National Aviation Co.
of India Ltd. Vs. S.M.K.Khan [2009] INSC 609 (24 March 2009)
Judgment
Reportable IN THE
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.1622 OF
2009 (Arising out of SLP [C] No.21290/2007) National Aviation Company of India
Ltd. ... Appellant S.M.K. Khan ... Respondent
R.V.RAVEENDRAN, J.
The appellant is the
successor of Indian Airlines Ltd. (for short `IAL'). On 12.9.1966 the
respondent joined IAL as a Security Assistant. His work was unsatisfactory and
several warnings and minor punishments were given for insubordination,
indiscipline, negligence, sleeping on duty etc. He was also chargesheeted in
regard to the repeated acts of misconduct and was imposed the punishment of
demotion to the post of Chowkidar on 26.5.1971. Even thereafter his service was
unsatisfactory resulting in several reprimands and warnings. He was however
again appointed as Security Assistant with effect from 17.8.1990, in the normal
process of recruitmnent, under internal selection. He was also given the
benefit of a 2 time bound promotion on 6.7.1998. When he attained the age of 55
years his case was reviewed under Rule 12 of Indian Airlines Employees Service
Regulations to consider whether he should be continued in service beyond the
age of 55 years. In view of the unsatisfactory service record, on review, the
Regional Director (South), IAL, who was the competent authority, issued a
notice dated 11.5.1998 proposing to retire him from service with effect from
10.8.1998 under Regulation 12. The said letter referred to the poor performance
and unauthorized absence in the years 1994 to 1997.
2. The respondent
gave a representation dated 18.5.1998 admitting absenteeism but offered an
explanation that it was on account of family reasons. He requested that he may
be continued in service assuring satisfactory service in future. The competent
authority was not satisfied with the explanation. Therefore by letter dated
15.7.1998 he communicated his decision to retire the respondent from service as
at the close of work on 10.8.1998. Thereafter the respondent sought a personal
interview with the competent authority and made a fervent appeal to reconsider
his case assuring that he will not give room for any complaint in future. In
view of it, the competent authority sent a letter dated 8.8.1998 stating that
respondent will be continued in service for a specific period of one year,
beyond 55 years, and that retention beyond one year would be subject to the
outcome of review that will be carried out after monitoring his attendance and
performance closely.
3. However, the
respondent's service continued to be unsatisfactory and his unauthorized
absences continued. A show-cause notice dated 27.5.1999 was issued by the
competent authority proposing to retire him from service at the close of work
on 26.8.1999. The show cause notice referred to the unsatisfactory service and
unauthorised absence for 20 days during the extended period of service.
Respondent sent a reply dated 14.6.1999 wherein he admitted his unauthorised
absence from time to time and again gave the reason as advanced age and ill
health of himself and his wife. He again assured that he will not give room for
any complaint, if continued in service. After considering the same, the
competent authority passed an order dated 22.6.1999 compulsorily retiring the
respondent as at the close of work on 26.8.1999.
4. Feeling aggrieved
the respondent approached the Industrial Tribunal cum Labour Court, Chennai in
ID No.60/2000. The Tribunal by award dated 14.9.2001 held that the IAL
management was justified in compulsorily retiring the respondent with effect
from 26.8.1999 and respondent was not entitled to any relief. The respondent
challenged the order of the Tribunal in 4 W.P. No.23617/2001. A learned Single
Judge of the Madras High Court by order dated 13.11.2003 set aside the award of
the Tribunal and the order of compulsory retirement dated 22.6.1999. As the
respondent had already reached the age of superannuation (58 years) on
10.5.2001, he directed the IAL to pay all terminal benefits including back
wages by treating the respondent as having worked till attaining the age of
superannuation in the normal course. An intra-court appeal filed by IAL was
dismissed by a Division Bench of the High Court by judgment dated 19.7.2007.
The Division Bench held that after the decision to continue the respondent in
service beyond 55 years, the only complaint against the respondent was
unauthorized absence; that on account of the inconsistency in the evidence as
to the number of days of absence without permission, the period of unauthorized
absence was uncertain; that the respondent was punished by way of compulsory
retirement, for such unauthorized absence; and that in the absence of a charge
with specific particulars of misconduct or an enquiry into such charge
resulting in a definite finding in regard to the misconduct, the compulsory
retirement was liable to be set aside.
5. The said judgment
is challenged in this appeal by special leave. On the contentions urged the
only question that arises for consideration is whether IAL was justified in
compulsorily retiring the respondent with 5 effect from 26.8.1999, that is 1
year and 3 months after taking a decision to continue him beyond 55 years.
