Director
General, EST & Anr Vs. T. Abdul Razak [1996] INSC 761 (8 July 1996)
Agrawal, S.C. (J) Agrawal, S.C. (J) Nanavati G.T. (J) S.C. Agrawal,
J.
CITATION:
1996 SCC (4) 708 JT 1996 (6) 502 1996 SCALE (5)113
ACT:
HEAD NOTE:
THE
8TH DAY OF JULY, 1996 Present:
Hon'ble
Mr. Justice S.C Agrawal Hon'ble Mr. Justice G.T. Nanavati M. Chandrasekharan,
Additional solicitor General, V.J. Francis, P.I. Jose, Adv. and Amlan Ghose,
Advs. with him for the appellants.
The
following Judgment of the Court was delivered:
Director
General, ESI & Anr. V. T. Abdul Razak [ WITH CIVIL APPEAL NO. 3953 OF 1988,CIVIL APPEAL NO. 1913 OF 1989 AND SPECIAL LEAVE PETITION (C)NO 13126-27 OF 1996
{C.C. NO. 368/1996 }] CIVIL APPEALS NOS. 3952/1988, 3953/1988 AND 1913/1989 -
These appeals directed against the judgment of the central Administrative
Tribunal, Bangalore Bench (hereinafter referred to as 'the Tribunal') dated
January 29, 1988 raise a common question relating to the validity of Rule 16(2)
of the employees' State Insurance (Central) Rules, 1950 (hereinafter referred
to as 'the Rules') and Regulations 12(2) and 13(1) of the Employees' State
Insurance Corporation (Staff and Condition of Service) Regulations, 1959
(hereinafter referred to as 'the regulations') The Employees' State Insurance
Corporation (for short 'the Corporation') is a statutory corporation
established under the provisions of the Employees' State Insurance Corporation
Act, 1948 (herein after referred to as 'the Act'). Under Section 16 of the Act
the Director General of the Employees' State Insurance Corporation (for short
'the Director General') is the Chief Executive Officer of the Corporation and
is one of the Principal officers. Section 17 of the Act makes provisions with
regard to staff other than the Principal Officers. In sub-section (2) of
Section 17 it is provided that the Corporation shall, with the approval of the
Central Government, make regulations regarding the method of recruitment, pay
and allowances, discipline, superannuation benefits and other conditions of
service of the members of its staff. Section 94-A, wherein provision has been
made for delegation of powers, provides that the Corporation, and Subject to
the regulations made by the Corporation in this behalf, the Standing Committee
may direct that all of any of the powers and functions which may be exercised
by the Corporation or the Standing Committee, as the case may be, may in
relation to such matters and subject to such conditions, if any, as may be
specified, by also exercisable by any officer or authority subordinate to the
Corporation sub-section (1) of Section 95 of the Act empowers the Central
Government to make rules not inconsistent with the Act for the purpose of
giving effect to the provisions thereof. Under clause (d) of sub-section (2) of
Section 95 such rules may provide for the powers and duties of the principal
officers and the conditions of their service. Sub-section (1) of Section 97
empowers the Corporation to make regulations not inconsistent with the Act and
the rules made thereunder for the administration of the affairs of the
Corporation and for carrying into effect the provisions of the Act. Under
clause (xxi) of sub-section (2) of Section 97 such regulations may provide for
the method of recruitment, pay and allowances, discipline, superannuation
benefits and other conditions of service of officers and servants of the
Corporation other than the principal officer.
The
Rules have been framed by the Central Government in exercise of the powers
conferred by Section 95 of the Act.
Rule
16 relating to the powers and duties of the Director General is as under:-
"Rule 16. Powers and duties of the Director General .-
(1)
The powers and duties of the Director General shall be - (1) to act as the
Chief Executive officer of the Corporation;
(ii) to
co-ordinate, supervise and control the work of the other Principal Officers;
(iii) to
convene, under the orders of the Chairman, meetings of the Corporation, the
Standing Committee and the Medical Benefit Council in accordance with the Act
and the Rules and to implement the decisions reached at the meetings;
(iv) to
enter into contracts on behalf of Corporation in accordance with the Act or the
Rules of regulations made thereunder, or the General or special instruction of
the Corporation or the Standing Committee;
(v) to
furnish all returns and documents required by the Act or the Rules to the
Central Government and to correspond with the Central Government and the State
Governments upon all matters concerning the Corporation ;
(vi) to
undertake such other duties and to exercise such other powers as may from time
to time be entrusted or delegated to him.
