Corporation of India, Hyderabad & Ors Vs. A. Prahalada
Rao & ANR  INSC 528 (1 November 2000)
& D.P. Mohapatra.
The notice issued by this Court is limited to the interpretation given by the
High Court to Regulation 60 of the Food Corporation of India (Staff)
Regulations, 1971 (hereinafter referred to as the Regulations) which prescribes
the procedure for imposing minor penalties. In Writ Petition No.14152 of 1989
filed by respondent No.1-Assistant Manager (Quality Control) at Kakinada
challenging the order imposing penalty of recovery of Rs.7356/- from his pay by
21 monthly instalments on the ground of dereliction of his duties, which caused
loss to the Corporation, learned Single Judge held that once the employee
denies the charge, it is incumbent upon the authorities to conduct an inquiry
by giving an opportunity to him and render findings on the charges, otherwise
there is every scope for the disciplinary authority to misuse the power under
Regulation 60. The Court, therefore, set aside the order imposing minor penalty
as the procedure contemplated for imposing major penalty was not followed.
appeal, the Division Bench of the High Court by judgment and order dated 18th
November, 1997 confirmed the same by observingwhere the employee disputes that
any loss is caused to the Corporation either by his negligence or breach of
order, and if so, how much pecuniary loss has been incurred, it is but
necessary that an enquiry should be conducted, otherwise it is impossible to
arrive at a correct finding with regard to the causing of loss by the employee
by his negligence or breach of order and with regard to the quantum of loss.
The aforesaid interpretation of Rules given by the High Court is challenged in
deciding the question involved, we would first refer to the relevant procedure
prescribed under Regulations 54 and 60 which read thus:- 54. MINOR PENALTIES:
of his promotion;
from his pay of the whole or part of any pecuniary loss caused by him to the
Corporation by negligence or breach of orders;
of increments of pay.
PROCEDURE FOR IMPOSING MINOR PENALTIES:
Subject to the provisions of Sub-regulation (3) of Regulation 59, no order
imposing on an employee any of the penalties specified in clauses (i) to (iv)
of Regulation 54 shall be made except after:
informing the employee in writing of the proposal to take action against him
and of the imputations of misconduct or misbehaviour on which it is proposed to
be taken, and giving him a reasonable opportunity of making such representation
as he may wish to make against the proposal;
an inquiry in the manner laid down in Sub- regulations (3) to (23) of
Regulation 58, in every case in which the disciplinary authority is of the
opinion that such inquiry is necessary;
taking the representation, if any, submitted by the employee under clause (a)
and the record of inquiry, if any, held under clause (b) into consideration;
a finding on each imputation of misconduct or misbehaviour.
Notwithstanding anything contained in clause (b) of Sub- regulation (1), if in
a case it is proposed, after considering the representation, if any, made by
the employee under clause (a) of the sub-regulation, to withhold increment of
pay and such withholding of increments is likely to affect adversely the amount
of retirement benefits payable to the employee or to withhold increments of a
pay for a period exceeding 3 years or to withhold increments of pay with
cumulative effect for any period, an inquiry shall be held in the manner laid
down in Sub-regulations (3) to (23) of Regulation 58 before making any order
imposing on the employee any such penalty.
The record of the proceedings in such cases shall include:
copy of the intimation to the employee of the proposal to take action against
copy of the statement of imputations of misconduct or misbehaviour delivered to
representation, if any;
evidence produced during the inquiry;
findings on each imputation of misconduct or misbehaviour; and (vi) the orders
on the case together with the reasons therefor.
counsel appearing on behalf of the appellants submitted that while interpreting
Regulation 60, the High Court has added a proviso by stating that when the
employee disputes his liability after receipt of the show cause notice, it is
incumbent upon the disciplinary authority to conduct a detailed enquiry as
provided for major punishment.
his contention that in case of negligence in discharge of duties or loss
occurred to the Corporation by not following the directions issued by the
Corporation for taking precautions, there is no question of holding
full-fledged departmental enquiry before imposing minor penalty as provided in
Regulation 54. As against this, respondent No.2-Joint Secretary, Food
Corporation of India Executive Staff Union who appeared in person submitted
that under the guise of imposing minor penalties, the Management of appellant
is dispensing with holding of regular departmental enquiry in cases where
charges cannot be proved. He further pointed out that there is large scale
misuse of powers under the said Regulation and, therefore, the interpretation
given by the High Court to the said Regulation does not call for any
view, on the basis of the allegation that Food Corporation of India is misusing its power of imposing
minor penalties, the Regulation cannot be interpreted contrary to its language.
Regulation 60(1)(b) mandates the disciplinary authority to form its opinion
whether it is necessary to hold enquiry in a particular case or not. But that
would not mean that in all cases where employee disputes his liability, a
full-fledged enquiry should be held.
the entire purpose of incorporating summary procedure for imposing minor
penalties would be frustrated.
discretion given under Regulation 60(1)(b) is misused or is exercised in
arbitrary manner, it is open to the employee to challenge the same before the
for the disciplinary authority to decide whether regular departmental enquiry
as contemplated under Regulation 58 for imposing major penalty should be
followed or not. This discretion cannot be curtailed by interpretation which is
contrary to the language used.
Regulation 60(2) itself provides that in a case if it is proposed to withhold
increments of pay and such withholding of increments is likely to affect
adversely the amount of retirement benefits payable to employee and in such
other cases as mentioned therein, the disciplinary authority shall hold enquiry
in the manner laid down in Regulation 58 before making any order imposing any
such penalty. Hence, it is apparent that High Court erroneously interpreted the
regulation by holding that once the employee denies the charge, it is incumbent
upon the authority to conduct enquiry contemplated for imposing major penalty.
It also erred in holding that where employee denies that loss is caused to the
Corporation either by his negligence or breach of order, such enquiry should be
held. It is settled law that Courts power of judicial review in such cases is
limited and Court can interfere where the authority held the enquiry
proceedings in a manner inconsistent with the rules of natural justice or in
violation of statutory rules prescribing the mode of enquiry and imposing
punishment or where the conclusion or finding reached by the disciplinary
authority is based on no evidence or is such that no reasonable person would
have ever reached. As per the Regulation, holding of regular departmental
enquiry is a discretionary power of the disciplinary authority which is to be
exercised by considering the facts of each case and if it is misused or used
arbitrarily, it would be subject to judicial review.
result, the appeal is allowed to the aforesaid extent. There shall be no order
as to costs.