6. Regulation 12,
under which the respondent was compulsorily retired, as it stood at the
relevant point of time, is extracted below :- "An employee shall retire
from the service of the Corporation on attaining the age of 58 years provided
that the competent authority may ask an employee to retire after he attains the
age of 55 years on giving three months' notice without assigning any reason.
An employee, (a) on
attaining the age of 55 years; or (b) on the completion of 25 years of
continuous service, may, by giving three months notice, voluntarily retire from
service.
Provided that the
voluntary retirement under clause (b) shall be subject to approval of the
competent authority." [emphasis supplied] An order of compulsory
retirement in pursuance of a rule/regulation which enables the competent
authority to prematurely retire an employee, on the formation of a bona fide opinion
that continuation of the employee in service will not benefit the institution
or be in the interest of the institution (or will not be in public interest
where the employee is a government servant), on review of the
performance/service record of the employee, on the employee attaining the
specified age or completing the specified period of service, is valid and not
open to challenge. It is neither a punishment nor 6 considered to be
stigmatic. Where the compulsory retirement, is not by way of punishment for a
misconduct, but is an action taken in pursuance of a valid condition of service
enabling the employer to prepone the retirement, the action need not be
preceded by any enquiry and the principles of natural justice have no
application. The unsatisfactory service of the employee which may include any
persistent misconduct or inefficiency furnishes the background for taking a
decision that the employee has become a dead wood and that he should be retired
compulsorily. Such `compulsory retirement' is different and distinct from
imposition of a punishment of compulsory retirement (or dismissal/removal) on a
specific charge of misconduct, where the misconduct is the basis for the
punishment. The difference is on account of two factors : Firstly, the employee
on account of completing a particular age or number of years of service falls
within the zone where his performance calls for assessment as to whether he is
of continued utility to the employer or has become a deadwood or liability for
the employer. Secondly, the record of service, which may include poor
performance, unsatisfactory service or incidentally any recent conduct (which
if separately considered may constitute a misconduct subject to punishment)
when considered as a whole, leads the Reviewing Authority to the conclusion
that the employee in question is not fit to be continued in 7 service and not
of utility to the employer. Therefore, any incidental reference to
unsatisfactory service, or any remarks in the context of explaining the reason
for compulsory retirement under the relevant rule, in the letter of compulsory
retirement will not be considered as stigmatic, even though read out of
context, they may be capable of being construed as allegations of misconduct.
Any order of compulsory retirement in terms of the rule/regulation providing
for such compulsory retirement is not open to interference unless shown to be
malafide or arbitrary or not based on any background material at all relating
unsatisfactory service justifying the premature retirement. When an order of
compulsory retirement purports to be one under the rule/regulation providing
for such premature retirement, the proper approach of the court would be to
consider whether the order is sustainable with reference to the requirements of
the relevant rule, rather than examining whether the order could also be
construed as a punishment for misconduct -- vide Baikuntha Nath Das v. Chief
District Medical Officer [1992 (2) SCC 299], Allahabad Bank Officers'
Association v. Allahabad Bank [1996 (4) SCC 504], I.K.Mishra v. Union of India
[1997 (6) SCC 228], State of Uttar Pradesh v. Lalsa Ram [2001 (3) SCC 389] and
M. L. Binjolkar vs. State of Madhya Pradesh [2005 (6) SCC 224].
7. When the
compulsory retirement of respondent is examined in the context of the aforesaid
tests and principles, the inescapable conclusion is that it is valid and not
open to challenge.
8. The respondent
contended that once on review of performance, an employee is allowed to
continue beyond 55 years, such employee is entitled to continue in service
until he attains the age of 58 years and the employer cannot compulsorily
retire him before 58 years, except by way of punishment for a proved
misconduct. In support of the said contention, he relied upon the decisions of
this Court in State of Uttar Pradesh v. Chandra Mohan Nigam [AIR 1977 SC 2411]
where this court held that once a review committee considered the case of a
government servant, and the government, on the report of the committee, decides
not to take any prejudicial action against the government servant, there is no
warrant for a second review committee under the provisions relating to
premature retirement, to reassess his case on the same material, unless the
exceptional circumstances emerge in the meantime or the next stage for review
arrives.
In particular, the
respondent relied on the following observations in that case:
"Once a review
has taken place and no decision to retire on that review has been ordered by
the Central Government, the officer gets a lease in the case of 50 years upto
the next barrier at 55 and if he is again cleared at that 9 point, he is free
and untrammeled upto 58 which is his usual span of the service career. This is
the normal rule subject always to exceptional circumstances such as disclosure
of fresh objectionable grounds with regard to integrity or some other
reasonably weighty reason."