(2)
The Director General may, with the approval of the Standing Committee, by
general or special order, delegate any of his powers or duties under the Rules
or the Regulations or under any resolution of the Corporation or the Standing
Committee, as the case may be, to any person subordinate to him. The exercise
or discharge of any of the powers or duties so delegated shall be subjected to
such restrictions, limitations and conditions, if any, as the Director General
may, with the approval of the Standing Committee impose." The Regulations
have been made by the Corporation in exercise of powers conferred by
sub-section (1) of Section 97 read with clause (xxi) of sub-section (2) and
sub-section (2-A) of the said Section and sub-section (2) of Section 17 of the
Act. The Regulations apply to every whole-time employee of the Corporation
other than the principal officers appointed under Section 16 of the Act. The
Regulations contain provisions regarding appointment, probation, termination of
service, pay, leave, provident fund, age of retirement pensionary benefits,
control and discipline suspension, penalties etc, regulation 12 which relates
to disciplinary authorities provides as follows :- "Regulation 12.
Disciplinary Authorities- (1) The Director General may impose any of the
penalties specified in regulation 11 on any employee.
(2)
Without prejudice to the provisions of sub-regulation (1) but subject to the
provisions of sub-regulation (3) any of the penalties specified in regulation
11 may be imposed on any employee by the appointing authority or the authority
specified in this behalf by a general of special order of the Director General.
(3)
Notwithstanding anything contained in this regulation, no penalty specified in
clause (v) to (ix) regulation 11 shall be imposed by any authority subordinate
to the appointing authority.
Explanation-
Where an exployee holding a post of any class, is promoted, whether on
probation or temporarily to the post of the next higher class, he shall be
deemed for the purpose of this regulation to hold the post of the such higher
class." Regulation 13 which makes provision for the authority who can
institute disciplinary proceedings reads as under :- "Regulation 13.
Authority to Institute Proceedings- (1) The Director General or any other
authority empowered by him by General or special order may :
(a) institute
disciplinary proceeding against any employee;
(b)
direct a disciplinary authority to institute disciplinary proceeding against
any employee on whom that disciplinary authority is competent to impose under
these regulation any of the penalties specified in regulation 11, (2) A
disciplinary authority competent under these regulations to impose any of the
penalties specified in clauses (i) to (iv) of regulation 11 may institute
disciplinary proceedings against any employee for the imposition of any
penalties specified in clauses (v) to (ix) of regulation 11 notwithstanding
that such disciplinary authority is not competent under these regulations to
impose any of the latter penalties." In view of the powers conferred under
Regulation 12(2), the Director General made and order dated May 10, 1974 in the
following terms :- "OFFICE ORDER NO 181 OF 1974 In exercise of the powers
conferred by Regulation No. 12(2) of the Employees' State Insurance Corporation
(Staff and Conditions of Service) Regulations 1959, the Director General hereby
delegates powers to the Officers specified in Schedule-I to impose minor
penalties specified in clauses (1) to (iv) of Regulation 11 in respect of
employees specified in Schedule- II on condition that the powers shall be
exercisable in respect of the employees in their respective regions/offices.
This
office order supersedes all previous order on the subject without prejudice to
any action taken or proceedings initiated in exercise of the powers conferred
by the said or orders.
SCHEDULE-I
1. Regional Directors.
2.
Director (Medical), Delhi.
3.
Administrative Officer, establishment Branch II at Headquarters Officer.
SCHEDULE
- II
1.
Head Clerks, Assistants/Managers Grade-III, Personal Assistants.
2.
