative of rules of natural justice so much so
that the ground of taking part in active politics was not mentioned in the show
cause notice whereas it was relied upon in the termination order.
5.
Whether the period of absence, which was prior to the date of coming into force
of the amended Regulation 16.14, could be taken into consideration for invoking
ground (c) of the Regulation.
We see
no arbitrariness in Regulation 16.14. The Regulation has been framed to meet
four different eventualities which may arise during the service of a company
employee.
Under
this regulation services of an employee may be terminated (a) if his post is
abolished or (b) if he is declared on medical grounds to be unfit for further
service or (c) he remains on unauthorised absence or (d) if he takes part in
active politics. In the case of (a) and (b) three months notice to a permanent
employee and one month notice to temporary employee or pay in lieu thereof is
to be given. In case of (c) and (d) a show cause notice, to explain his conduct
satisfactorily, is to be given. So far as grounds (a) and (b) are concerned
there cannot be any objection.
When a
post is abolished or an employee is declared medically unfit for further
service the termination is the obvious consequence. In the case of abolition of
post the employee may be adjusted in some other post if legally permitted.
Ground
(c) has also a specific purpose. "Remains on unauthorised absence"
means an employee who has no respect for discipline and absents himself
repeatedly and without any justification 437 or the one who remains absents for
a sufficiently long period. The object and purport of the regulation is to
maintain efficiency in the service of the company. The provision of show cause
notice is a sufficient safe-guard against arbitrary action. Regarding ground
(d) "acting politics" means almost whole time in politics. Company
job and active politics cannot go together. The position of the civil servants
who are governed by Article 311 is entirely different but a provision like
grounds (c) and (d) in Regulation 16.14 concerning the employees of
companies/corporations/public undertakings is within the competence of the
management.
We do
not agree with the Division Bench of the High Court that three months' notice
or pay in lieu thereof was to be given to Sharma under Regulation 16.14. It is
clear from the plain language of the regulation that three months notice or pay
in lieu, is only required when termination is under ground (a) or (b).
Regarding (c) and (d), the regulation provides for a 15 days notice to explain
the conduct satisfactorily and there is no requirement of any other notice or
pay in lieu thereof.
We may
now take-up the third point. Sharma was appointed as Chemical Engineer by the
Board of Directors. The powers of the Board of Directors to appoint officers of
Sharma's category were delegated to the Managing Director on September 12, 1974 and as such from that date the
Managing Director or became the appointing authority. Needless to say that
employees of the company are not civil servants and as such they can neither
claim the protection of Article 311(1) of the Constitution of India nor the
extension of that guarantee on parity. There is no provision in the Articles of
Association or the regulations of the company giving same protection to the
employees of the company as is given to the civil servants under Article 311(1)
of the Constitution of India. An employee of the company cannot, therefore,
claim that he cannot be dismissed or removed by an authority subordinate to
that by which he was appointed. Since on the date of termination of Sharma's
services the Managing Director had the powers of appointing authority, he was
legally competent to terminate Sharma's services.
The
learned Single Judge allowed the writ Petition on the fourth point though the
same did not find favour with the Division Bench. Grounds (c) and (d) in
regulation 16.14, exclusively and individually, are sufficient to terminate the
services of an employee. Once it is established to the satisfaction of the
authority that an employee 438 remains on unauthorised absence from duty, the
only action which can be taken is the termination of his services.
Similar
is the case when an employee takes part in active politics. The finding in the
termination order regarding taking part in active politics cannot be sustained
because no notice in this respect was given to Sharma but the order of
termination can be supported on the ground of remaining unauthorised absence
from duty. This Court in State of Orissa v. Vidyabhushan Mohapatra, [1963] 1
Supp. SCR 648 and Railway Board v. Niranjan Singh, [1969] 1 SCR 548 has held
that if the order can be supported on one ground for which the punishment can
lawfully be imposed it is not for the courts to consider whether that ground
alone would have weighed with the authority punishing the public servant.
Thus
there is no force in this argument.
This
takes us to the last point which we have discovered from the facts. Regulation
16.14 before amendment consisted of only clauses (a) and (b) relating to
abolition of post and unfitness on medical ground. The company had no authority
to terminate the services of an employee on the ground of unauthorised absence
without holding disciplinary proceedings against him. The regulation was
amended on April 20,
1983 and grounds (c)
and (d) were added. Amended regulation could not operate retrospectively but
only from the date of amendment. Ground (c) under which action was taken came
into existence only on April 20, 1983 and as such the period of unauthorised
absence which could come within the mischief of ground (c) has to be the period
posterior to April 20, 1983 and not anterior to that date. The show cause
notice was issued to Sharma on April 21, 1983. The period of absence indicated
in the show cause notice is obviously prior to April 20, 1983. The period of
absence prior to the date of amendment cannot be taken into consideration. When
prior to April 20, 1983 the services of person could not be
terminated on the ground of unauthorised absence from duty under Regulation
16.14 then it is wholly illegal to make the absence during that period as a
ground for terminating the services of Sharma. It is basic principle of natural
justice that no one can be penalised on the ground of a conduct which was not
penal on the day it was committed. The date of show cause notice being April
21, 1983 the unauthorised absence from duty which has been taken into
consideration is from December 20, 1982 to April 20, 1983. Whole of this period
being prior to the date of amendment of regulation 16.14 the same could not be
made as a ground for proceeding under ground (c) of Regulation 16.14. The
notice served on the appellant was thus illegal and as a consequence the order
of termination cannot be sustained and has to be set aside.
439
When the termination order is set aside by the courts normally the servant
becomes entitled to back-wages and other consequential benefits. This case has
a chequered history. From 1976 onwards there has been continuous litigation and
mistrust between the parties. The facts which we have narrated above go to show
that Sharma has equally contributed to this unfortunate situation. In view of
the facts and circumstances of this case we order that sixty per cent of the
back-wages be paid to Sharma. Money already received by Sharma under orders of
this Court or the High Court shall be adjusted and the balance paid to him. If
the money already paid to Sharma is more than what we have ordered then there
shall be no recovery from him.
Civil
Appeal 3154/85 is allowed to the extent indicated above, Civil Appeal 3155/85
filed by the company is dismissed. C.M.P. 1213/ 88 is dismissed as infructuous.
There shall be no order as to costs.
R.N.J.
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