The said decision
will not assist the respondent. The principle laid down therein is that after a
review of the service of an employee for purposes of extension of service
beyond 55 years, if it is decided that he is fit and suitable for continuation,
there is no question of a re-appraisal of the same material, for taking a
different decision in the absence of exceptional circumstances. That principle
will apply, where on review, the competent authority is satisfied that the
service of the employee is satisfactory and there is no ground to compulsorily
retire the employee. But in this case, the employee's service was not found to
be satisfactory on review of performance at the end of 55 years, nor was the
employee cleared for retention in service till 58 years. In this case, on
review, the competent authority decided that the employee was not fit and
suitable for retention and that he should be compulsorily retired from service
with effect from 10.8.1998. But because of the extreme hardship pleaded by the
employee and assurance of improvement in performance, the respondent's service
was continued as a special case, for only a period of one year beyond 55 years
making it clear that retention of service beyond one year, that is, 10.5.1999, 10
will be subject to the outcome of review that will be carried out after
monitoring his attendance and performance during that period. Thus the
continuation of respondent beyond 55 years was not because his service was
satisfactory, but out of leniency, for a specific period somewhat on the lines
of probation. During the extension period of one year, his performance was
watched and it was found to be unsatisfactory. Therefore after giving due
opportunity to him to explain the unsatisfactory service, a decision was taken
by the competent authority not to continue him in service and consequently he
was compulsorily retired from service with effect from 26.8.1999. Thus the
compulsory retirement with effect from 26.8.1999 was merely a postponement of
the compulsory retirement which was to take place on 10.5.1998 and not on
account of a second-appraisal of the service performance upto 55 years.
9. The learned
counsel for the respondent next submitted that recourse to `compulsory
retirement' should be only in `public interest'; and that in this case, as
neither the regulations nor the order of compulsory retirement referred to
public interest, the compulsory retirement was vitiated. This contention has no
merit. "Public interest" is used in the context of compulsory
retirement of government servants while considering service 11 under the
state. The concept of public interest would get replaced by `institutional
interest' or `utility to the employer' where the employer is a statutory
authority or a government company and not the government.
When the performance
of an employee is inefficient or his service is unsatisfactory, it is
prejudicial or detrimental to the interest of the institution and is of no
utility to the employer. Therefore compulsory retirement can be resorted to (on
a review of the service on completion of specified years of service or reaching
a specified age) in terms of relevant rules or regulations, where retention is
not in the interests of the institution or of utility to the employer. It is
however not necessary to use the words `not in the interests of the
institution' or `service not of utility to the employer' in the order of
compulsory retirement as the regulation provides that no reason need be
assigned.
10. The respondent
next drew our attention to the finding of the High Court that there was some
discrepancy in regard to the number of days of unauthorized absence during the
period of one year after 55 years and such unauthorized absence could not be a
ground for compulsory retirement without an enquiry. It is true that the High
Court has referred to the evidence of MW-1 and the entries in the muster rolls,
to point out the discrepancy. MW1 had stated before the tribunal the period of
unauthorized absence was 27 days whereas the entries in the muster rolls showed
such absence was 32 days and that there was also an admission that out of the
said 32 days, 6 days was availed as sick leave. But that cannot be a ground to
conclude that the order of compulsory retirement was bad. The Tribunal and the
High Court were not examining `unauthorized absence' as a misconduct which was
subject matter of a charge. When the show cause notice dated 27.5.1999 referred
to the absence for 20 days during the period of one year beyond 55 years, the
respondent did not deny the same in his reply dated 14.6.1999. On the other
hand, he admitted such absence and tried to explain it as being on account of
advanced age and ill health of himself and wife. The fact that the unauthorized
absence was more than 20 days during a period of one year was never disputed.
The discrepancy in the oral evidence of MW1 and the muster rolls in regard to
the total number of unauthorized absence, even if true, was not material, as
the respondent was not being punished for any specific unauthorized absence.
The unauthorized absence was only the background material to reach the decision
that respondent's service was unsatisfactory.
11. The High Court
also erred in treating the show cause notice dated 27.5.1999 as a charge memo
and finding fault with it on the ground that it did 13 not contain necessary
particulars in regard to the charge of unauthorized absence, and consequently
holding that in the absence of any inquiry, principles of natural justice were
violated. The letter dated 27.5.1999 was not a charge memo but only a notice
giving opportunity to the employee before compulsorily retiring him under
Regulation 12. In fact even without such a notice he could have been
compulsorily retired.
12. In view of the
above we allow this appeal set aside the orders of the learned Single Judge and
Division Bench and restore the award of the Industrial Tribunal.
..........................J.
(R V Raveendran)
New
Delhi;
..........................J.
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