Insurance Inspectors/Audit Inspectors/Manager Grade - II" The said order
was modified by order dated April 9, 1981 which reads as under:- "Office
Order In exercise of the power conferred by Regulation No. 12(2) of the
Employees' State Insurance Corporation (Staff and Conditions of Service) Regulations,
1959, the undersigned hereby delegates powers to Regional Directors/Director
(Medical) Delhi/Administrative Officer-II to impose any of the penalties
specified in clauses (i) to (ix) of Regulation 11 ibid on class III (excluding
Insurance Inspectors/Managers Grade-II/Audit Inspectors and Personal
Assistants) and class IV employees, in their respective regions/offices. In
cases of Insurance Inspectors/Managers Grade-II/Audit Inspectors and Personal
Assistants, the powers already delegated by the Director General vide office
order No. 181 of 1974 dated 10.5.1974 to all regional Directors/Directors
(Medical) Delhi/Administrative Officer II to impose only minor penalties as
specified in clauses (1) to (iv) of Regulation 11 ibid shall be exercisable by
them. The powers delegated by the Director General vide office order NO. 16
(1)-2/73/-EI will thus stand modified to the extent above.
It is
circulated that Director General will continue to be in disciplinary authority
in respect of Head Clerks/Assistants/Manager Grade III, whose appointments
above been made by him/or whose appointments have been made before 1.12.1980
i.e. prior to the issue of this office Memorandum No. 7(3)- 1/74 EI (b) dated
15.11.1980 to impose major panalties specified in clauses (v) to (ix) of regulation
11 ibid.
This
order modified all previous orders on the subject without prejudice to any
action taken or proceeding initiated in exercise of the powers conferred by the
said orders." The Standing Committee had earlier passed a resolution dated
May 24, 1968 in the following terms:- "Resolved that notwithstanding any
restrictions imposed earlier, the Director General may delegate any of his
power under the Rules, or the Regulations or under any resolution of the
Corporation and the Standing Committee, as the case may be, to any officer
subordinate to him, subject to such restrictions, limitations and conditions,
if any, as the Director General may impose from time to time." T. Abdul Razak
(respondent in Civil Appeals Nos. 3952 of 1988 and 3953 of 1988) was employed
as Insurance Manager Gr. II/Inspector with the corporation. Disciplinary
proceedings were initiated against him by the regional Director of Karnataka
Region on the basis of Memorandum dated October 20, 1983. In the said
proceedings after holding an enquiry an order was passed by the Director
General on March 6, 1987 imposing the penalty of reduction in rank to the post
of Head Clerk/Manager Gr.III for a period of one year. The said respondent
filed an application (Application No. 473 of 1987 ) before the Tribunal
assailing the said order, disciplinary proceedings were started against the
said respondent by the Regional Director of Karnataka Region on the basis of
another Memorandum dated January 23, 1985. A writ petition was field by the
said respondent in the Karnataka High Court challenging the said memorandum and
the competence of the Regional Director to initiate the Disciplinary
proceedings. The said writ petition was subsequently transferred to the
Tribunal and was registered as Application No. 1678 of 1986.
P.K.
Philip (respondent in Civil Appeal NO. 1913 of 1989) was employed as Manager
Gr. II. Disciplinary proceedings were initiated against him by the Regional
Director on the basis of Memorandum dated July 18/25, 1986.
The
said respondent filed an application (Application No.747 of 1987) before the
Tribunal challenging the very initiation of said proceedings against him by the
Regional Director.
All
the three petitions, namely, Application No. 1678 of 1986 and application No.
473 of 1987 filed by T. Abdul Razak and Application No 474 of 1987 filed by
P.K. Philip have been disposed of by the Tribunal by the impugned judgment
dated January 29, 1988 whereby the Tribunal has Struck down Rule 16(2) of the
Rules in its entirety, the words "or the authority specified in this
behalf by a general or special order of the Director General: in Regulation
12(2) and the words "or any other authority empowered by him by general or
special order may" in regulation 13(1) of the Regulation. The resolution
of the Standing Committee of the Corporation dated May 24, 1968 as well as
orders dated May 10, 1974 and April 9, 1981 passed by the Director General have
also been quashed. The Tribunal has also quashed the memorandum dated October
20, 1983, January 21, 1985 and July 18/25, 1986 regarding initiation of
disciplinary proceedings against both the respondents by Regional Director of
Karnataka Region as well as the order of punishment dated March 6, 1987 passed
by the Director General against the respondent, T. Abdul Razak.
The
Tribunal has held that there was delegation of the powers of the Corporation to
the Director General and it was not permissible in law for the Director General
to further Delegate the said powers to the said powers to the Regional
Director. In taking the said view the Tribunal has proceeded on the basis that
the powers of the corporation have been delegated to the Director General under
Section 97-A of the Act and since Section 94-A does not make provision for
further delegation by the Director General of the Power so delegated the
resolution of the Standing Committee dated May 24, 1968 as well as Rule 16(2)
and regulation 12(2) and 13(1) by empowering the Director General to specify
any other person to exercise the said powers permit sub- delegation by the
delegate of the powers delegated to him which is not permissible in view of the
well know principle delegates non potest delegate. The Tribunal has placed
reliance on the decision of the Karnataka High Court in The Employees State
Insurance corporation, Banglore v. Shoba Engineers, Bangalore & Ors. 1982
(1982 (44) FLR 100, construing the provisions of Section 94-A of the Act.
At the
outset, it may be stated that in the applications that were filed by the
respondents the challenge was mainly to the memoranda dated October 20, 1983,
January 21, 1985 and July 18/25, 1986 regarding initiation of disciplinary
proceedings by the Regional Director and the order dated March 6, 1987 passed
by the Director General imposing the penalty of reduction in rank on
respondent, T.Abdul Razak. The order dated March 6, 1987 was passed by the Director General
himself who was the disciplinary authority and it is not open to challenge on
the ground of delegation of powers by the Director General.
The
validity of the said order was challenged on the basis that the Regional
Director was not competent to initiate the disciplinary proceedings in which
the order was passed. The Tribunal was, therefore, primarily concerned with the
validity of three memoranda referred to above regarding initiation of
disciplinary proceedings by the Regional Director. In this context, it may be
mentioned that no order of the Director General delegating his powers regarding
initiation of disciplinary proceedings under Regulation 13(1) had been placed
before the Tribunal. The tow orders of the Director General dated may 10, 1974
and July 18, 1981, which were under challenge, had been passed under Regulation
12(2) whereby the Director General had delegated the power to impose minor
penalties specified in clauses (1) to (i) of Regulation 11 in respect of
certain categories of employees specified therein on the officers specified
therein.
Therefore.
in so far as the validity of the memoranda regarding initiation of disciplinary
proceedings against the respondents is concerned the question regarding
delegation of powers by the Director General did not arise for consideration
and the Tribunal was not required to deal with the question regarding validity
of Rule 16(2), Regulations 12(2) and 13(1), the resolution of the Standing
Committee dated May 24, 1968 and the orders of the Director General dated May
10, 1974 and April 9, 1981. With regard to initiation of disciplinary
proceedings by the Regional Director, we find that the legal position is well
settled that it is not necessary that the authority competent to impose the
penalty must initiate the disciplinary proceedings and that the proceeding can
be initiated by any superior authority who can be held to be the controlling
authority, [ See : State of Madhya Pradesh v. Shardul Singh, 1970 (1) SCC 108;
P.V. Srinivasa Sastry v. Comptroller & Auditor General, 1993 (1) SCC 419;
and Inspector General of Police & Anr. v. Thavasiappan, 1996 (2) SCC 145 ].
The Regional Director, being the officer in charge of the region, was the
controlling authority in respect of the respondents, was the controlling
authority in respect of the respondents. He could institute the disciplinary
proceedings against the respondents even in the absence of specific conferment
of power in that regard. The memoranda dated October 20, 1983, January 21, 1985
and July 18/25, 1986 regarding initiation of disciplinary proceedings against
the respondents by the Regional Director, therefore, do not suffer from any
legal infirmity and the applications filed by the respondents before the
Tribunal has pronounced upon the validity of Rule 16(2), Regulations 12(2) and
13(1), the resolution of the standing Committee dated May 24, 1968 and orders
dated May 10, 1974 and April 9, 1981 passed by the Director General it becomes
necessary to examine the correctness of the decision of the Tribunal in that
regard.
The
law is well settled that in accordance with the maxim delegates non potest
delegate, a statutory power must be exercised only by the body of officer in
whom it has been confided, unless sub-delegation of the power is authorised by
express words or necessary implication. [ See : Halsbury's Laws of England, 4th Edn. Vol. 1 para 32 p. 34; Craies
on Statute Law, 7th Edn p. 316; the Barium Chemicals Ltd. and Anr. v. The
Company Law Board and Others, 1966 Supp. SCR 311, at p. 330 and Sahni Silk
Mills (P) Ltd. and Anr. v. Employees' State Insurance Corporation, 1994 (5) SCC
346, at pp. 350-351 ] In Sahni Silk Mills (P) Ltd. and Anr. v. The employees'
State Insurance Corporation (supra) this Court has approved the decision of the
Karnataka High Court in the Employees' State Insurance Corporation, Bangalore
v. Shoba Engineers, Bangalore and Ors. (supra). It has been held that
Parliament while introducing Section 94-A in the Act only Conceived direct
delegation by the Corporation to different officers or authorities subordinate
to the Corporation and there is no scope for such delegate to sub-delegate that
power, by authorising any other officer to exercise or perform the powers so
delegated. The Tribunal has, therefore rightly held that Section 94-A does not
specifically provide that an officer or authority subordinate to the
Corporation to whom the power the power has been delegated by the Corporation
can, in his turn, authorise any other officer to exercise that power of
function. But the question that arises is whether Rule 16(2) of the Rules and
Regulations 12(2) and 13(1) of The Regulations relate to exercise of powers or
functions of the Corporation or the Standing Committee delegated to the
Director General by the Corporation or the Standing Committee under Section
94-A of the Act. In order to answer these question, it is necessary to make a
distinction between a power conferred on the Director General under a rule made
in exercise of rule making power under Section 95 or under a regulation made in
exercise of power to make regulations under Sections 97(2)(xxi) and 17(2) of
the Act and a power or function of the Corporation or the Standing Committee
which is delegated to the Director General under Section 94-A. A rule or a
regulation made in exercise of a power conferred by a statue being in the
nature of subordinate legislation is statutory in character while a resolution
of a Corporation or a Standing Committee is purely administrative in nature.
Therefore, the power conferred on the Director General under a rule or a
regulation is in the nature of statutory power that has been conferred
independently on the Director General. It cannot be regarded as delegation of
powers and functions of the Corporation or the Standing Committee under Section
94-A of the Act. Section 94-A speaks of "powers and functions which may be
exercised or performed by the Corporation or the Standing Committee". The
said powers and functions are other than the powers that are conferred
independently on the Director General under the Rule or the Regulations.
On
that view of the matter regulations 12 and 13 must be construed as conferring
independent powers on the Director General and it cannot be said to be the
powers and functions of the Corporation or the Standing Committee that have
been delegated to the Director General by the Corporation or the Standing
Committee under Section 94-A.
Regulation
12(2) which empowers the Director General to specify by general of special
order the authority which can also Act as a disciplinary authority and
regulations 13(1) which authorises the Director General to empower by general
or special order any other authority to institute disciplinary proceedings
against an employee, cannot be regarded as empowering further delegation by the
Director General of powers delegated to him. The Tribunal was, Therefore, in
error in striking down the words "or any other authority specified in this
behalf by a general or special order of the Director General" in
Regulation 12(2) and the words "or any other authority empowered by him by
general or special order may" in Regulation 13(1) on the view that they
permit further delegation by the Director General of the powers delegated to
him which is impermissible. The decision of the Tribunal in this regard cannot
be upheld and the offending words in Regulations 12(2) and 13(1) must be
treated as a valid conferment of power on the Director General to delegate his
powers under side regulation. The orders dated May 10, 1974 and April
9, 1981 were passed by
the Director General in Exercise of the powers conferred on him under
Regulation 12(2). By the said orders the Director General delegated the powers
to impose minor penalties specified in clauses (i) to (iv) of regulation 11 in
respect of certain categories of employees and the officers specified in the
said orders, Since the offending part of Regulation 12(2) has been found to be
valid the said orders dated May 10, 1974 and April 9, 1981 must be held to have
been validly issued in exercise of the power of delegation conferred on the
Director General under Regulation 12(2).
Rule
16(2) and the resolution of the Standing Committee dated May 24, 1968 go
together, under rule 16(2) the Director General has been empowered to delegate
any of his powers or duties under the Rules or the Regulation or under any
resolution of the Corporation or the Standing Committee, as the case may be, to
any person subordinate to him, For the purpose of such delegation it is
necessary for the Director General to obtain the approval of the Standing
Committee. Resolution of the Standing Committee dated May 24, 1968 accords such approval to the
Director General. The power of delegation under Rule 16(2) can be divided into
two parts; one relating to delegation of the powers or duties under the Rule
16(2) can be divided into two parts; one relating to delegation of the powers
or duties under the Rules or the Regulation and other relating to the powers
and duties under any resolution of the Corporation or the Standing Committee.
Insofar as the powers or duties under the Rules or the Regulations are
concerned, the conferment on the Director General the power to delegate the
same is not violative of the principle of sub-delegation as indicated earlier
because the said powers and duties are in the nature of independent statutory
powers conferred on the Director General under the Rules or to Regulations. No
infirmity can, therefore, be found either in Rule 16(2) or in the resolution of
the Standing Committee dated May 24, 1968
empowering the Director General to delegate any of his powers or duties under
the Rules or the Regulations. The position is, However, different in respect of
the and duties conferred on the Director General under any resolution of the
Corporation or the Standing Committee. The conferment of such powers or duties
under a resolution of the Corporation or the Standing Committee could be by way
of delegation of the powers of the Corporation or the Standing Committee under
Section 94-A of the Act and empowering the Director General to further delegate
the said powers or duties would amount to sub-delegation of a power delegated
to him which is impermissible in view of the law laid down in Sahni Sil Mills
(supra. Rule 16(2) and the resolution of the Standing Committee dated May 24,
1968, to the extent they empower the director General to further delegate the
powers or duties delegated to him by the Corporation or the Standing Committee
under a resolution referable to Section 94-A have to be held to be invalid.
For
the reasons aforementioned, the impugned judgment of the Tribunal is set aside
insofar as it strikes down the words "or any other authority specified in
this behalf by a general or special order of the Director General" in
Regulation 12(2) and the words "or any other authority empowered by him by
general or special order may" in Regulation 13(1) of the Regulations and
quashes the orders dated May 10, 1974 and April 9, 1981 passed by the Director
General, the memoranda dated October 20, 1983, January 21, 1985 and July 18/25,
1986 and the order dated March 18, 1987, Rule 16(2) and the resolution of the
Standing Committee, to the extent they empower the Director General to delegate
the powers or duties delegated to him under any resolution of the Corporation
or the Standing Committee referable to Section 94-A, Are invalid but the rest
of the said Rule and the resolution are valid. As a result, the applications
filed by the respondents before the Tribunal are dismissed. The appeals are
disposed of according. But in the circumstances there is no order as to costs.
SPECIAL
LEAVE PETITIONS (CIVIL) NO. 13126-27 OF 1996 {C.C. NO. 368/1996} Delay
condoned.
The
petitioner had Central Administrative Tribunal, Ahmedabad Bench for quashing
the Disciplinary proceedings initiated against him by the Regional Director and
the order of compulsory retirement passed in those proceedings. The competence
of the Regional Director to initiate the Disciplinary proceedings was challenged
by the petitioner by relying on the decision of the Tribunal in the case of T. Abdul
Razak. The Tribunal has negatived the said contention.
Since
we have set aside the said decision of the Tribunal in the case of T. Abdul Razak,
we find no merit in this petition and the same is accordingly dismissed.
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